Originally printed online in the Times Union, April 18.
State legislators in the Senate and House are hammering out the differences between two competing plans to fund long-term road construction, with a deadline set for midnight Friday.
The final bill is expected to include a 10-cent increase in the gasoline tax.
Accelerate Indiana Municipalities (AIM), formerly known as Indiana Association of Cities and Towns, with the support of local government officials like Warsaw Mayor Joe Thallemer, would like the final bill to be more like the House’s version than the Senate’s because it will provide more local funding for roads.
In a teleconference Monday afternoon with Thallemer and Public Works Superintendent Jeff Beeler, AIM Executive Director Matthew Greller said, “This discussion really, really started moving last year, and then took off in the interim in the summer and fall months with the first task force work. Long story short, right after they got done meeting, and certainly identified there was a need out there for local government, the Purdue (Local Technical Assistance Program) study came out.”
LTAP was designed to help cities, towns and counties with their road needs and understand emerging technologies. It’s also a bit of a research/policy think-tank that makes projections with the gas funding formula and “things of that nature,” Greller said.
“So they identified a need of $775 million in new funding necessary for local governments, cities, towns and counties to bring all their roads, streets and bridges up to a much better condition, a good condition,” Greller stated. “… The proposal put forth by the House, coupled with federal funding, and coupled with actions from last year, gets us very close to that $775 million a year, as an average, over the next 15 to 20 years.”
He said that is why AIM is so adamant that if the state legislators are going to vote on a tax increase, which they are expected to do over the next couple of days, that it solves the problem and doesn’t only go a portion of the way.
Both the House and Senate plans include a 10-cent tax increase.
“The Senate plan phases it in over two years. The House plan does it all at once,” Greller explained. “The main difference, though between the House plan and the Senate plan, is that – and this is where it gets a little bit complicated – the House version includes transferring the sales tax collected on gasoline. So that’s separate from the gas tax. That’s a sales tax just like we pay on any article of clothing we buy, or a car or whatnot at the 7 percent rate in the state of Indiana. The House plan includes transferring the remaining 4-1/2 cents of the sales tax collected on gasoline into the road funding mix. The Senate plan does not. That’s how the House plan is so much richer for local government than the Senate plan. That’s the major difference.”
After about four years, he said, the House plan would provide local governments with a total of approximately $1.4 billion. The Senate plan, after four years, would provide local government with a total of just under $700 million.
“So the House plan is almost twice as good for local governments as the Senate plan, in terms of the dollars it provides. And that’s where we are today. Legislators are working out those differences in the conference committee process, and obviously our goal is for us to get as close as we can to the numbers contained in the House version because we believe that does a better job of meeting our need as defined by the Purdue report,” Greller stated.
In 2016, a penny of the 7-cent gas sales tax was transferred to the road funding mix.
Thallemer said, “So they’re trying to go to the full (amount). The House suggests that the full amount of sales tax, that’s applicable to gasoline purchases, all go to roads funding. And the Senate version is (about half of that).”
He said, “We all felt like the legislature understands the needs and requirements because of this LTAP study.”
Last year, the City of Warsaw got a Community Crossing 50/50 matching grant of about $723,000. Part of the requirement of getting that funding was to do a local asset management plan. Thallemer said Beeler “worked through that and did a marvelous job.”
“The important part of that is that we identified that locally, to eliminated poor-rated roads in our community, it’s about 70 lane miles, which is about 37 percent of our roads, would require close to $9 million to just get us up to where we need to be,” Thallemer said.
The last few years, he said, “The legislature has done a great job of increasing our funding, knowing that this was an issue. But we’re also very aware that we’ve got to come to a sustainable level of road maintenance and road funding that’s going to help us meet these very realistic needs that were identified both in this LTAP plan and all municipalities. The majority of them have gone through the local asset management and have put numbers to what truly is required in their communities. And the legislature wanted to see those numbers.”
For roads, Thallemer said the city is currently getting just under $1 million a year now. With the Community Crossing matching grant, it got up to over $1.6 million last year, but Thallemer said that was a one-time 50-50 match as well as a special distribution from the Local Option Income Tax.
Greller said the matching grant is still 50/50 in the Senate version, but 80/20 in the House version with the state paying the 80 percent. “We’re going to have a lot more ability for smaller communities, or any community for that matter, to meet that matching requirement and utilize those dollars that are in the grant program,” he said.
In both versions of the bill, Greller said the legislature is “just short of doubling the amount that’s in Community Crossing. So it’s a great program for local government in both bills. It’s something that we strongly support.”
One-time funding, however, won’t help local governments get their roads up to where they need to be. Thallemer credits legislators working to come up with ways to make better road funding happen.
Toll roads may be a part of the solution long-term, he said. Greller said there are study provisions in the bills this week, but nothing is concrete.
Thallemer said if the city can keep its roads at the good level, it’s cheaper to maintain them rather than go back and reconstruct them. “If your roads are failing because you’re not maintaining them, that’s the hard part,” he said.
Greller said technically the legislature has until April 29 at midnight to finish its work. Internally, the legislature moved up its own deadline to this Friday at midnight to finish things up.
“All signs are pointing to them being done at the end of this week. We’re expecting a bill to come out of this General Assembly,” he said.
Once passed, Greller said it remains to be seen how soon the tax increase will hit the pump. “There’s a lot of discussion about whether to phase the gas tax increase in over multiple years or just do it all at once. So that will be one of the things we are watching in the final bill,” he said.
AIM would be fine with a phase-in, he said, as long as the decision to phase it in is done now. “I think what we’d like to try to avoid is having to come back and having another vote, another policy discussion on the process in future legislative sessions. It becomes very difficult for legislatures to vote for a tax increase once, let alone more than once, which is what that would entail.”