On the final day of the 2017 legislative session, the Indiana General Assembly strongly endorsed a compromise on House Bill 1002, the proposal to establish long-term road funding, after days of intense negotiations.
The measure now goes to Gov. Eric Holcomb’s desk.
Here’s a breakdown of the final proposal, House Enrolled Act 1002-2017:
- The plan appears to restore much of the funding for local roads provided by the original House version.
- The bill raises by .10 cents the gas, special fuel and motor carrier surcharge taxes, and sustains those fees regardless of inflation. Increases to the user fees take effect in July at the beginning of FY 2018.
- A key compromise between the House and the Senate is the bill phasing-in a shift in sales tax revenue on gas from the state’s general fund to a dedicated infrastructure fund. The shift will occur over five years beginning in 2020. So by 2025, every penny paid at the pump will go directly toward roads.
- The compromise does not increase the cigarette tax to compensate for the shift in sales tax. At Thursday’s briefing, House Speaker Brian Bosma said the state can absorb the shift’s impact on the state’s general fund.
- In FY 2019, local roads will receive a projected $264 million in additional dollars. That amount will ramp up to $340 million by FY 2024.
- Altogether, the bill will raise $1.2 billion a year in new dollars beginning in 2024. That breaks down to nearly $900 million a year in new funding for state infrastructure, with local governments receiving on average $300 million a year in new road funding.
- The bill also will provide additional wheel tax authority for locals, but doesn’t require the adoption of a wheel tax to access new revenue generated by HEA 1002. The bill lowers the population threshold for municipalities to consider a wheel tax from 10,000 to 5,000. It also extends the deadline for a municipality to adopt the tax to Sept 1.
- The bill will make an estimated $200 million available for the next generation of Community Crossings grants. For large cities and towns, with populations above 10,000, the match requirements will remain at 50/50. But for small cities and towns, with populations under 10,000, the match will become 75/25, with the state picking up the larger portion.
- Distributions from the motor vehicle highway account will eventually shift to 60 percent for the state and 40 percent for locals. However, the distributions will increase each year because revenues will increase.
- The bill also makes changes to MVH allowable uses. Local governments must utilize 50 percent of MVH funds for construction, reconstruction and maintenance. The funds can no longer be used for law enforcement purposes and for painting structures.
- The federal funds exchange was included in the final roads bill. The Indiana Department of Transportation may exchange 100 percent of funds with approval of the budget director. That guarantees 25 percent of federal funds to locals with a 20 percent local match.
- The bill requires new annual fees: $15 for all vehicles, $50 for hybrids and $150 for electric. Those fees will support Community Crossings.
- To meet the full need in the future, the state will explore tolling as another revenue source, Rep. Ed Soliday said. “All of the tools are there,” he said, “and we always said it would be an average over the period of time with a ramp up.” Under the bill, the Indiana Department of Transportation will produce a strategic tolling plan and submit a waiver to the federal government, according to a statement by House Republicans. Bosma said any decision to toll an actual project is subject to the review of the State Budget Committee, whose membership is comprised of legislative fiscal leaders.
What leaders are saying:
Matt Greller, CEO, Aim: “There is no greater way to begin the spring road construction season then with a piece of groundbreaking legislation that will make a difference for all Hoosiers. Indiana’s cities and towns can begin almost immediately tackling their road maintenance backlog thanks to the provisions in HEA 1002-2017. Our citizens will begin witnessing first-hand the transformation of Indiana’s infrastructure. Aim would like to thank House Speaker Brian Bosma, Ways and Means Chair Tim Brown, Rep. Ed Soliday, Senate President Pro Tem David Long, Appropriations Chair Luke Kenley and Sen. Mike Crider and all of their colleagues in the House and Senate. The partnership between the two legislative chambers and local government has been a case study for how great things happen when we all work together for the betterment of our state.”
House Speaker Brian Bosma: “This comprehensive road funding plan marks the strongest infrastructure investment in state history. We met our long-term goal of creating a comprehensive, responsible and sustainable plan that funds our roads for the next generation. Hoosiers recognize the need to maintain and improve our infrastructure, and this conservative approach directs all fees paid at the pump directly to roads. This plan also ensures those who utilize our roads are paying for them. House and Senate lawmakers ultimately struck the right balance between funding Indiana’s greatest asset while protecting budget stability.”
Sen. Luke Kenley: “This shows an incredible commitment to the future of Indiana…Indiana does have infrastructure needs but this plan puts us on a glide path where we can maintain not only good roads and safe roads…but deal with our economic development as the Crossroads of America.”
Gov. Eric Holcomb: “I congratulate state lawmakers – particularly House Speaker Bosma, Senate President Pro Tem Long, state Reps. Soliday and Brown, and state Sens. Kenley and Crider – for their plan that will strengthen our global reputation as the ‘Crossroads of America.’ This plan provides the tools necessary to maintain what we have, finish what we started, and invest in the future.”