The Indiana Department of Transportation will launch an expansive study seeking new ways to finance road construction and maintenance, according to a bill passed by the Indiana legislature awaiting the governor's signature.
House Bill 1104, authored by Rep. Ed Soliday, R-Valparaiso, authorizes INDOT to contract with a third party to study methods that could be used to fund the state’s infrastructure.
The bill comes as revenue from Indiana’s gasoline tax has stagnated or fallen, in part because the increased fuel economy of most modern vehicles means Hoosiers are buying less gas. That’s raised concerns among lawmakers that the state might not have the cash it needs in the future to keep up with road construction.
Federal officials are facing similar questions.
“Infrastructure across America is falling apart,” Soliday said. “The gas tax and the diesel fuel tax is a fixed number. It hasn’t been raised for years. Inflation is eating away at that money.”
Although the gas tax has consistently been relied on to fund the state’s road projects, the tax is set at a fixed rate – one that hasn’t increased since 2003 – and does not account for inflation. That means that the amount of money generated by the tax and available to use on statewide transportation continues to decline.
“We think the study is extremely important because the sources of fuel for various types of vehicles is changing and our current funding system hasn’t kept up with that,” said Kevin Brinegar, president of the Indiana Chamber of Commerce. “Solving and addressing this challenge is a high priority for us.”
Dennis Faulkenberg, a transportation consultant and noted expert, refers to the gas tax as “bread and butter funding” and pointed to the use of the funds for non-highway expenditures as a partial reason for the state’s dilemma.
Faulkenberg also said he hopes the study will find new ways of addressing the funding situation.
“Hopefully the study might bring some things forth that we might see that we don’t know of today,” he said.
Comparatively, the price Hoosiers pay for the upkeep and maintenance of their state’s roads and highways is relatively low. Soliday said the average person, driving about 12,000 miles per year, pays roughly $100 a month in gas tax. He related the cost to a monthly cell phone or cable television payment.
“Which contributes more to our economy?” Soliday said. “The roads or cable TV?”
Among the options expected to be explored are a “miles traveled tax” and an additional fee for owners of electric and hybrid vehicles. The miles traveled tax – which other states are currently exploring – would track the number of miles traveled by a particular vehicle and use the information to calculate a tax rate.
That option has become a controversial alternative elsewhere because the tracking devices has raised privacy concerns. Faulkenberg said the study might look at how the tax could be implemented while still addressing that issue.
The miles traveled tax has also received criticism for the cost of collecting the information from the sensors on each vehicle.
“From studies I’ve seen, the cost of collection for that are about 16 times the cost of collection for the fuel tax,” Soliday said.
Soliday said those costs and the overall amount the program might raise are key metrics when considering any potential road-funding alternative.
“I want to know what the costs of collection are,” he said. “I want to know what it will raise and what it will cost to raise it.”
Under the bill, the study, conducted by INDOT and a contracted third party, must not last longer than two years and will include an inventory of Indiana’s transportation infrastructure.
INDOT declined to discuss the details of the study until Gov. Mike Pence signs HB 1104 into law. But officials released a statement expressing their support for the bill.
“INDOT supports House Bill 1104,” the statement said. “But it would be premature and speculative for us to discuss the bill until it is signed into law by the governor.”
The bill will also pass into law by March 28 if Pence does not veto it.