State Republican lawmakers are on the right track in trying to raise “user fees” to fund Indiana’s roads.
They have proposed lifting the gas tax rate by indexing it to inflation and are considering tolls on Indiana’s existing interstates.
Gov. Mike Pence doesn’t like these ideas. He has ruled out new interstate tolls and a hike to Indiana’s 18-cents-per-gallon gas tax. That rate has remained steady since 2003 even though more fuel-efficient cars have reduced the actual tax Hoosiers pay each year by $42.5 million.
This is an odd stance, given the governor’s conservative political leanings.
User fees were championed for decades by conservative economist Milton Friedman as clearer, fairer and more efficient funding methods than, say, income taxes.
President Ronald Reagan more than doubled the federal gas tax in 1983, even though he had staked his presidency—and the economy of the country—on sharp reductions to income taxes.
“Our country’s outstanding highway system was built on the user fee principle—that those who benefit from a use should share in its cost,” Reagan said. “It is appropriate that we rely on this same concept now.”
Even Pence’s own Blue Ribbon Panel on Transportation Infrastructure, whose July 2014 final report is still on the governor’s website, recommended “user fees.”
Instead, Pence has floated a short-term, $1 billion plan that relies on appropriating $150 million more per year, borrowing $240 million and spending down the state’s fiscal reserves by a similar amount. That means using revenue primarily from income and sales taxes to hold down transportation taxes.
“I don’t believe we need to look to Hoosier motorists to pay more of their hard-earned dollars when we’ve got money in the bank and we’ve got the best credit rating in the country,” Pence said during an October press conference announcing his transportation funding plan.
The conservative lobbying group Americans for Prosperity has backed up Pence, blasting the idea of a gas tax hike in Indiana as a drag on the economy.
But that’s shortsighted. Indiana’s logistics and manufacturing industries, which employ one of every five Hoosiers, benefit from four interstates that allow trucks to reach 75 percent of the U.S. population within 24 hours.
And even small-government conservatives have long contended that public investment in roads makes sense, because it helps private citizens and businesses create wealth.
“We need a modern system of roads and highways to carry our people to and from work, to haul the products of our industries and farms to market, to help maintain a dynamic and prosperous economy, and to make travel safer for our people,” Reagan said in 1973 while governor of California. “That is a legitimate and valid goal. It is something that government must recognize.”
Indiana’s roads deserve a funding solution for the long haul, not more budget gimmicks designed to win the next election cycle.•
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