Bosma urges Holcomb to get behind tax hike for Indiana roads

January 12, 2017

The speaker of the Indiana House urged new Gov. Eric Holcomb on Thursday to make a strong push for a tax hike to pay for much-needed road and bridge repairs, a politically tricky sell in a conservative state that has long resisted higher taxes.

Speaker Brian Bosma said it was "important" for his fellow Republican to vocalize his support and convince voters that it is important for the Legislature to raise revenue through increased gas taxes or vehicle fees.

Holcomb has made a 20-year infrastructure plan one of his top priorities for the upcoming session and will elaborate on his concerns during his first State of the State address next week, spokeswoman Stephanie Wilson said in an email to The Associated Press. As for paying for it, Holcomb is "keeping all options on the table," she said. He previously said that he is open to raising the gas tax, though he hasn't indicated how much of a hike he would support. GOP leaders in the Senate have not said what would be palatable to them.

Despite a lack of consensus on how to go about raising the money, there's widespread agreement on the need to quickly improve infrastructure. Indiana has received mixed ratings for its roads and bridges, and consultants say the state hasn't spent enough on road maintenance or improvements.

If Holcomb actively campaigns for a tax hike, it could go a long way in selling the idea to voters, who have reliably voted for Republicans in recent years, creating GOP supermajorities in both chambers. The state GOP has proudly cut taxes over the last decade and a reversal of that trend is unusual for a party that has long been associated with an anti-tax philosophy.

"The governor will continue to work with legislative leaders as the session progresses to achieve a plan that maintains what we have, finishes projects we've started and invests in new projects for the future," Wilson said.

Bosma acknowledged Thursday the difficulty of asking conservative elected officials to raise taxes, but added he's confident the House Republican bill contains the "best, fairest and most conservative means of funding infrastructure."

"I'm very comfortable with it. I know it's the right thing to do for investing in our state's economy," he said.

The House plan would increase the cost of fuel at the pump by 10 cents a gallon, while requiring vehicle owners to pay an additional $15 a year registration fee. It would also make it easier for local governments to raise money for infrastructure by allowing more small towns to impose local vehicle registration taxes.

Senate Republicans have agreed that new revenue and road improvements are needed, but haven't offered much more at this point.

In a news conference about the caucus' legislative priorities, Republican Senate President David Long said he expected a final road-funding solution to be made up of a "mix" of revenues, declining to predict the exact composition of taxes and fees a Senate-backed bill might include.

"Something should pass, something really needs to pass," the Fort Wayne lawmaker said. "We cannot kick this can down the road."

The proposed tax increase comes as Republicans in both chambers have preached the importance of fiscal restraint when crafting the state's two-year budget, particularly as the state brought in about $300 million less than expected this year.

Democrats, meanwhile, note the state is sitting on about $2 billion in reserves. Some have questioned whether tax hikes are the best avenue for raising revenues and challenge what some call a regressive tax on gasoline, in a state that has consistently cut or capped corporate taxes.

The GOP-led Legislature passed an income tax cut and also backed plans to eliminate taxes on inheritances over $100,000, cut corporate tax rates and cut property taxes while increasing the sales tax in recent years—moves that some experts estimate eliminated about $650 million from the state's budget.

It's estimated the House Republican road proposal would raise about $300 million in its first year and about $480 million in 2019.


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