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Senate panel advances road-funding plan after adding tire tax

March 28, 2017

The Senate Committee on Tax and Fiscal Policy has put its stamp of approval on a modified infrastructure funding plan that the GOP majority says is a top priority this session.

Committee Chairman Brandt Hershman's committee on Tuesday made substantial changes to much of the fine print of the House Republican proposal. One new provision is a $5 fee that would be charged on the sale of each tire sold in the state.

Many of the other tax-raising provisions remain, including a $15 vehicle registration fee, a 10-cent gasoline tax increase and a diesel tax increase, albeit slightly reduced. A proposal allowing the governor to seek interstate tolling also remains.

And the amended bill would also increase annual fees charged on commercial vehicles.

But one big change would eliminate a major source of roads funding sought by the House GOP. They had proposed redirecting more of an existing sales tax that is charged at the gas pump in addition to the state's per-gallon fuel tax. Much of the fuel sales tax money — which is different from the per-gallon fuel tax—is currently used to pay for other programs, but House Republicans said redirecting all of it to roads could yield more than $300 million for infrastructure improvements.

Hershman, of Lafayette, didn't rule the idea out for the session, but said he didn't want the provision included in the bill. Other Republican leaders in the Senate concurred, including Appropriations Committee Chairman Luke Kenley, of Noblesville.

All told, the bill, as it currently reads would bring in about $670 million for road funding beginning two years from now, according to Senate estimates. That's still shy of the more than $1 billion increase in yearly infrastructure spending lawmakers estimate is needed.

Kenley said allowing tolls on interstates is a good way to provide the rest of the needed money, especially once tax revenues from fuel sales plummet as new vehicle efficiency standards go into effect in the coming years.

"Ultimately, this is a resource that does not continue to diminish like the gas tax does," Kenley said.

Negotiations on the measure are bound to continue in the waning days of this year's legislative session, which will adjourn in late April.

Finding a way to pay for maintenance and improvements to Indiana's aging infrastructure has proved to be a vexing challenge for lawmakers in recent years. Borrowing money, tapping the state's $1.8 billion reserve fund or cutting other programs are non-starters. And Republicans say they want a dedicated stream of funding for roads, paid for by people who use them the most—hence the fuel- and vehicle-related charges they have proposed.

But it's an awkward conversation for GOP-dominated Statehouse after repeatedly cutting taxes over the past decade. Unlike those cuts in income taxes, property taxes and corporate taxes, which favor those who pay the most taxes, the tax hike Republicans are pushing this year would affect motorists of all economic backgrounds.

Democrats have repeatedly pointed out that Republicans are happy to continue phasing in a large scale corporate tax cut while asking the middle and working class to pay more for infrastructure.

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