Road bill with gas tax increase clears House

February 3rd, 2016

News Coverage:

February 3, 2016

Road bill with gas tax increase clears House

NIKI KELLY | The Journal Gazette

INDIANAPOLIS – The Indiana House voted 61-36 Tuesday to move forward a massive road funding bill that provides billions in new infrastructure dollars but comes with a price – tax increases. 

Eight GOP members voted against the bill even though House Bill 1001 has been deemed the top priority for the House Republican caucus.

“It’s a great bill because it’s taking us in a direction where we are leading,” said Rep. Matt Lehman, R-Berne. “And that’s what we are here to do – lead.”

He talked about political will – in an election year – and noted he never signed a pledge not to raise taxes just in case someday doing that was the right thing to do.

The discussion was passionate and long on the House floor.

Three area representatives voted against the bill – Rep. Phil GiaQuinta, D-Fort Wayne; Rep. Chris Judy, R-Fort Wayne; and Rep. Curt Nisly, R-Goshen. All other area reps supported the measure.

The bill has a number of provisions, including studying tolling on Indiana’s interstate highways for future funding.

But one of the most important parts of the legislation would tie the state gas tax to inflation going back to 2002 (the last time it was raised) to regain some of the buying power.

This would essentially raise the gas tax of 18 cents per gallon about 4 cents – at a time when gas prices are historically low. That change is expected to cost the average Hoosier taxpayer $25 a year.

The second part of the proposal would shift all money derived from the state sales tax on fuel purchases to roads. Currently, most of it goes into the general fund and pays for a variety of state programs.

The shift is about $480 million to $500 million, which is why the bill also calls for a doubling of the cigarette tax from $1 per pack to $2 per pack. That money, along with a registration surcharge on electric vehicles, would fill the gap caused by redirecting the sales tax money.

The GOP inserted a future income tax cut into the bill last week to try to garner more support.

Democrats said Republicans wouldn’t need to raise taxes if they hadn’t cut tax after tax in recent years – from corporate to income to inheritance – which has cost state coffers billions.

“We’ve had all the revenue you ever wanted to fund this road dilemma,” House Democratic Leader Scott Pelath said. “You let it go.”

He also said that the tax cuts have helped the rich disproportionately while the tax increases will hit lower income Hoosiers.

“We’re back here raising taxes on regular Hoosiers,” said Rep. Dan Forestal, D-Indianapolis.

House Speaker Brian Bosma said the comprehensive road-funding package spurs economic growth and is fiscally responsible.

“In fact, the addition of a personal income tax cut in the bill means this proposal would be revenue neutral once fully implemented.”

The bill now moves to the Senate, where its future is uncertain.

That chamber has been pushing a separate plan by Gov. Mike Pence to provide $1 billion in short-term funding to the Indiana Department of Transportation for maintenance but leaves the long-term discussion of how to fund roads for another day.

His plan would rely on surplus dollars and bonding, as well as future spending by lawmakers. It has no tax increases.