1. Indiana’s 2017 road funding legislation
Laurie Maudlin
APPIAN

2. Goal: “Truth in Funding”
History of funding
Goal: “Truth in Funding”

3. History of funding Goal: “Truth in Funding”
Public private partnerships
Goal: “Truth in Funding”
Indiana Toll Road lease in 2006 – out of $3.8b lease deal, $2.8b went to roads. It was a huge deal, but one impact it had was that it went just to larger, non-preservation projects.
Authorized further use of P3’s in 2010.

4. History of funding Goal: “Truth in Funding”
Public private partnerships
Goal: “Truth in Funding”
Diversions
Diversions were a huge issue, costing the highway fund $140m at its peak. The funds went to the state police, to the bmv, to the department of revenue. In 2013, they were removed and these funds stayed with the road fund.

5. History of funding Goal: “Truth in Funding” Needs studies
Public private partnerships
Needs studies
Goal: “Truth in Funding”
Diversions
Governor Pence Blue Ribbon Panel convened in 2013.
FIRSST task force convened in 2016.

6. History of funding Goal: “Truth in Funding” Needs studies Sales Tax
Public private partnerships
Needs studies
Goal: “Truth in Funding”
Sales Tax
Diversions
Sales tax – 7 cents collected on gasoline and sent to the general fund. 1 cent in 2017 moved to roads, and then another 1.5 cents. Always a struggle because of the hole it left in the general fund. Estimates were up to $350M for a GF hit.

7. History of funding Goal: “Truth in Funding” Needs studies Sales Tax
Public private partnerships
Needs studies
Goal: “Truth in Funding”
Sales Tax
Diversions
General fund money appropriated for Transfers from general fund surpluses were moved to the highway fund.
LOIT reserves released in $323m to locals.
Other funds

8. Goal: “Truth in Funding”
History of funding
Goal: “Truth in Funding”
By 2017, all avenues had been explored, and still a funding shortfall.
RESULT? THERE IS STILL A NEED

9. Challenges Is there a shortfall? Conservatives/no taxes
No bipartisan cooperation
Not if, but how
Need $1B a year…but too large to solve with just one source
Challenges:
Do we really need to do this? Used the truth in budgeting argument, and then showed 11% of state pavement is “poor”…want to get to 95% of pavement fair or better.
The no tax argument was big – the Americans for Prosperity were vocal, as well as family groups (don’t hurt the young families), and the tea party. None said that it wasn’t needed, but all wanted to use existing resources and cut other programs.
Democrats did not vote for the bill until the very end. Passed and then (got 8 democrats) and and (did have some dems all along in the senate).
Not if, but how….how do you tackle such a big issue? No one source is going to get us there, and is it even possible to raise $1b without damaging hoosiers?

10. messaging
Messaging:
Last increase in 1993, diesel hadn’t been increased since 1988
Don’t leave it to our kids and grandkids
Conservative message of taking care of problems without debt
Helps state and locals
Front loaded for locals
Community crossing grants
Stable, known sources went to locals
Had some high profile road issues (bridge closures, bad conditions on interstate)
Media was supportive of legislation
Polling was 62% in favor of gas tax increase

11. 2017 legislation Gas tax increased by 10 cents and indexed
Diesel tax increased by 10 cents, indexed
Surcharge increased by 10 cents, indexed
Sales tax moved to highway fund
IRP fee increased by 25%
Registration fees increased by $15
Electric and hybrid fees instituted - $150/$50
Additional wheel tax authority for cities and towns
Authorized tolling in future
Our gas tax was 18 cents, split between state and locals. It had been a 53/47 split, but had to change it account for the extra funds going to the locals. The indexing on all goes for 7 years and then has to be renewed. There is a 1 cent per year cap.
Diesel tax was split between state and local. It had been 16 cents.
The surcharge was an extra trucking charge paid quarterly based on miles driven. Split between state and local.
Sales tax just to INDOT. Started with .75 cents beginning in 2020, full phase in by This was point of contention with the budget folks, who didn’t want to lose those general funds if an emergency happened. So through 2024, a decreasing portion of the sales tax transfer is eligible for the special transportation flex fund, which allows the governor to determine that the money should not be transferred if needed in k-12, health care or child services.
IRP and bmv fee increases split between state and local; statewide registration fee to locals
Electric and hybrid fees go to locals.
Allowed wheel taxes
Tolling – instructed INDOT to study tolling, and make a report to the legislative council and budget committee, required INDOT to submit a tolling waiver to FHWA, required state budget committee review before implementing projects
A major point of this is the future uncertainty of traditional revenues (thus the tolling piece)

12. Summary of new funding Gas tax $302M $423M Diesel tax $118M $196M
FY FY24
Gas tax $302M $423M
Diesel tax $118M $196M
Surcharge $112M $153M
Sales tax $55M $292M
IRP fee $36M $36M
Registration fees $43M $85M
Electric/hybrid $4M $20M
Wheel tax $5M $9M
Tolling
New lanes/2 interstates $178M
All lanes/2 interstates + bridge $1.23B
BOTTOM LINE: $617M in FY18 growing to $1.209B in FY24*
*(without tolling)
The tolling piece has continued to evolve. INDOT did a more indepth study and found that tolling 6 interstates would provide 1.3b a year (85% chance) up to $1.86b a year (50% chance). But late this past year, Gov Holcomb decided not to move forward with tolling (possibly because 1/5 approves tolling), although he does leave it open for a future governor to look at, and if needed, will look at other funding solutions.

13. What is the impact? Pre-1002: 2018 - $807 (now $1169)

14. Looking to the future Protect our gains
Reducing impact of revenue declines

15. Questions?
Laurie Maudlin