INDIANAPOLIS — House Democrats unveiled an infrastructure funding plan Monday that relies on significant state spending cuts, budget shifts and freezing already approved business tax reductions to pay for four years of road projects.
The Democrats' "No New Taxes" plan was presented as an alternative to House Bill 1002, sponsored by state Rep. Ed Soliday, R-Valparaiso. Soliday's bill proposes tolling highways and raising fuel taxes and vehicle fees to fund two decades of road and bridge projects.
"It is not necessary to have new taxes or tolls in order to reinvest in our roads and bridges," said House Democratic Leader Scott Pelath, D-Michigan City. "The problem we've had up to this point is not a problem of revenue, it's been a problem of priorities."
The Democratic plan re-prioritizes all state spending toward roads by cutting some $300 million a year from state agencies, which Pelath claimed could be found in "waste, fraud and abuse," and using that money for highway repairs.
It also generates another roughly $300 million a year by requiring all sales taxes collected from gasoline purchases be spent only on roads, just as revenue from the 18 cents per gallon state gasoline tax is.
Currently, one-seventh of gasoline sales tax revenue is dedicated to roads. The remainder is deposited in the General Fund that pays for nearly all other state spending, primarily education.
Pelath said the estimated $604 million hole in the 2018-19 state budget created by shifting gasoline sales tax revenue to roads would be covered using funds from Indiana's $2.1 billion budget reserve.
The plan also calls for halting the previously enacted step-down in the 6.25 percent corporate income tax rate to 4.9 percent by 2021, instead leaving the rate at 6.25 percent and thereby preserving about $65 million a year in state revenue.
"We already have a great business tax climate here in Indiana," Pelath said. "That great business tax climate is going to continue, but we're going to prioritize our roads and bridges."
In contrast to the Republican roads proposal, which focuses mainly on state roads, the Democratic measure — set to be formally submitted Wednesday to the House Ways and Means Committee — devotes a majority of its spending to local road maintenance needs.
It also gives locals the power to help themselves by turning a $500 million state trust fund, left over from the 2006 lease of the Indiana Toll Road, into a revolving loan account for local governments to borrow from at low interest rates for infrastructure projects.
Soliday was not impressed by the Democratic plan.
He said it does little to address the state's long-term road funding needs, especially after 2021 when higher federal fuel mileage standards are expected to crater state gasoline tax revenue absent the inflation adjustment included in the GOP proposal.
"The door is always open for a bipartisan solution, but we refuse to kick the can down the road," Soliday said. "Our plan is backed by years of study, producing a data-driven, lasting solution to Indiana's infrastructure needs that does not create debt for future generations."
Pelath insisted there's still room for compromise and noted the Democratic plan relies on some ideas generated by anti-tax groups that usually favor Hoosier Republicans.
"You can have a substantial investment without doing what they propose," Pelath said.