Widening Smith Valley Road could be funded with a bonding scenario that Johnson County officials discussed at Monday’s council meeting. Elissa Maudlin | Daily Journal
Bonding breakdown
Here is a list of projects that could be funded through a bond issue that the Johnson County Council and Commissioners are considering to spur on needed road projects.
Construction projects on the following roads:
- Bridge 137 and Fairview Road and Leisure Lane intersection
- Clark School Road — County Road 440 East to County Road 750 East
- Smith Valley Road — I-69 through Morgantown Road
- Smith Valley Road — Morgantown Road to Restin Road
- North Frontage Road
- South Frontage Road
- Transfer Federal Aid Local Matches
Right of way acquisition for the following projects:
- Bridges 61, 63, 71
- Morgantown — Smith Valley Road to County Line Road
Engineering design for the following projects:
- Morgantown Road — Smith Valley Road to County Line Road
- Morgantown Road — Smith Valley Road to Stones Crossing Road
- Morgantown Road — Stones Crossing Road to State Road 144
Engineering assessment for the following projects:
- County Road 300 South — Nineveh Road to Airport Road
- County Road 300 West/750 South — Trafalgar to Nineveh Road
- County Road 650 South — U.S. 31 to County Road 800 East
- County Road 800 East — County Road 650 South to State Road 252
- Airport Road — U.S. 31 to County Road 300 South
- Franklin SE Bypass — Old U.S. 31 to County Road 450 East
- Hurricane Road — Franklin City to Whiteland Road
- Nineveh Road — County Road 300 South to Brown County
- Spearsville Road — State Road 252 to Brown County
- Whiteland Road — Honey Creek Road to New Whiteland
- Whiteland Road — Whiteland Town to Hurricane Road
Three years ago, Johnson County officials estimated that roughly $382 million was needed for capital road projects. Now, the price tag is even higher.
Officials now estimate that about $530 million is needed to fund capital road projects, said Luke Mastin, highway department director. Although he presented a plan to pay for some improvements through bonding to the Johnson County Council on Monday, proposed bills at the Indiana Statehouse give officials pause.
Mastin and Highway Engineer Daniel Johnston say road funding and the county’s path forward to get roads where they need to be is complicated. Several factors are working against the county: inflation has caused construction prices to rise, there is a limited amount of tax money that can be allocated for roads, and grants the county can go after are competitive and typically require the county to match funds, they said.
Additionally, road projects have many steps that have to be taken before the county can “even turn a shovel of dirt,” Mastin said.
In 2022, the county council agreed to pledge additional funds to the highway department from revenue generated from the economic development income tax, or EDIT, through at least 2031. Approximately $4.4 million was given to the department from EDIT in 2023, but Mastin said it’s a small portion of the millions of dollars needed.
The council also allocated $3 million from the Rainy Day Fund to begin the engineering design and right-of-way services for the Smith Valley Road widening project and agreed to annually give approximately $4 million in income tax revenue for road infrastructure improvements to supplement the EDIT funds, Mastin said.
Using bonds would allow the county to get approximately $140 million more, which would provide funds for the four highest priority projects, Mastin said. These projects would be widening Smith Valley Road to four lanes from State Road 135 to Interstate 69, completing of two frontage roads on the east side of I-69, and completing the Worthsville Road connection from east of Greenwood to Shelby County. The Worthsville Road connection will upgrade Franklin Road and Clark School Road to better handle semi-truck traffic.
The bonding would also free up roughly $8 million in savings held for underway projects that could then be used for immediate maintenance. The county has also received $3.6 million in federal grants to help with the construction of two bridges that will need to be rehabbed as part of the Worthsville Road project.
County Road 144 was not included in the project list because it is a good potential candidate for the federal government’s BUILD grant program, and Bargersville may have funding options, Mastin said. Concrete neighborhood street reconstruction wasn’t included because the county can fund that with Community Crossings Matching Grant program from the state, he said.
Funding the department
The highway department’s main sources of funding are the motor vehicle highway fund, or MVH, and local road and street fund, or LRS, for maintenance work, Mastin said. The wheel tax is a local option funding source that counties can choose to supplement MVH and LRS.
MVH, LRS and the wheel tax are reserved for road maintenance expenses and come from fuel taxes and vehicle registration fees. The maximum wheel tax rate that a county could implement was raised a few years ago by the legislature, the county council in 2022 decided against raising the tax to the maximum. They did this because of the “somewhat unfair nature of how the registration fees are assessed,” Mastin said.
Monies in these three funds are separate from the general budget for the rest of the county. State laws dictate how taxes are spent, and much of the rest of the budget could not be reallocated to roads. For example, property tax revenue and many streams of local income tax revenue could not be used for road work, Mastin said.
It’s also not just about larger capital projects. The county maintains 600 miles of roads and Johnston said most roads need some sort of maintenance. The true cost to repair every single road is “an unreachable number,” Johnston said. It would be more than double what county officials can put toward the annual maintenance program, Mastin added.
Grant funding
With the help of Community Crossings, the state’s road funding matching grant program, the county has been able to fit more projects into its maintenance program.
For example in 2024, the highway department was able to do deeper asphalt paving on Morgantown and Peterman roads, which allowed the department to “essentially do about three times as much pavement removal and replacement,” Mastin said. Community Crossings has also helped the county prioritize converting crumbling concrete streets in older subdivisions to asphalt. The department wouldn’t have been able to afford the work like this without the grant, he said.
However, Mastin said Community Crossings caps out at $1 million annually and can’t be used for large capital projects. Community Crossings also requires a 50% local funding match whereas federal aid typically requires a 20% local funding match.
Grants, particularly federal ones, are “very competitive,” Mastin said.
“There are no guarantees that an application that we submit for a project is going to be selected and even if we are, we still have substantial local costs, local investment that’s required,” he said. “Those federal dollars do not fund those projects completely.”
Since awards are not guaranteed, Mastin said long-term planning is difficult and grant awards are typically capped at the initial award amount, so if bids come in higher than originally estimated because of inflation, the county has to make up the shortfall.
“This has been the case for the last several federal aid projects constructed by the county where additional local funds were needed to move the project forward than originally planned,” he said.
Mastin said the department had historically used money saved in their highway funds — budget amounts not spent by the end of the year that can be rebudgeted — to fund local matches for large projects. However in 2022, Mastin said the department reached the point where those savings were already assigned to projects underway, so there weren’t new federal funding application opportunities because the county couldn’t provide a match.
At that time, the county council moved eligible costs being paid from the general fund to the Correctional Facility Local Income Tax Fund — often referred to as jail LIT — which freed up $4 million of income-tax general fund revenue for capital road projects. They also adopted a 0.2% Economic Development Income Tax, or EDIT.
The highway department has been focused on Smith Valley Road, an approximately $55 million endeavor that was estimated to be fully funded in 2028 with EDIT and the general fund. Until that project is fully funded no work on any other capital road projects will occur, Mastin told the county council Monday.
Uncertain future
Although the proposed bonding scenario can help with road funding, the county won’t pursue bonding under after the 2025 legislative session ends later this spring.
Mastin said there are bills being considered in the Statehouse that could affect both road funding and property taxes. Senate Bill 1 would provide major property tax cuts with no replacement revenue. Other bills could also change local government revenue structure and sources significantly, Mastin said.
For example, House Bill 1461 would essentially make counties responsible for bridges within cities and towns, regardless of whether they have a Cumulative Bridge Fund, Mastin said at the commissioners meeting Monday morning. The county eliminated the Cumulative Bridge Fund in 2023 and would have to put it back in place. It was eliminated because the county couldn’t fund it to the right level without a “significant detrimental impact to the funding that’s available,” Mastin told the commissioners.
The delay in taking action on the bonding scenario won’t cause issues with implementing a bond, Mastin said at the Monday county council meeting. The county’s financial advisor Jeff Peters recommended the county look at bonding closer to the end of 2025.
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