A new state transportation funding bill would mean higher gas prices for all Hoosiers, but the impact could be bigger for convenience stores on the state’s borders.
Gas taxes would increase by 10 cents a gallon, in order to help create the projected $1.2 billion per year needed to maintain and expand state and local roads. The bill would also create potential new toll roads in the future and a $150 registration fee for electric vehicles.
The Indiana Petroleum Marketers & Convenience Store Association says the price increase could push people across the borders to purchase cheaper gas.
Indiana’s taxes on gas are already slightly higher than Kentucky’s most months, when including use taxes. If this bill passes, gas would be about 14 cents per gallon more in Indiana than Kentucky. By consistently going across the border to fill up Hoosiers could save an average of $90 per year, based on the average number of gallons Americans used in 2014 according to the Department of Transportation.
While most people agree something should be done to improve roads, some are worried 10 cents is too much. Mike Ackerman, the president of Ackerman Oil Company in Jasper, has both his own stores and others that he supplies to in Evansville and may feel the effects of people crossing the border.
“The concept of the bill is absolutely necessary, It’s just the amount of the raise might be more than the market will tolerate when comparing to our bordering states,” Ackerman said. “We already have a problem in Indiana with variation of cigarette taxes ... If we get too far out of wack with our neighbor, we’re going to create a similar situation with fuel.”
But, experts don’t think people will necessarily take advantage of the savings.
“I just don’t think (the gas tax is) enough of a boost, considering where gas prices are to make people do something different,” said Greg Wathen, the president of the Economic Development Coalition of Southwest Indiana.
Likewise Ball State economist Michael Hicks doesn’t think most Hoosiers across the state will even notice a difference in fuel prices, partially because fuel prices in general are pretty low across the country. He predicts there won’t be any huge increases in the near future.
The self-described “fiscal hawk” supports the gas tax increase, after Indiana’s gas tax has remained constant for years even with inflation.
“Today the state doesn’t really have a choice rather than to raise taxes in order to have enough revenue to finish
I-69 or handle congestion around Indianapolis, around Lake county, around Porter county, around Evansville and both Cincinnati and Louisville,” Hicks said. “We’re struggling to build through the builds we need.”
Another criticism of the gas tax is that it will be based on the annual index factor, meaning it likely will go up with inflation, without another bill signed into law. “We could be deep in a recession, and we could have suddenly a tax increase that an elected official didn’t vote on,” said Scot Imus, the executive director of the Indiana Petroleum Marketers & Convenience Store Association.
House speaker Brian Bosma (R-Indianapolis) acknowledged it’s challenging to ask the public to support a tax increase.
“For conservative elected officials that have championed tax cuts for the last 12 years... it’s difficult to step forward and say, ‘We’re as lean as we can get, and we have to have an investment in roads, and we’re willing to put a gas tax on the table,’” Bosma said. “That’s not without trepidation for conservative elected officials. I’m very comfortable with it; I know its the right thing to do for investing in our state’s economy. “