House Republicans eye tax increases to pay for Indiana roads

House Speaker Brian Bosma, R-Indianapolis, declared Wednesday the state needs "responsible, comprehensive, sustainable solutions" to its road funding quandary, and short-term, partial fixes that put off tough decisions until after the 2016 elections aren't good enough.

"It's time for a strong adult conversation about maintaining our reputation and slogan as 'The Crossroads of America,' " Bosma said at the annual Bingham Greenebaum Doll Legislative Conference. The law firm sponsors the conference every December before the January start of the legislative session.

He explained House Bill 1001, co-sponsored by state Rep. Ed Soliday, R-Valparaiso, will propose adding $1 to the state's $0.995 existing cigarette tax to shift Medicaid health care costs attributable to smoking onto tobacco users.

That will free up approximately $300 million from the state's general fund for roads, and put Indiana on course to dedicating all the revenue collected through the 7 percent sales tax on gasoline purchases to highway construction and maintenance.

"Hoosiers, when they buy a gallon of gas, presume that every penny they pay either buys the gas or pays a tax that funds roads, and they deserve to have that presumption fulfilled," Bosma said.

Currently, only 1 out of every 7 cents collected in sales tax for each dollar of gasoline purchased goes toward roads. The remainder is deposited in the general fund used for education and nearly all other state spending.

Bosma said the legislation also will add 5 or 6 cents to the 18 cents per gallon state gasoline tax and index the gas tax to inflation.

That will ensure the rate automatically changes with the national economy, and without requiring future legislative action, to ensure its purchasing power remains constant, he said.

"Some will say that's a tax increase. Well, it's a revenue enhancement," Bosma said. "Most Hoosiers realize that we've got to fund an infrastructure that's got a lot of wear and tear on it and they're willing to do it, according to those I've spoken with and surveyed."

He said the measure additionally will provide flexibility in spending county income tax revenue for roads, establish a state matching grant program for local bridge funding and permit larger municipalities to adopt a wheel tax if their county chooses not to.

Lawmakers also will study whether to toll Interstates 65 and 70 across the entire state, starting possibly by the end of the decade, to pay for an extra lane in both directions on those highways and ongoing maintenance.

"Can it be done in a short session that also happens to be an election year? I don't know the answer to that," Bosma said. "But we're certainly going to give it the very best effort we can."

None of the other road funding plans, separately proposed by Republican Gov. Mike Pence, House Democratic Leader Scott Pelath, D-Michigan City, and state Sen. Brandt Hershman, R-Buck Creek, include tax increases.

They all rely on a variety of one-time revenue, long-term borrowing or reprioritizing future appropriations to spend between $1 billion and $2 billion on roads and bridges over just the next four years.

Road funding is expected to be a top issue when the Republican-controlled Legislature convenes its 10-week session Jan. 5.