INDIANAPOLIS— Indiana House Republicans want to increase gas and cigarette taxes to pay for improvements to the state’s poorly rated roads — a proposal they say offers a long-term alternative to Gov. Mike Pence’s rival plan that would boost infrastructure spending in the short-term without more taxes.
“This is a small price to pay … for enhanced roads, enhanced bridges and economic infrastructure that is very critical to create jobs, to maintain jobs,” House Speaker Brian Bosma said Monday after formally releasing the plan.
Lake County Democrats and Republicans picked sides over the issue, with Dems backing the GOP bill and Republicans backing away from a tax increase.
If ultimately approved by the Legislature, the plan would pump $500 million a year into roads spending, with the majority of it going toward maintaining existing infrastructure, said Bosma, who estimated the average motorist would pay $25 more each year in gasoline taxes.
Smokers would be on the hook for considerably more, paying an additional $1 in taxes on each pack of cigarettes. The plan would also change the way lawmakers spend a portion of current gas tax revenues, redirecting some gas tax money from other priorities back to roads. It would give municipalities with a population greater than 20,000 the authority to raise their own vehicle registration taxes to help pay for local improvements.
The condition of Indiana’s crumbling roads has emerged as a major issue not only for lawmakers, but also on the campaign trail. There is a major division among majority Republicans over how to do so, with Pence and the Senate leaders signaling they are at odds with the House.
Hammond Mayor Thomas McDermott Jr. said that he plans on testifying Wednesday in support of the bill by Rep. Ed Soliday, R-Valparaiso. McDermott said it’s hypocritical for state legislators to rant against interference by the federal government but then to take control away from the towns and cities in determining whether they want to raise local taxes for roads.
“If I raise taxes and taxpayers don’t support that, I trust the taxpayers to take care of that problem,” McDermott said.
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McDermott noted that Hammond’s revenue is down $12 million from before property tax caps went into action and that, although he’s not sure he would want to raise local taxes for roads, it’s an issue he would at least discuss with the Hammond City Council.
The gas tax of 18 cents a gallon has not been increased in more than a decade. Pence, who is facing a tough re-election, has frequently touted the fact that his own roads funding plan would not raise taxes — a statement he has reiterated in email blasts to campaign donors. He proposed borrowing $240 million while drawing $241 million from the state’s budget reserves to boost short-term roads spending in 2017. 18c a gallon 4
That idea got a frosty reception from the House GOP last October when Pence first announced the plan — a dynamic that was reversed Monday when the governor gave a less-than-receptive welcome to the House’s plan.
“Governor Pence believes the last place to look when we have the best credit rating and $2 billion in reserves is in the pocketbooks of hardworking (Indiana residents),” spokeswoman Kara Brooks said in a statement.
President Pro Tempore David Long, a fellow Republican, declined to comment on the House plan Monday, though he was receptive to Pence’s proposal when it was first announced.
Tension between Pence and Bosma has been noticeable recently, most notably over policy differences — though both deny there’s any animosity between the two.
“Despite reports to the contrary we have a great relationship and we’ll talk about this,” Bosma said Monday. “There’s a lot of time yet for these discussions to transpire.”
Bosma also said that he has established “street cred” as someone who has previously pushed a long list of tax cuts through the Legislature.
The House plan is supported by the Indiana Chamber of Commerce, which dismissed Pence’s idea as “just another stop-gap proposal.”
But it drew opposition from Americans for Prosperity — the main political advocacy group for Charles and David Koch, billionaire brothers who spend millions on conservative causes. The group said in a statement that lawmakers need “prioritize existing tax revenue for transportation funding needs rather than hiking the gas tax and otherwise take more money from Hoosiers’ wallets.”
Lake County’s two Republican councilmembers say they are not ready to support a tax increase for road funding.
Both Councilman Dan Dernulc, R-Highland, the county’s Republican Party chair, and Councilman Eldon Strong, R-Crown Point, said they have not yet seen the House GOP plan.
“The short answer is until we exhausted every avenue of any type of revenue, no…I’m not a taxing person,” Dernulc said.
Dernulc acknowledged a tax increase may be needed at some time to deal with road and bridge improvements, but now is not that time. Dernulc said he is willing to see what can be accomplished with the governor’s plan. He says local officials need to lobby state government for every dollar that may be available before new taxes are implemented.
“I want to make sure we exhaust every aspect of waste in government,” Dernulc said, adding he does not know where that waste exits, but until he is comfortable all efforts have been made, he will not be supporting a tax increase.
Strong said he could not support a tax increase at this point.
“We have too much stuff internally we have to do at the county level (before a tax increase),” Strong said.
Currently, the county is using some of its motor fuel tax revenues to pay for highway department salaries and benefits. He said in his opinion salaries should be paid for through the general fund and the gasoline tax revenues be used for road and bridge work as intended.
“We need to do some stuff ourselves before we start going to the people for more money,” Strong said.
Gary Mayor Karen Freeman-Wilson praised Soliday’s bill for creating opportunities to fix crumbling roads. “It’s innovative,” she said of the option for cities with more than 20,000 people to raise the wheel tax.
Freeman-Wilson said citizens might not complain. “I think they would be willing to pay it if it continues the paving.”
Freeman-Wilson said she didn’t think the city would use the CEDIT increase option.
Staff writers Carole Carlson and Teresa Auch Schultz and freelance reporter Carrie Napoleon contributed.
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