Road Funding Bills, Regional Cities Funding Headed Down to the Wire

?????????????????????????????????????????????????????????????Several bills attempting to address Indiana’s transportation infrastructure and regional economic development are headed toward eleventh hour conference committee deliberations where differences in approach between House Republicans and Gov. Pence/Senate Republicans will need to be hashed out. It is a high-stakes game in an election year.

House Bill 1001 is the House Republicans’ original effort to create a long-term, sustainable and dedicated funding source for Indiana’s roads, highways and bridges. It attempts to address a near $1 billion annual maintenance shortfall through indexing existing fuel taxes to inflation, dedicating the sales tax on fuel sales to infrastructure (vs. the state’s general fund), increasing taxes on cigarettes to refill the state’s general fund coffers (which support the state’s Medicaid program), imposing fees on alternative fuel vehicles, and supplying local units of government with expanded fiscal tools and taxing authority for roads. The Indiana Chamber worked with legislators on this bill and supports this comprehensive, data-driven approach.

Senate Bills 67 and 333 (as they started in the Senate) reflect Gov. Pence’s and Senate Republicans’ desire to avoid any tax increases for roads this year and delay any major decisions on road funding until the 2017 budget year, while also giving some money and tools to local units of government. At best, these proposals are short-term fixes to a long-term problem and the Chamber prefers the House Republican legislation.

Add to this mix Gov. Pence’s request for an additional $42 million for a third Regional Cities grant award, and you have plenty of fodder for lengthy, contentious negotiations with a March 10 deadline looming. Leadership from both chambers has been meeting with the Governor and his staff to hammer out a compromise proposal. As of this writing, negotiations are occurring behind closed doors and in caucus discussions with both sides remaining far apart. Meanwhile, Democrats in the Legislature watch as Republicans battle among themselves over the “right” compromise package.

We anticipate that the third Regional Cities grant will be funded in some way and that some short-term road funds and expanded authority for local governments will emerge. Whether or not the tax increases in HB 1001 survive the negotiation is an open question. The Chamber will work with all parties to address the state’s road-funding needs in the most rational and comprehensive way possible.

Senate Committee Amends House Roads Bill; Another Task Force Created

30449450The political wrangling between the House and Senate over the roads bill is in full swing. This bill has been substantially altered by the Senate Appropriations Committee at the direction of its chairman, Sen. Luke Kenley (R-Noblesville). Essentially, Kenley’s amendment removes all tax increases and decreases from the bill and establishes a task force to further assess the state’s needs for road funding – putting off difficult decisions to 2017.

Meanwhile, the original language of HB 1001 was inserted into SB 333, the Governor’s roads plan. Both bills are set up for conference committee negotiations. We expect the discussions and subsequent vote on this one will go down to the wire.

The Indiana Chamber has worked with legislative leaders as they attempt to address the state’s transportation infrastructure needs and nearly $1 billion annual maintenance deficit. The original language of HB 1001 represents a rational, long-term and sustainable system for roads, highways and bridges and is the Chamber’s preferred approach at this time.

Any movement is positive movement at this point and there are many elements to like in Kenley’s amendment, but another task force or working group (or whatever you care to call it) is viewed as unnecessary given the amount of timely studies and commissions that have already looked at the state’s infrastructure needs in recent years. The Chamber will work with all interested parties to address the state’s needs in the most rational and comprehensive way possible.

Call to Action: Please urge your representative and senator to support a long-term fix for Indiana’s roads and highways; you can do so online. Fuel taxes have not been raised in more than a decade and no other short-term policies will address the state’s needs as well as a set of comprehensive policies in the original HB 1001 language. No other legislation even comes close, even though short-term funding is helpful.

Speaker Links Regional Cities Expansion to Long-Term Road Funding

statehouse-picSB 302 passed the Indiana Senate 35-15 on February 1, but House Speaker Brian Bosma (R-Indianapolis) stated this week that the measure won’t clear the House Ways and Means Committee “without extra help.”

The bill does the following:

  • Specifies the manner in which certain excise taxes and local taxes collected under the tax amnesty program shall be distributed
  • Provides that after making the distributions required under the tax amnesty program, the next $42 million collected under the program must be deposited into the Indiana Regional Cities development fund
  • Provides that any remaining amounts collected under the tax amnesty program shall be deposited in the state bicentennial capital account (rather than the state general fund, under current law)
  • Specifies that revenue received from the rental of certain communications system infrastructure shall be deposited in the state general fund (rather than the state bicentennial capital account, under current law)
  • Appropriates $42 million from the Indiana Regional Cities development fund for the purpose of funding a third grant under the regional cities initiative

The Indiana Chamber endorses regionalism and place-making strategies that the Indiana Economic Development Corporation’s Regional Cities program embodies and that this legislation seeks to supplement. Separately, we appreciate Speaker Bosma’s efforts to use this bill as leverage to assist his plan for long-term road funding (HB 1001); that’s the transportation bill that the Chamber fully endorses.

This week, Bosma essentially said give and take will need to occur to get House legislators over the hump after they feel they held up their end of the bargain by passing the Regional Cities statute for two locations last session, only to now have the Governor expand the parameters to request dollars for a third location.

Ultimately, the Chamber would like to see both the Regional Cities expansion and HB 1001 – in its full form – become law this session and will be intently working toward that goal.

RFRA 2.0 and Road Funding

statehouse picElection year dynamics, conservative Republican super majorities and the non-budget nature of the “short” session create the context for all issues facing the Indiana General Assembly in 2016. In economic development, the only issues to see much traction are adding LGBT civil rights protections to the Indiana Code and a short-term fix for the state’s roads and highways with an emphasis on local funding. Other issues will arise, but are unlikely to gain much attention.

Last spring’s rancorous debate over the Religious Freedom Restoration Act (RFRA) damaged Indiana’s brand in the international marketplace for jobs and investment. It led to an economic boycott of Indiana, a viral trashing of our state’s reputation in the international media and a black eye for our state’s political leadership. Moreover, the enduring stigma attached to Indiana as a discriminatory and unwelcoming place, especially among a Millenial generation that represents our future workforce, endangers our prosperity. That is why the Indiana Chamber has made adding protections for the LGBT community in state law a priority for the upcoming session.

New legislation will start in the Senate, where Sen. Travis Holdman (R-Markle) has drafted a bill that attempts to strike a balance between the religious and LGBT communities. The bill, as it stands, will probably not make either of those constituencies happy. The synopsis prohibits discrimination based on sexual orientation or gender identity while also providing protection for religious liberty and conscience. Additionally, it also preempts local civil rights ordinances that conflict with the state civil rights law. Look for an interesting debate as the session progresses.

In the area of transportation infrastructure, the General Assembly likely will take only baby steps to address an acknowledged nearly $1 billion annual funding gap between current revenues and maintenance needs. Legislative leadership seems content to wait until 2017 before pursuing any significant changes to the way Indiana funds its roads, bridges and highways. Nevertheless, armed with the results of a major road funding study by the Indiana Department of Transportation (INDOT) presented over the summer, all legislators will be able to evaluate proposed solutions in 2016 – it is just unlikely that they will move on them, especially any tax or fee increases. (The INDOT study examined existing fuel excise taxes, their future revenue potential and alternative funding mechanisms and revenue streams, such as vehicle miles traveled [VMT] or tolling.)

The legislation to watch is HB 1001, which will contain a number of reforms and potential funding mechanisms based upon the initial data from the INDOT study. The Indiana Chamber collaborated with key legislators in crafting HB 1001, which can be likened to a block of stone delivered to a sculptor’s studio: It will be an array of many options that will be chipped away at during the legislative session, hopefully into something recognizable (and helpful) in the end.

The condition of our infrastructure has already become highly politicized with partisan accusations and dueling proposals from Gov. Pence, House Democrats and the Republican majority caucuses, but nevertheless we expect several issues to be examined in sobering detail: gasoline and diesel fuel excise tax increases; fees for electric or alternative-fuel vehicles; repurposing the 7% sales tax on gasoline for the state’s highway fund; and a discussion of indexing fuel taxes for inflation, among other proposals.

Given the controversial nature of these topics and a near allergic reaction by politicians to tax increases in an election year, we anticipate it will be a very contentious and interesting session.

Lawmakers Hear from INDOT on Road Funding; Gov. Makes $1 Billion No-Tax Proposal

30449450Two key events in recent weeks on the transportation front in Indiana: A long-awaited Indiana Department of Transportation (INDOT) study on long-term funding options for Indiana’s roads, highways and bridges was presented on Oct. 15 to the Interim Study Committee on Roads and Transportation; and just a few days before, on Oct. 13, Gov. Pence proposed a $1 billion, four-year plan for short-term transportation needs whose most prominent feature was no tax increases. INDOT Commissioner Brandye Hendrickson appeared with the governor at his announcement and testified before the interim study committee.

Hendrickson provided a broad overview of the state of Indiana’s roads and bridges during her testimony and INDOT’s study vendor, Cambridge Systematics, testified at length on the options available to the state to address long-term transportation funding, concluding that policymakers need to “decide what Indiana should invest in and how best to pay for it.” Both federal and state highway revenues are expected to decline in future years due to a number of factors, including increased fuel efficiency standards and more alternative-fuel vehicles hitting the roads.

All fuel excise tax revenues from the state’s highway fund are required for maintenance of existing infrastructure; no funding is available for expansion projects such as completion of I-69, adding lanes to I-65 or I-70, or new bridges across the Ohio River. Additionally, more than half of the state’s bridges are in the last 25 years of their useful life (50-plus years or older) and will need significant reconstruction or remediation in coming years.

Bottom line: The state needs more revenues to address a growing need for maintenance of existing infrastructure – let alone expansion of the state’s highway network.

Pence proposes a mix of bonding (debt), general fund appropriations and use of the state’s reserves in his “21st Century Crossroads” plan. His proposal would seek $450 million over three years to be appropriated by the General Assembly from the state’s general fund, $250 million to be used from the state’s reserve funds, $50 million from the state’s Next Generation Trust Fund (established by Major Moves monies) and roughly $240 million in new bond financing as existing debt gets retired or refinanced. The plan is short term in nature and, while tapping appropriate sources, needs the consent of the Legislature (where several Statehouse voices expressed reservations about the bonding aspect of the plan).

The Indiana Chamber would like to see a mix of increased fuel excise taxes, indexation, tolling, fees on alternative fuel vehicles and other tools based upon a “user fee” model discussed in the 2016 legislative session, along with the use of existing tax authority by cities, towns and counties to address the needs of local streets and county roads. Policymakers must make some hard choices with the support of the state’s business community to address the scale and scope of the challenge.

In short, the era of strategic investments fueled by the Major Moves program is over. The prevailing (default) practice of making stop-gap appropriations from the state’s general fund is not a reliable or strategic means to pay for future maintenance and upgrades to Indiana’s surface transportation network. Currently, we risk wasting strategic investments already made, and our roads and highways will deteriorate along with our reputation as “The Crossroads of America.”

Chamber Convenes Infrastructure Leadership to Discuss I-65, Long-Term Solutions

10049160The Indiana Chamber recently brought together a trio of the state’s top leadership on infrastructure issues to discuss Indiana’s current maintenance and funding challenges, including the closure of Interstate 65 near Lafayette due to emergency bridge repairs, and long-term solutions to an estimated $1 billion annual road and bridge maintenance funding gap.

Indiana Department of Transportation (INDOT) Commissioner Brandye Hendrickson, House Ways and Means Committee Chairman Tim Brown M.D. (R-Crawfordsville), and House Roads and Transportation Committee Chairman Ed Soliday (R-Valparaiso) appeared before the Chamber’s Infrastructure Policy Committee to share their views and hear the viewpoints of the state’s business leadership.

INDOT Commissioner Hendrickson stated that the I-65 closure represented significant logistical and engineering challenges and economic costs, but that the bridge repairs should be completed and the interstate back online by mid-September. She stated that INDOT was doing all it could to expedite the process, but that the bridge failure pointed to the state’s maintenance needs. A statutorily required study of potential funding mechanisms has been underway and will be made public at a legislative interim study committee this fall, most likely in October.

Both Brown and Soliday agreed that the state needs to commit for funding to road and bridge maintenance – and that was the case prior to the I-65 bridge incident. Brown suggested that revenue projections look pretty good for the $200 million appropriated to the 2020 fund to be deployed later this year, but acknowledged that more needed to be done – most likely in 2017, the next budget-writing session of the General Assembly. He also said he was open to using the $500 million in the Next Generation Trust Fund for immediate infrastructure maintenance needs. Brown would like to see a “consistent funding stream on an annual basis for transportation infrastructure” enacted in the future, but left all options on the table pending review of the INDOT study.

Soliday praised the INDOT study and described it as a “tool to look at a number of funding mechanisms and options”; he plans to hold a study committee hearing in October to review the tool and various options. Soliday said that the average Hoosier driving 12,000 miles/year pays about $108/year in taxes for transportation infrastructure and described that as a “bargain” compared to the average monthly cell phone or cable TV bills consumers pay. Both legislators were supportive of public-private partnerships and progress on existing road projects; they expressed frustration that county wheel taxes had not been more fully utilized to address local funding needs for local and county roads.

It was clear from the panel discussion that it is a question of when and how the transportation funding gap will be addressed, not “if” it will be addressed. Most likely, these issues will begin to be discussed in-depth in the 2016 legislative session with some supplemental funding being found, but that a longer-term solution will be waiting until the budget-writing process in 2017.

D.C. Fly-in with Congressional Delegation Sept. 16-17

7324001Don’t sit on the sidelines when you could be influencing laws and regulations under discussion in Washington. Make an impact by attending the Indiana Chamber’s D.C. Fly-in on September 16-17. (Note: Our hotel room block expires Sunday so book your reservations this week!)

The event offers business and community leaders an opportunity to speak with Indiana’s congressional delegation and key staff members during a roundtable discussion/dinner on September 16. The second day features a panel of national and state issue experts, followed by numerous group visits to congressional offices.

By September, the 2016 presidential campaign will be in full swing with a number of members of Congress running for re-election. Dominant issues in Washington and beyond will include transportation, tax reform, repatriation of overseas funds, Obamacare and immigration.

Cost is $149 per person and group discounts are available. Each attendee is responsible for securing travel arrangements. Discounted hotel rooms are available for Chamber Fly-in guests at The Liaison Capitol Hill. Register online.

(The D.C. Fly-in is sponsored by Zimmer. The breakfast program is sponsored by Faegre Baker Daniels. Additional sponsorship is provided by Duke Energy. Thanks to these fine businesses for their support.)

Chamber Promotes Life Sciences in D.C.

7324001The Indiana Chamber is a proud partner in Hoosiers Work for Health, which promotes the biopharmaceutical and life sciences industry, and visited with Indiana’s elected representatives in Washington, D.C. July 15-16 to discuss issues such as patent
reform, taxation and FDA regulatory procedures.

The Chamber joined several other Hoosiers Work for Health representatives for office visits on Capitol Hill. The group met with Reps. Susan Brooks (R-5th District) and Larry Bucshon (R-8th District), both members of the House Energy and Commerce Committee, as well as Rep. Todd Young (R-9th District), who serves on the House Ways and Means Committee. The group also visited with key staff members for Sens. Dan Coats (R) and Joe Donnelly (D) while the Senate held floor votes on an education bill.

It is clear from the conversation with Indiana’s elected officials that they understand the importance of the biopharmaceutical/life sciences sector to the economic health of Indiana. This sector directly supports more than 20,000 jobs across the state and generates $19 billion in economic output. By creating high paying jobs, biopharmaceutical companies build a strong foundation from which we can grow our state economy – providing stability and prosperity into the future.

Federal Highway Funding Deadline Nears

36601064The current federal funding stream for highways runs its course July 31. The Senate is looking at a four-year option, while the House appears more in favor of extending it through this year and soon revisiting the matter.

Every member of Indiana’s delegation is keenly aware of the situation. While in D.C. this week, the Indiana Chamber continued to advocate for a long-term solution to financing the federal Highway Trust Fund. A patchwork of re-authorizations that are often only for a few months is no way to manage transportation assets, set national priorities or plan for future needs. U.S. Transportation Secretary Anthony Foxx said in his letter this week to state departments of transportation:

“Congress’s failure to pass a long-term bill is of great concern to all of us who are engaged in the work of building and maintaining our nation’s transportation infrastructure. Careening from self-inflicted crisis to self-inflicted crisis undermines our system. We need Congress to break the cycle of short-term extensions; we need a long-term bill with significant growth.”

Chamber Supports Regional Cities Initiative, I-69 Route in Southern Marion County

HB 1403 establishes the Indiana Regional City Fund to provide grants and loans to regional development authorities. Provides that the Indiana Economic Development Corporation administers the fund. Provides that a city or town that is eligible to become a second-class city may become a member of a regional development authority.

The Indiana Chamber testified in support of HB 1403, joining many others. The Indiana Chamber endorses regionalism and place-making economic development strategies that this legislation seeks to enable. Both have proven effective and both are in line with the Chamber’s Indiana Vision 2025 economic development plan. How to fund the state portion of the regional cities initiative remains an open question and one which the Indiana Chamber is prepared to work with legislative leaders to find an answer.

The bill was heard in the House Ways and Means Committee on Monday. No vote taken; eligible for further committee action.

Furthermore, see the article on the Regional Cities Initiative in the January/February edition of BizVoice magazine.


HB 1036 removes the requirement that the General Assembly enact a statute authorizing the construction of I-69 in Perry Township (Marion County) before I-69 may be constructed in Perry Township.

The Indiana Chamber, along with many others, testified in support of HB 1036; no party testified in opposition to the bill. There is no valid reason that the current prohibition for I-69 in Perry Township, Marion County should exist in law. The Chamber’s position: The current prohibition should be repealed; all potential routes for the final section of I-69 should be objectively studied by the appropriate agencies of both the federal and state governments; and the route with the least environmental and best economic impact for the state should be chosen upon the merits, not upon any political clout or other considerations.

This bill was heard in the House Roads and Transportation Committee on Wednesday. No vote taken; eligible for further committee action.