Road Funding Bill Now Travels to Senate

Chamber-supported HB 1002 was amended last week on the House Floor and then passed 61-36 largely along party lines and is now up for consideration by the Senate.

The floor amendment prohibits any new toll road within 75 miles of any other toll road, terminates the gas tax indexing after July 2024 and allows additional time for public comment before a significant road project begins. Earlier, changes were made to the bill to have all sales taxes collected on fuel costs to be designated for roads (currently it’s only a penny of the seven-cent tax) starting in 2018 versus a phase-in of the sales tax to roads over three years through 2021. This creates a potential general fund budget deficit of over $300 million a year that must be addressed, either through budget cuts or other identified revenue sources. Moreover, the Chamber will continue to advocate for a strong, user-fee based model to address Indiana’s $1.2 billion per year road funding gap.

Call to Action: Connect with your state senator via our grassroots page. Let them know today that long-term funding is important to you and your company!

Senators Challenge “Donor State” Issue

The term “donor” usually refers to a person who bestows something voluntarily – a vital organ to a person in need or blood to a blood bank; even someone offering money to an organization without expecting anything in return is considered a donor. 

But, Indiana’s title as a financial “donor state” in the federal transportation system has never been voluntary. (States that put more money into the federal transportation program than they receive out of it are considered donor states.) A total of 28 states have the moniker, and Indiana receives only 92 cents for every dollar given to the federal system.

To combat this inequity, Indiana Republican Dan Coats has joined with several other senators from around the nation in introducing the State Transportation Flexibility Act, legislation that would allow states to opt out of federal highway programs. The act gives states the flexibility to manage and spend the gas tax revenue collected inside each state on transportation projects without federal mandates or restrictions.

The federal gas tax is the biggest revenue generator for the federal highway trust fund. With more fuel efficient vehicles and people driving less on average, the gas tax has been pushed into a steady decline and the trust fund has been bailed out several times.

“For too long, Indiana has been a donor state and sent more gas tax dollars to Washington than it has received back,” Coats says in a press release. “This isn’t fair to Hoosier taxpayers, which is why I support the State Highway Flexibility Act. Hoosiers know our state’s transportation needs better than bureaucrats in Washington, and Indiana should be able to control its own resources.”

States that choose to opt out would have to continue to maintain the Interstate system in accordance with its current program, but all gas tax revenue gained inside its borders would be used at the state’s discretion on transportation projects without federal interference.

“Anytime you can eliminate a layer of federal bureaucracy from the state’s ability to govern, it is a good thing,” adds Sen. David Vitter (R-Louisiana) in the release. “The states know their transportation needs better than Congress, so let’s put them in the driver’s seat to manage their own gas tax.”

In 2009, Alaska received $3.28 for every dollar it put into the federal fund, the District of Columbia received $5.04 for every dollar and Montana, North Dakota, Rhode Island and Vermont had returns of greater than 200% that same year.

For more information on the federal highway transportation fund and the challenges Indiana faces with the current transportation funding system, check out the story "Stuck in Neutral" in the May/June 2011 edition of BizVoice®. 

Pay Here & Get Gas

The gasoline tax comes with its share of controversies. Add another one to the mix as a leading transportation columnist says it’s simply wrong to call the gas tax a user fee. Find out why he says that is important in the battle for future transportation infrastructure funding. Alex Marshall of Governing opines:

I went to the grocery store today and bought an apple. While eating it, I complained that proceeds from the sales tax I paid were used for other things than agricultural support programs.

This made-up anecdote is similar to how highway advocates, who I’ll call “road firsters,” talk about the gas tax, which they erroneously label a “user fee.” Road firsters criticize the planned high-speed rail lines for needing subsidies while saying that the gas tax is actually a user fee, which means roads are self-sufficient. This is logically and factually wrong.

A gas tax might appear to be a user fee at first, because you need gas to drive. But this confuses the meaning of the term.

To qualify as a user fee, you must have a choice as to whether or not you pay it. It also must relate directly to a particular service that you can accept or reject, and to the number of times you use that service.

When it comes to roads, a toll on a highway or bridge is a true user fee. If you don’t want to pay to travel on a limited-access expressway or bridge, you can choose a different route. And every time you use a particular highway or bridge with a toll, you pay a fee. You don’t pay one toll and then use the Golden Gate Bridge as many times as you like.

The same is true about paying a fee to enter a national park. That’s a true user fee. You can choose not use a park if you don’t like the fee.

But pretty much everyone in this country, except for a tiny percentage of people living in cities like New York, have to drive—to jobs, schools and grocery stores. We can’t choose not to buy gas any more than we can choose not to buy food.

Plus, once we pay the gas tax, we have no choice about where the money goes. When I fill up my car with gas, I can’t choose that the tax money goes to repair the potholes on my street instead of the brand new interchange on the other side of the state. However, once I do pay the gas tax, I can use one stretch of road or a bridge as many times as I like with no additional charge. That’s not a user fee. There’s a reason the gas tax is called a tax—because it is one.