Two bills passed by the Indiana General Assembly that would provide $800 million for state and local roads over the next two years are expected to be signed into law by Gov. Mike Pence.
Senate Bill 67 and House Bill 1001 are a joint victory for state senate and house Republicans who sought to increase funding for Indiana’s ailing infrastructure system this session without increasing the gas tax or borrowing money.
Road funding will be broken down like this: Indiana has kept about 50 percent of its local option income taxes (LOIT) in a trust — keep in mind these are already local tax dollars the state has withheld. SB 67 releases most of these funds, keeping the trust around 15 percent of all LOIT funds, while the rest will be dispersed to local governments in a one-time transfer of approximately $504 million. A total of 75 percent of these funds must be used for infrastructure-related projects, so cities, towns and counties can either use that money for local road and bridge projects or stash it away in a rain-day fund for later projects.
The local breakdown looks as such: Jasper will receive about $1.6 million, Huntingburg $438,000, Ferdinand $165,000, Holland $34,000 and Birdseye $8,500. Dubois County will receive nearly $2.1 million, of which $1.6 million is earmarked for road projects.
But it’s unclear whether the county will use those funds for road projects in the near future, or stash it away for later projects to pad a pattern of five consecutive county budget shortfalls.
“What’s likely to happen, since the county’s general fund shortfall was being funded through economic development income tax funds, in all likelihood, a lot of those are going to replace those EDIT funds,” said Steve Berg, Dubois County Highway superintendent. “That final decision comes down to the commissioners, but we’ll all have to get together and discuss it.”
The bill also calls for the creation of a task force dubbed Funding Indiana’s Roads for a Stronger, Safer Tomorrow. Its charge will be to develop a long-term plan for state highway and major bridge needs, including sustainable funding mechanisms for the various components of the plan.
In an editorial published in the Indianapolis Star, Indiana Fiscal Policy Institute President John Ketzenberger commended lawmakers for following through on finding a path toward fixing Indiana’s roads, but characterized SB 67’s funding mechanism as “a clever way to give local governments their own money back and call it an increase in road funding.”
Berg said much of that $2.1 million appropriated to Dubois County is tied to HB 1001, which transfers any state reserves exceeding 11.5 percent of general revenue to the state highway fund and newly established local road and bridge matching grant fund. It also provides that one penny from the sales tax revenue of gasoline will be funneled into the local road and bridge matching grant fund.
Local governments must apply to the Indiana Department of Transportation for the roads on which they wish to spend the money, but the county must match funds allocated through the grant fund. Therefore, if the county does not choose to immediately use any or all of the $2.1 million provided by SB 67, it will not have access to any of the funds made available by HB 1001, according to Berg.
Despite the uncertainty of how these funds could be used and whether they’ll be used at all, Berg said his department is planning to continue with business as usual.
“We don’t really even know when the funds from SB 67 are going to come in, so we’re under the assumption right now that we don’t have it and try to do what we can without it,” Berg said. “If the money comes in June or July, possibly if we have a second round of project bidding we could utilize some of that money then, but until we actually get it, we’re not going to assume any usage, although it will factor into our planning.”
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