The state that calls itself the Crossroads of America needs to spend more money on roads to protect that reputation.
There are competing plans to do just that floating around the Statehouse in Indianapolis. Gov. Mike Pence is promoting his four-year plan. State Rep. Ed Soliday's (R-Valparaiso) plan is more sustainable for a longer term. We like Soliday's plan.
Soliday, chairman of the House Roads and Transportation Committee, proposes a spending increase for maintenance of existing roads, money that Indiana needs. In 2014, the Indiana Department of Transportation said Indiana needs $300 million more a year just to keep up with existing roads. That doesn't even count making headway on the deferred maintenance.
What makes Soliday's plan solid is that it not only spends more money on roads, but also generates the money to do so. It also boosts spending on local roads, not just state highways and bridges.
House Bill 1001, authored by Soliday, spends an additional $787 million for state road work and $240 million for local roads.
To say the means of doing so is complicated is an understatement.
When we talk about the gas tax, we sometimes forget there are really two taxes — the tax per gallon, plus the sales tax on each gallon. The sales tax revenue fluctuates along with the price per gallon. Revenue from the tax per gallon — the actual fuel tax — has been dropping as the fuel efficiency of vehicles increases. Come 2021, when the new corporate average fuel economy standards take effect for cars and trucks, the revenue will plunge.
Soliday's plan takes that into account.
Under HB1001, the gasoline tax would be brought back to the same level, in real dollars, as it was in 2002. That likely means increasing the tax from its current 18 cents per gallon to about 22 cents. That sounds expensive until you put it in perspective.
The average Hoosier motorist pays about $110 in gasoline taxes each year. A 4-cent increase would mean about $24 more per year. That's far less than the cost of vehicle repairs and reduced gas mileage caused by roads in poor condition.
HB1001 also would use about 5 cents of every 7 cents in sales tax collected on gasoline to be devoted to roads and bridges. Currently, only about 1 cent goes toward roads. This shift makes sense because it's devoting revenue from people who cause wear and tear on the roads to repairing those roads.
That creates a hole elsewhere in the state budget, but that's a topic for Thursday's editorial.
There's another potential shift in state revenues in the complicated HB1001 funding formula. Instead of refunding excess revenues to taxpayers, that money would be shifted to road work.
That translates to about $459 million in the next fiscal year. Anytime reserves exceed 11.5 percent of the state's budget, the extra money would go toward roads and bridges.
Pence's plan would draw $241 million from state reserves and borrow an additional $240 million. Soliday's plan doesn't call for borrowing.
Under Soliday's plan, local government would gain important new tools for generating money for road work. Municipalities with a population of 20,000 or more would be able to enact a wheel tax of up to $25 per vehicle. The tax for buses, trailers and trucks could be up to $40.
That could generate hundreds of millions of dollars, statewide, for local roads and bridges.
All it takes to see why the extra money is needed for Indiana's roads is to drive in a neighboring state. "Welcome to Indiana" should not be translated as "Lousy Roads Ahead." Additional spending is needed.
Make the Crossroads of America more conducive to commerce by spending more money on road work. Soliday's plan, which pays for that construction, is the way to boost that spending.