INDIANAPOLIS — Indiana communities will soon get about $430 million to fix roads under a deal forged on the last day of the Legislature’s session. Getting much more than that means raising taxes — an option that many local leaders will find loathsome.
As part of the road-funding deal, lawmakers included a matching grant to push local officials to raise or create local wheel taxes to pay for repairs.
Senate President David Long (R-Fort Wayne) called it having “skin in the game,” and said it’s targeted at local leaders who’ve refused to make hard choices.
“Some communities have refused to do what they need to do for themselves,” he said. “They’d rather have the state provide all the money.”
The complicated funding package funnels about $1 billion into fixing state and local roads over the next two years. It uses a combination of existing resources, and it avoids the election-year increase in gas and cigarette taxes pushed by House Republicans but strongly opposed by Senate Republicans and Gov. Mike Pence.
In total, lawmakers set aside about $580 million for roads and bridges across the state. But only $430 million of that is guaranteed, coming from local income taxes collected and held by the state.
More affluent counties, which collect more income taxes, will get back more money. Poor, rural counties — and urban areas with slow growth — will see the least.
The deal sets aside another $150 million for matching grants for local road and bridge work.
Communities can use returned income tax revenues to leverage those grants. Areas seeing little returned to them can raise matching funds by charging a local wheel tax or raising the one they already have.
About half of Indiana’s 92 counties have wheel taxes, charged to motorists on every vehicle driven. Fees range from $5 to $40 per car.
Until now, cities were barred from adopting wheel taxes, but the road-funding plan allows officials in communities with more than 10,000 people to adopt them.
In addition, counties may now double their wheel taxes, if local leaders vote to do so.
Matt Greller, executive director of the Indiana Association of Cities and Towns, said the funding plan was a big move in the right direction, as communities have clamored for more road dollars for years.
He predicted cities across the state will soon adopt wheel taxes to leverage more money, since any long-term road funding solution appears far off.
But, he noted, those tax increases will be unpopular.
On Friday, House Democratic Leader Scott Pelath (Michigan City), who opposed raising gas and cigarette taxes to fund roads, said local officials are unlikely to raise taxes.