Push under way to revise Indiana’s road funding

A growing drop in revenue from Indiana's gasoline tax is fueling a push for state lawmakers to rethink how local road and bridge maintenance is funded.

Officials with Indiana's cities, towns and counties are struggling. The state gas tax receipts are less than what they received in 2000, and the cost of maintaining roads and bridges has only gone up.

State lawmakers have shied away from the problem in recent years, but now that Indiana has built up a budget surplus and is preparing to send tax dollars back to Hoosiers, the discussion is likely to change, The Journal Gazette (http://bit.ly/P64Mpm ) reported Sunday.

Matt Greller, executive director of the Indiana Association of Cities and Towns, said studies show that Indiana's infrastructure, particularly local roads and streets, "are woefully underfunded."

"The inadequate funding has been a problem for a long time, and it's time to have a difficult conversation," he said.

Each side has its own views on the issue, and the only fact all parties seem to agree on is that the current system is unsustainable.

"The state is eventually going to have to change the way they tax the use of vehicles," said Rep. Jeff Espich, R-Uniondale. "The gasoline tax is wearing out."

Indiana has had an 18-cent tax on every gallon of gas purchased since 2003, and a similar federal gas tax provides funding for state roads.

In fiscal year 2011, the most recent year for which data is available, $543 million in gas tax money came into the state. That money is split among a number of funds, with about $300 million going to the Motor Vehicle Highway Fund. Other smaller revenue sources also funnel into that fund, from which money is distributed to local governments.

But there's been a 15 percent drop in revenue since 2005 sent to local governments from the motor vehicle account, partially because drivers are buying more fuel-efficient vehicles.

A smaller pot of money from vehicle and licensing fees also goes to local governments, but that fund has remained relatively stable.

State budget director Adam Horst said the gas tax "is a questionable funding source in terms of sustainability" and its revenue is going to continue to decline.

Before the most recent recession hit, Espich had for years tried unsuccessfully to get the Legislature to address what he saw as a coming problem and proposed indexing the gas tax so that it would rise slowly each year.

The state's Motor Vehicle Highway Fund has less available for road funding also because it's being relied on to cover other expenses. In fiscal year 2011, $127 million was diverted from the state's Motor Vehicle Highway Fund to pay for running the Bureau of Motor Vehicles, the Department of Revenue Motor Fuel Tax Division and the Indiana State Police.

Expenses for those entities are up 9 percent since fiscal year 2000, while their revenue is down.

Sen. Luke Kenley, R-Noblesville, said shifting expenses away from the motor vehicle fund probably won't happen.

"The problem is if we get more money to local roads and streets, then that creates a hole in the state budget. We will be short in one bucket or another," he said.