Lawmakers consider giving local governments more flexibility on road funding

State lawmakers are debating whether to give local communities more flexibility on how certain road funding can be spent.

House Bill 207, authored by Republican Sen. Blake Doriot of Goshen, would change how cities and counties with wheel and vehicle excise taxes in place are required to spend Motor Vehicle Highway funds for the next two years.

Currently, all local governments have to spend half of Motor Vehicle Highway funds on road and bridge construction projects and half on operational expenses. Doriot’s bill would change the required split to be 40% on road and bridge construction and 60% on operations.

The legislation would also allow communities to use the funding dedicated for construction projects to be used for snow removal and salt purchases.

According to a fiscal analysis of the bill prepared by the Legislative Services Agency, the change would free up roughly $30 million that could be used for purposes other than road construction.

Doriot said he heard from several northern Indiana counties that were struggling to pay for snow removal and salt, so the change would give those municipalities more flexibility.

It would only apply to funding in 2022 and 2023, and in the 55 counties and 12 cities that have vehicle excise and wheel taxes in place.

Marion and Hamilton counties are among the 55 counties with those taxes. Democratic Sen. Fady Qaddoura, who represents portions of those counties, said he spoke to officials from both communities and they are supportive of the bill.

If a city or county were to take advantage of the flexibility and spend money otherwise designated for construction projects for a different purpose, it would be required to report an itemized list of how the funds were spent.

Senate Appropriations Chairman Ryan Mishler said this means if a city or county tried to use all 40% of the funding that would be set aside for road construction on snow removal instead, then state lawmakers would know about it.

The Build Indiana Council is opposed to the legislation, but several representatives from cities and counties spoke in favor of the bill during the committee hearing Thursday morning.

AIM, the organization that represents Indiana’s cities and towns, also supports the bill.

The Senate Appropriations Committee approved the bill Thursday morning, but several lawmakers had concerns about the current language, and changes are still expected to be made to the bill as it moves forward.

Sen. Ed Charbonneau, R-Valparaiso, said he is worried that the bill is rewarding local governments that didn’t manage road funding well, because it only applies to those that have imposed a vehicle excise and wheel tax. But he voted to pass the bill out of the committee.

Sen. Karen Tallian, D-Portage, voted against the bill because she said the state is expecting to receive $236 million for roads and highways from the latest federal relief package and plans have not been made for how to spend those dollars yet.

“I think this bill is premature,” Tallian said.