House Democrats unveil $2 billion roads proposal centered around sales tax on gasoline

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INDIANAPOLIS (Nov. 9, 2015) – Indiana House Democrats unveiled a $2 billion plan Monday meant to fund road repairs statewide.

The proposal would mandate every dollar collected from Indiana’s sales tax on gasoline be set aside to fix roads. Currently a vast majority goes into the state’s general fund.

“What the people of Indiana don’t know, and one of the reasons the roads are in bad shape, is because when they pay at the pump those dollars are not going to where they belong,” House Democratic Minority Leader Scott Pelath (D-Michigan City) said.  “This is the fundamental and number one economic issue our state needs to address in the upcoming session.”

Pelath said in 2015 the plan would have reallocated about $525 million dollars for road maintenance, claiming over four years it would free up an estimated $2 billion.  About 53 percent of the funds would go toward state projects, Pelath said, and 47% to local.

Republicans were quick to respond.

Matt Lloyd, spokesman for Gov. Mike Pence said in a statement, “Sadly, the plan presented today by House Democrats forces Hoosiers to choose between cutting $500 million from the general fund for vital services like K-12 tuition support, teacher pensions, Medicaid and state hospitals or going broke in four years. That is irresponsible and not serious.”

Pence unveiled his own $1 billion plan last month that would use a combination of reserves, budget allocations and other funds over four years to fund maintenance on state roads.

Pelath said Democrats are resistant to increasing the gas tax to pay for the proposal and would rather reallocate the money.

“Ultimately, the House Democrats’ plan is shortsighted,” State Rep. Ed Soliday (R-Valparaiso) said in a statement, chairman of the House Roads and Transportation Committee. “Merely redirecting all the sales tax on gas toward roads would leave a corresponding hole in our already balanced budget.”

But Democrats argued the money Hoosiers pay at the gas pump should only be reinvested into Hoosier roadways.

Last month House Speaker Brian Bosma (R-Indianapolis) said he believes there is some room for negotiation in how the gas tax is used.

“Just a couple thoughts,” he said referring to next session. “We can change how sales tax on gasoline is allocated. One-seventh of it is allocated to roads and six-sevenths goes into the general fund.”

Democrats plan to formally introduce the proposal during the 2016 legislative session.