Proposed roads funding plan would increase gas and cigarette tax to pay for state’s transportation needs

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UPDATE (February 2, 2016) — The House passed this bill with a vote of 62-35.

INDIANAPOLIS (Jan. 11, 2016) – Top Republican leaders in the House called for an increase in the state’s gas tax Monday as part of a long-term funding solution to fix, maintain and upgrade Indiana roads.

Under the proposal, which will move through the legislature as House Bill 1001, the state’s gas tax would increase for the first time in more than a decade to 22 cents per gallon, a four cent increase. Diesel fuel would increase seven cents per gallon.

Beyond that, more of the money collected from the gas tax would go directly to road repairs and maintenance.

“Hoosiers are ready to invest in their roads and understand the needs for this for our economy,” House Speaker Brian Bosma (R-Indianapolis) said.

Bosma said the average Hoosier driver would pay an additional $25 a year, noting unlike the state’s sales tax, the gas tax doesn’t change with inflation.

“A revenue enhancement or a tax increase, we consider the two things the same,” Justin Stevens said the Indiana state director for Americans for Prosperity, which plans a campaign against the measure. “So it is a tax increase.”

The proposal was met with quick resistance from some fellow Republicans.

Perhaps the toughest sell will be Indiana Gov. Mike Pence.

His spokesperson said in a statement, “Governor Pence believes the last place to look when we have the best credit rating and $2 billion in reserves is in the pocketbooks of hardworking Hoosiers.”

Bosma said he presented the plan to Pence last Wednesday, noting the reaction was “thoughtful” and “polite.”

“I feel very comfortable saying it’s time to invest in our roads and infrastructure,” Bosma said. “I’m anti-tax. I am however pro-growth. And this is an economic growth proposal.”

House Democratic Leader Scott Pelath (D-Michigan City) said raising the gas tax is the wrong approach.

“There is less reason to be enthused about the House Republican call for tax increases,” he said in a statement. “I will be interested to see Speaker Bosma and his leadership team make the case for taking more from taxpayer wallets at a time when we carry a huge state budget surplus.”

Other significant parts of the transportation plan include a $1 increase in the state’s cigarette tax, an opportunity for the state to match local funds on certain road projects and the ability for cities with a population greater than 20,000 residents to implement their own taxes for road repairs.

“Yes, they are willing to pay for something where we can show them a return on their investment,” Westfield Mayor Andy Cook said.

The plan would also incorporate Pence’s idea to push any excess revenue in the state’s reserves, beyond 11.5 percent, to the state highway fund.

Owners of electric vehicles would also be charged a $100 registration fee.

And lawmakers would study the idea of tolling on major interstates like I-65, I-70 and I-80/94.

“Our bridges, our roads need investment,” Bosma said. “Not just for economic reasons but to keep Hoosiers safe.”