Thursday, July 10, 2014

IBJ Reports Panel Recommends Indexed Gas Tax

From the Indianapolis Business Journal:

The state should index its gas tax to increase with inflation, build a new bypass around Indianapolis, and consider user fees to supplement highway funding, a transportation panel said in its recommendations Wednesday.

The group – appointed by Gov. Mike Pence – detailed a funding crisis facing the state: Revenue from the state’s gas taxes are falling as cars become more fuel efficient, but the cost of building roads is increasing.

Still, the funding issues didn’t stop the Blue Ribbon Panel on Transportation Infrastructure from proposing new highway projects. It said the state needs to add lanes on Interstates 65 and 70, build an I-69 bridge over the Ohio River and improve its rail and port infrastructure.

And the group said the so-called Commerce Connector in Central Indiana is “a high priority, critical project because of its ability to facilitate the movement of freight and passenger traffic into and around Indianapolis,” particularly at bottleneck locations including the intersection of I-69 and I-465 on the northeast side.

“We do believe we are the Crossroads of America and transportation is ripe for transformation in Indiana,” said Lt. Gov. Sue Ellspermann, a co-chair of the panel.

The group recommended projects using a three-tier system, with the first tier having the highest priority. That list included projects associated with I-69 and I-70, along with the Commerce Connector and an Ohio River bridge over I-69.

The second tier includes the construction of a four-lane, limited access highway from the southwest corner of the state, providing more transportation and a better route between Mount Vernon and I-69.

And the conversion of U.S. 30 to interstate status is a part of the second tier projects.

The third tier projects include the construction of another road in and out of Burns Harbor in Northwest Indiana, along with a road connecting Madison to I-65.

The report did not recommend specific funding for specific projects. However, it noted that the state’s current funding method isn’t working.

Much of the state’s transportation funding comes from an 18-cent per gallon tax on gasoline. But revenue from that tax has been decreasing, even though Hoosiers are traveling roughly the same number of vehicle miles. That’s because as cars get more fuel efficient, drivers use less gas to go the same distance.

At the same time, the cost of building roads is increasing, the panel said.

Indexing the tax means it would go up as inflation rises, which could generate more money for state highway construction.

The report also said the state should consider user fees. It said that could include a fee on alternative fuel vehicles – which generate even less revenue through the state’s gas tax – but the panel said it was not making that recommendation.

“We are not recommending specific solutions,” said Co-Chair Cathy Langham, president of Langham Logistics. “These are just concepts to form the guardrails of funding discussions.”