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Lawmakers set to approve variety of tax and fee hikes for road projects

State Rep. Ed Soliday, R-Valparaiso, at the podium, speaks to reporters Thursday about the compromise road funding package agreed to by the House and Senate Republican supermajorities. Lawmakers are expected to approve the measure Friday.

INDIANAPOLIS — State lawmakers will vote Friday on a compromise road funding plan that requires Hoosiers to pay higher fuel taxes, vehicle registration fees and possibly tolls in exchange for improved highways, bridges and local roads.

The final version of House Bill 1002, sponsored by state Rep. Ed Soliday, R-Valparaiso, is expected to easily pass both Republican-controlled chambers of the General Assembly, and Republican Gov. Eric Holcomb has signaled that he intends to sign it into law.

It raises the state's 18-cents-per-gallon gasoline tax by 10 cents per gallon, starting July 1. Diesel and other truck fuel taxes also would increase by 10 cents per gallon that day.

In addition, the fuel taxes automatically would grow by up to 1 cent in each of the next seven years to ensure inflation does not reduce the buying power of the new rates.

The legislation also dedicates all sales tax revenue from gasoline purchases to roads in varying annual increments until 2025 when every penny of tax paid at the pump will be spent only on infrastructure.

Starting in 2018, Hoosiers will pay an extra $15 vehicle registration fee to specifically support local road projects, with electric ($150) and hybrid ($50) vehicle owners charged additional fees to account for their comparatively reduced gasoline use.

Altogether, the tax hikes and fee increases will raise an average of $915 million a year over the next seven years for state and local roadwork.

That could grow to more than $1.2 billion a year if the federal government approves Indiana's request to toll existing interstate highways.

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Soliday doesn't view the legislation as a tax increase. Rather, he said it simply is restoring the state's buying power lost to inflation since the current rates were set 14 years ago.

"The buying power of what was passed in 2003 is about 10 cents. If you take that out another 10 years, we'd have zero buying power," Soliday said.

"Yes, it costs money, but this is infrastructure that's essential to get to work, it's essential to get goods to market, get kids to school, get grandma to the doctor."

Senate President David Long, R-Fort Wayne, admitted that Statehouse Republicans always prefer to cut taxes instead of raising them, but he also believes it's critical to pay for road improvements as you make them and not stick future generations with the tab.

"We're not kicking the can down the road like they do in Washington," Long said. "We're paying for it today, responsibly and appropriately."

The sharpest criticism of the plan came from Americans for Prosperity-Indiana, a conservative political organization, which described the proposal as "a massive tax hike on Hoosier families" that "takes us in the wrong direction."

At least a few Democrats are expected to join most Republicans in supporting the road funding legislation.

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