Key state lawmaker eyes license plate taxes to fund road projects
The Associated Press December 22, 2012 7:12PM
Updated: January 24, 2013 6:48AM
INDIANAPOLIS — A key Indiana lawmaker says the state might need a license plate tax of $20 to $50 per car to pay for new road projects and maintenance.
Senate Appropriations Chairman Luke Kenley, R-Noblesville, said such a tax, multiplied by about 6 million state-licensed vehicles, would raise $120 million to $300 million at a time when the Indiana Department of Transportation faces a budget shortfall as high as $200 million.
“Our road infrastructure is more critically important to us than it ever was,” Kenley said. “Somehow this needs to become a renewed major initiative like Major Moves was for Mitch.”
Major Moves was Gov. Mitch Daniels’ project to lease the Indiana Toll Road for $3.8 billion and use the proceeds for road projects across the state, but all of that money will be committed by next summer.
Kenley said the new license plate revenue could be used to start planning expansions of Interstates 65 and 70 and to revive plans for the Indiana Commerce Connector that would loop around Indianapolis’ eastern and southern suburbs, from Interstate 69 to the Indianapolis International Airport. Daniels recently revived talk about that project, and Kenley has said he would like to see it studied.
He wants to expand I-65 and I-70 to six lanes across the state, with the third and sixth lanes possibly dedicated to truck traffic. Preliminary work already is under way at INDOT, said Troy Woodruff, the agency’s chief of staff.
“At a minimum, we have to start the discussion on the transportation infrastructure needs,” Kenley said. Expanding Medicaid and education funding top lawmakers’ agendas for 2013, but Kenley said, “I’m hoping that next in line is the transportation discussion.”
He acknowledged some people are likely to “get all bent out of shape” about his talk of new taxes.
Indiana Chamber of Commerce lobbyist Cam Carter said the tax idea “triggers the gag reflex,” but he supports user fees to provide new funding for the state’s 12,000 miles of highways.
“We think we ought to get as close to a user-fee model as possible,” Carter said.
INDOT now funds highway projects and maintenance from 18-cent-per-gallon taxes on gas, diesel and some other fuel, but revenues have fallen with the growing popularity of fuel-efficient cars and trucks. No taxes come from powering vehicles with electricity and natural gas.
INDOT Commissioner Michael Cline has told lawmakers the agency’s $200 million budget shortfall includes $70 million that’s needed to help Indiana continue to draw down the maximum amount of federal road matching funding, and $130 million for maintenance.
Another possible source of INDOT funding is the $550 million generated per year by Indiana’s 7 percent sales tax on gasoline and diesel. Those funds currently go to the state’s general fund.
“If we redirect the taxes we’re already assessing, the problem will take care of itself,” said Dennis Faulkenburg, a lobbyist for the Build Indiana Council, a trade group representing road construction companies.