INDIANAPOLIS (AP) — Republicans who control the Indiana Statehouse announced details of an agreement Thursday that would raise taxes on motorists in order to pay for improvements for crumbling infrastructure.
It was an unusual victory lap for top GOP leaders who have been more accustomed to championing tax cuts over the last decade.
“We want them to start smelling asphalt in July,” House Speaker Brian Bosma said. “That is when the taxes increase, the user fees increase.”
The agreement, a major Republican priority, is expected to come up for a vote Friday before lawmakers adjourn for the year. Gov. Eric Holcomb has signaled that he will sign it.
The measure would raise fuel taxes by 10 cents a gallon while creating a new $15 vehicle registration fee. Hybrid owners would have to pay a $50 fee, while electric car owners would have to pay a $150 fee.
The measure also shifts all sales taxes that are also charged on fuel purchases to infrastructure spending by 2025. Much of that money currently funds other programs, but lawmakers are counting on revenue growth from other taxes to cover the loss.
Republicans say their plan makes sense: by relying on vehicle fees and gas taxes, they are asking people who use the roads most to pay for them.
But Democrats point to the state’s roughly $2 billion budget reserve and question why the GOP wants everyday motorists to pay more — especially after a decade of Republican-led tax cuts have shifted the burden away from the rich and onto the poor and working class.
In recent years, Republican-championed policies have eliminated taxes on inheritances over $100,000, cut corporate tax rates and cut property taxes. At the same time they increased the state’s reliance on sales tax, which disproportionately impacts poor or working class people.
That’s eliminated about $650 million from the state’s budget, according to estimates from Purdue University economist Larry DeBoer.
“It’s just money out of our pocket,” said Democratic Rep. Dan Forestal, of Indianapolis.
Still, Sen. Luke Kenley, the Senate’s chief budget writer, said the roads funding bill puts the state’s needs above politics.
“Are you … somebody that does something for your state when you need something to be done?” the Noblesville Republican said. “I think a good Republican does that.”
Lawmakers started the session calling for a “long-term” roads funding plan. But the deal they reached only gets them part of the way there and doesn’t address all of the state’s transportation funding needs, which are estimated at $2 billion in new revenue a year.
Republican leaders, including Holcomb, say that means the state will have to consider interstate tolling in the not-too-distant future.
A provision in the roads bill would allow the governor to seek federal authority to toll. But Holcomb has signaled that he isn’t itching to do that quite yet.
Last month he suggested that was something the state should consider in seven or eight years — about the time he would be term-limited from running again.
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