INDIANAPOLIS, Ind. — State lawmakers plowed through the rarely easy prospect of raising taxes and other fees to come together on fixing Indiana’s roads  and bridges over the next 20 years.

 

The Republican compromise measure approved Friday by the state House and Senate has the support of Indiana Farm Bureau (IFB), which likes the final road funding bill more after the tweaking done by committees in both chambers.

 

The vote, mostly along party lines, was 69-29 in the House and 37-12 in the Senate.

 

Road funding has been the top priority of IFB for the 2017 legislative session and each of the earlier measures approved separately by the General Assembly had  the support of the organization, but IFB didn’t prefer the Senate version as much as the measure adopted by the House.

 

Justin Schneider, senior policy advisor and legal counsel for IFB, said the compromise bill provides more funding for local roads and bridges, something farmers were more concerned about given their rural locations.

 

Another thing farmers are happy about is a reduction from the Senate bill in the vehicle registration fee increase on semi trucks. The registration fee hike under the compromise bill ranges from as much as $168 a year for a 78,000-pound truck, to a $36 annual hike for a 26,000-pound truck.

 

More of the sales tax on fuel going to roads is another feature of the compromise bill not included in the original Senate measure, and one way more revenue is provided than what was contained that version, Schneider said: “It was a good compromise bill. It turned out well.” The final bill raises about $6.7 billion in additional funding by 2024 to repair state and local roads, but falls short of the projected $1.2 billion a year actually needed. To help fill the gap, the bill allows the governor to seek federal authority to impose tolling on interstates 65 and 70, which GOP leaders believe will likely happen at some point in the future.

 

However, any decision by the governor on tolling must be approved by the state budget committee, according to the final bill Gov. Eric Holcomb is expected to sign. Other revenue generators include a 10-cent increase in the state’s gasoline tax and a $15 hike in vehicle registration fees. There’s also a $150 annual fee on electric cars and a yearly $50 yearly fee added onto hybrid vehicles.

 

Under the measure, there’s also a 10-cent per gallon increase in diesel fuel, but due to a special charge already paid by carriers, the current sales tax on diesel was eliminated. “So, it was a wash,” Schneider said. 

 

Another difference from the Senate version is more of the sales tax on fuel going to roads and bridges. By 2024, all of the tax revenue from the sale of fuel will be applied to roads and bridges.

 

Currently, less than half those dollars go to roads and bridges, while the remainder is placed into the general fund for things like education – and that would have been unchanged under the original Senate-adopted legislation, officials said. There were some Democrats who voted in favor of the compromise legislation but most remained opposed. Most felt the funding mechanisms were not fair to working people and the poor because of the tax breaks that continue to be afforded to corporations and the wealthy.

 

Schneider said there were grumblings in the agriculture community about leaning too heavily on fuel taxes and other fees, but the overwhelming consensus among farmers is that something has to be done to improve the condition of roads and bridges.

 

“No one likes to raise taxes. The reality here is the revenue was necessary. There was really no place to cut to come up with this kind of money,” he said.

 

State Rep. Scott Pelath, the Democratic minority leader of the House, said while he was happy the Democratic proposal for all sales taxes to be applied to infrastructure was included in the mostly Republican compromise, he thinks tolls will leave a bad taste in the mouths of many Hoosiers. 

 

“Tolling continues to be very problematic. The motor fuel tax is one thing, but there continues to be very deep worries about the specter of tolling here in Indiana because those are costs that you understand and perceive very quickly, and people in the public will worry about that,” said Pelath, who lives in Michigan City.