ACT NOW: Transportation Infrastructure Funding
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Transportation Infrastructure Funding
THE BOTTOM LINE
The General Assembly is primarily addressing the topic of transportation infrastructure funding with Indiana House Bill 1002. There are two versions of HB 1002 – one version of HB 1002 passed the Indiana House of Representatives on February 16, and the second version of HB 1002 passed the Indiana Senate on April 4. These two HB 1002 versions together propose 56 different tax and fee increases – 25 of these proposed tax and fee increases are decidedly Taxpayer UNfriendly. The House version of HB 1002 includes Taxpayer Friendly changes in the distribution of Gasoline Use Tax revenue (which comes from the 7% sales tax on fuel purchases made at the gas pump) to the State Highway Fund and the Local Road and Bridge Matching Grant Fund while the Senate version of HB 1002 is Taxpayer UNfriendly because it unnecessarily continues to provide Gasoline Use Tax revenue to the state's General Fund (which is not used to improve transportation infrastructure throughout the state). The Senate version of HB 1002 also includes Taxpayer UNfriendly changes to the Motor Vehicle Highway Account distribution formula so that counties and municipalities receive much less new Motor Vehicle Highway Account funding than what is provided by the House version of HB 1002.
Speaker of the House Brian Bosma appointed State Representatives Ed Soliday and Dan Forestal to a conference committee that will prepare a compromise version of HB 1002 that must be passed by the General Assembly before the last day for adjournment on April 29. Senate President Pro Tempore David Long appointed State Senators Michael Crider and Karen Tallian to the conference committee. If Representative Forestal does not support a compromise version of HB 1002 favored by the House Republican caucus, Speaker Bosma will likely replace Representative Forestal with Representative Tim Brown on the conference committee. If Senator Tallian does not support a compromise version of HB 1002 favored by the Senate Republican caucus, President Pro Tempore Long will likely replace Senator Tallian with Senator Brandt Hershman on the conference committee. Governor Eric Holcomb will then need to approve any compromise version of HB 1002.
Governor Eric Holcomb, Speaker of the House Brian Bosma, Senate President Pro Tempore David Long, Representative Ed Soliday, Representative Tim Brown, Senator Michael Crider, and Senator Brandt Hershman are the seven members of the Indiana state government who will lead the effort to pass a compromise version of HB 1002. These seven elected public servants have congratulated themselves on what they proclaim to be their “political courage” to support tax and fee increases needed to improve the state’s transportation infrastructure. The truth of the matter is that these elected officials are not in an way courageous – they have thus far unethically allowed themselves to be improperly influenced at taxpayer expense by accepting extravagant campaign contributions from vested interests who expect to profit from increased state spending on transportation infrastructure.
The Indiana Campaign Finance Website at http://campaignfinance.in.gov/PublicSite/SearchPages/CandidateSearch.aspx can be used to uncover the campaign contributors and spending of the seven state leaders seeking to pass compromise legislation for transportation infrastructure funding – Holcomb, Bosma, Long, Soliday, Brown, Crider, and Hershman. The campaign funding summary information listed next for Representative Ed Soliday is typical of how these seven state leaders have unethically raised extravagant amounts of money from vested interests in order to try and keep their elected positions no matter how much they take from taxpayers with excessive tax and fee increases for transportation infrastructure funding.
The 2016 campaign expenditures of the Friends of Ed Soliday
Committee totaled an astounding $649,158.56. The House Republican Campaign
Committee – which gets most of its money from a plethora of various vested
interests – contributed a whopping $437,038.51. The following contractors,
labor unions, political action committees, truckers, farmers, and organizations
– all of whom expect to directly profit from increased state spending on
transportation infrastructure – also made significant 2016 Itemized
Contributions to the Friends of Ed Soliday Committee:
$ 1,500 ACEC INDIANA
$ 1,050 AMERICAN CONCRETE PAVEMENT ASSOCIATION – INDIANA CHAPTER (C.
MICHAEL BYERS)
$ 2,950 American Structurepoint (DPBG POLITICAL ACTION COMMITTEE) (WILLIS
R. CONNER)
$ 500 APPIAN, Inc. (DENNIS FALKENBERG)
$ 500 ASSOCIATION TO BUILD A BETTER INDIANA
$ 2,000 BEEMSTERBOER SLAG CORP
$ 1,000 BOILERMAKERS LOCAL #374 STATE AND LOCAL PAC FD.
$ 1,000 Brooks Construction Co., Inc. (ANDREW F. BROOKS)
$12,000 BUILD INDIANA POLITICAL ACTION COMMITTEE
$ 1,000 Butler, Fairman and Seufert, Inc. (JOHN W. BRAND)
$ 1,000 C-TECH CORPORATION INC.
$ 500 CARPENTERS LOCAL 1485
$ 1,000 DLZ INDIANA LLC
$ 500 GOOD TRANSPORTATION, LLC
$ 1,000 HIS Constructors, Inc. (TERRY L. MORGAN)
$ 1,500 HOOSIERS FOR BETTER ROADS
$ 1,000 IN KY OH REGIONAL COUNCIL OF CARPENTERS
$15,300 INDIANA BUSINESS FOR RESPONSIVE GOVERNMENT
$ 500 INDY CHAMBER BUSINESS ADVOCACY COMMITTEE
$ 2,000 INDIANA FARM BUREAU INC. ELECT PAC
$ 1,000 MARTIN MARIETTA AGGREGATES STATE PAC
$ 1,000 Milestone Contractors LP (MARK A. THOMPSON)
$ 200 NORTHERN INDIANA BUILDING TRADES PAC
$12,500 NORTHERN INDIANA OPERATORS JOINT LABOR-MANAGEMENT PAC
$ 1,000 NORTHWEST INDIANA CONTRACTORS PAC
$ 1,000 PARSONS BRINKERHOFF INC..
$ 2,001 Phend & Brown, Inc. (Daniel F. Brown) (DD&A PROPERTIES,
LLC)
$ 1,000 Primco Inc. (TODD FREDRICK, SCOTT FREDRICK)
$ 6,000 RIETH-RILEY CONSTRUCTION CO., INC. INDIANA PAC
$ 2,000 SMITH READY MIX,INC.
$ 1,000 Soils Solutions Co. (DALLAS D. DAY)
$ 1,000 SPECIALTIES COMPANY,LLC
$ 1,000 THE HOOSIER COMPANY
$ 2,500 TRUCKING INDUSTRY PAC
$ 3,500 Walsh & Kelly, Inc. (KEVIN J. KELLY)
$84,501 TOTAL from transportation infrastructure vested interests
THE BOTTOM LINE:
The final compromise version of HB 1002 will be Taxpayer UNfriendly unless the conditions listed next are all met. Data supporting these required conditions can be found elsewhere on this web page.(1) Do NOT take toll roads approval away from the General Assembly and give it solely to the Governor – it is more difficult for vested interests to use campaign contributions to “influence” 150 members of the General Assembly than it is to get toll roads approval from just the Governor.
(2) Do NOT increase the state’s Gasoline Tax, Special Fuel Tax, and Motor Carrier Surcharge Tax rates each Fiscal Year 2019 through 2025 using an annual index factor that would provide additional revenues much in excess of overall Consumer Price Index inflation increases.
(3) Do NOT impose regressive new annual transportation infrastructure improvement fees of $15 on Indiana motor vehicles with a gross weight not more than 26,000 pounds and $100 on Indiana motor vehicles with a gross weight more than 26,000 pounds.
(4) Do NOT increase the waste tire management fee on the sale of each new tire to $5.25 from $0.25.
(5) Make immediate changes in the distribution of all the 7% Gasoline Use Tax on fuel pump sales so that additional new revenues are dedicated to the State Highway Fund and the Local Road and Bridge Matching Grant Fund.
(6) Do NOT make the changes to the Motor Vehicle Highway Account distribution formula proposed in the Senate version of HB 1002 that would result in counties and municipalities receiving much less new Motor Vehicle Highway Account funding.
NOTE: The Watchdog Indiana Transportation Infrastructure Funding Plan at http://www.finplaneducation.net/watchdog_transportation_plan.htm would provide 98% as much additional new transportation infrastructure revenue in Fiscal Years 2018 through 2021 as the House version of HB 1002 with 22 fewer tax and fee increases.
Please ACT NOW and contact your elected Indiana General Assembly public servants to let them know that you want them to vote NO on the transportation infrastructure funding provisions in Indiana House Bill 1002 UNLESS the six Taxpayer Friendly conditions listed above are all met. The contact information for your Indiana State Senator and Indiana State Representative can be obtained online at
http://iga.in.gov/legislative/find-legislators/.The intended recipients for Watchdog Indiana E-mail Updates are individual Hoosier taxpayers who are fiscally responsible pragmatists. SOME tax and fee increases make sense so that prudent transportation infrastructure improvements can be made throughout Indiana. HOWEVER, unless this E-mail goes “viral” and many individual Hoosiers contact their State Senator and State Representative, the ethically compromised General Assembly members who have accepted extravagant campaign contributions from vested interests WILL impose excessive tax and fee increases on vulnerable low-income and fixed-income Hoosiers.
Overview
The 2017 Indiana General Assembly primarily addresses the topic of transportation infrastructure funding with Indiana House Bill 1002. There are two versions of HB 1002 - one version of HB 1002 passed the Indiana House of Representatives on February 16, 2017, and the second version of HB 1002 passed the Indiana Senate on April 4, 2017. State Senators Michael Crider and Karen Tallian, along with State Representatives Ed Soliday and Dan Forestal, have been appointed to a conference committee to prepare a compromise version of HB 1002 that must be passed by the General Assembly before the last day for adjournment on April 29, 2017.
The following list of
39 tax and fee increases would be imposed by the version of HB 1002 that passed the Indiana House of Representatives on February 16, 2017:The following list of 45
tax and fee increases would be imposed by the version of HB 1002 that passed the
Indiana Senate on April 4, 2017:
(1) The Gasoline Tax rate would increase in Fiscal Year 2018 to $0.23 per gallon
(from $0.18 per gallon),
(2) The Gasoline Tax rate would increase in Fiscal Year 2019 to $0.28 per
gallon,
(3) The Gasoline Tax rate is expected to increase in
Fiscal Year 2020 to $0.29 per gallon,
(4) The Gasoline Tax rate is expected to increase in
Fiscal Year 2021 to $0.30 per gallon,
(5) The Gasoline Tax rate would likely increase in
Fiscal Year 2022 to $0.31 per gallon,
(6) The Gasoline Tax rate would likely increase in
Fiscal Year 2023 to $0.32 per gallon,
(7) The Gasoline Tax rate would likely increase in
Fiscal Year 2024 to $0.33 per gallon,
(8) The Gasoline Tax rate would likely increase in
Fiscal Year 2025 to $0.34 per gallon,
(9) The Special Fuel Tax rate would increase in Fiscal Year 2018 to $0.19 per
gallon (from $0.16 per gallon),
(10) The Special Fuel Tax rate would increase in Fiscal Year 2019 to $0.22 per
gallon,
(11) The Special Fuel Tax rate is expected to increase
in Fiscal Year 2020 to $0.23 per gallon,
(12) The Special Fuel Tax rate is expected to increase
in Fiscal Year 2021 to $0.24 per gallon,
(13) The Special Fuel Tax rate would likely increase in
Fiscal Year 2022 to $0.25 per gallon,
(14) The Special Fuel Tax rate would likely increase in
Fiscal Year 2023 to $0.26 per gallon,
(15) The Special Fuel Tax rate would likely increase in
Fiscal Year 2024 to $0.27 per gallon,
(16) The Special Fuel Tax rate would likely increase in
Fiscal Year 2025 to $0.28 per gallon,
(17) The Motor Carrier Surcharge Tax rate would increase in Fiscal Year 2018 to
$0.16 per gallon (from $0.11 per gallon),
(18) The Motor Carrier Surcharge Tax rate would increase in Fiscal Year 2019 to
$0.21 per gallon,
(19) The Motor Carrier Surcharge Tax rate is expected
to increase in Fiscal Year 2020 to $0.22 per gallon,
(20) The Motor Carrier Surcharge Tax rate is expected
to increase in Fiscal Year 2021 to $0.23 per gallon,
(21) The Motor Carrier Surcharge Tax rate would likely
increase in Fiscal Year 2022 to $0.24 per gallon,
(22) The Motor Carrier Surcharge Tax rate would likely
increase in Fiscal Year 2023 to $0.25 per gallon,
(23) The Motor Carrier Surcharge Tax rate would likely
increase in Fiscal Year 2024 to $0.26 per gallon,
(24) The Motor Carrier Surcharge Tax rate would likely
increase in Fiscal Year 2025 to $0.27 per gallon,
(25) The Motor Carrier Surcharge Tax would have to be paid at the pump instead
of through quarterly filings made with the Indiana Department of Revenue,
(26) Individuals who operate personal diesel
vehicles would have to pay the Motor Carrier Surcharge Tax at the pump,
(27) The annual alternative fuel decal fee would increase to $150 from $100 for
a passenger motor vehicle, truck, or bus, the declared gross weight of which is
equal to or less than 9,000 pounds, that is owned by a public or private
utility,
(28) The annual alternative fuel decal fee would increase to $150 from $100 for
a recreational vehicle that is owned by a public or private utility,
(29) The annual alternative fuel decal fee would increase to $262.50 from $175
for a truck or bus, the declared gross weight of which is greater than 9,000
pounds but equal to or less than 11,000 pounds, that is owned by a public or
private utility,
(30) The annual alternative fuel decal fee would increase to $375 from $250 for
an alternative fuel delivery truck powered by alternative fuel, the declared
gross weight of which is greater than 11,000 pounds,
(31) The annual alternative fuel decal fee would increase to $450 from $300 for
a truck or bus, the declared gross weight of which is greater than 11,000
pounds, except an alternative fuel delivery truck,
(32) The annual alternative fuel decal fee would increase to $750 from $500 for
a tractor designed to be used with a semitrailer,
(33) A new $15 annual transportation infrastructure
improvement fee would be established that applies to the registration of all
Indiana motor vehicles with a declared gross weight of not more than 26,000
pounds,
(34) A new $100 annual transportation infrastructure
improvement fee would be established that applies to the registration of
commercial motor vehicles with a declared gross weight of more than 26,000
pounds,
(35) The annual fee to register a truck, a tractor used with a semitrailer, or a
for-hire bus with a declared gross weight greater than 26,000 pounds and equal
to or less than 36,000 pounds would be increased to $450 from $300,
(36) The annual fee to register a truck, a tractor used with a semitrailer, or a
for-hire bus with a declared gross weight greater than 36,000 pounds and equal
to or less than 48,000 pounds would be increased to $756 from $504,
(37) The annual fee to register a truck, a tractor used with a semitrailer, or a
for-hire bus with a declared gross weight greater than 48,000 pounds and equal
to or less than 66,000 pounds would be increased to $1,080 from $720,
(38) The annual fee to register a truck, a tractor used with a semitrailer, or a
for-hire bus with a declared gross weight greater than 66,000 pounds and equal
to or less than 78,000 pounds would be increased to $1,440 from $960,
(39) The annual fee to register a truck, a tractor used with a semitrailer, or a
for-hire bus with a declared gross weight greater than 78,000 pounds would be
increased to $2,034 from $1,356,
(40) A person who registers an electric vehicle would be required to pay a new
supplemental annual registration fee of $150,
(41) The new $150 supplemental registration fee for electric vehicles would
increase every five years beginning January 1, 2023, based on an index factor
like that used to annually increase the fuel tax rates,
(42) A person who registers a hybrid vehicle would be required to pay a new
supplemental annual registration fee of $75,
(43) The new $75 supplemental registration fee for hybrid vehicles would
increase every five years beginning January 1, 2023, based on an index factor
like that used to annually increase the fuel tax rates,
(44) The aviation fuel excise tax would be increased by $0.10 per gallon (and
the revenue from the increase would be transferred to the state’s Airport
Development Grant Fund for airport capital improvement matching grants), and
(45) The waste tire management fee on the sale of
each new tire would be increased to $5.25 from $0.25 (and the revenue from the
$5 fee increase would be deposited in the state’s Motor Vehicle Highway
Account).
NOTE: The 22 tax and fee increases
highlighted in bold red
above are Taxpayer UNfriendly
and should NOT be included in the final version of HB 1002 that is passed by the
Indiana General Assembly.
In addition to the varying tax and fee increases, the other significant differences between the House and Senate versions of HB 1002 are listed next.
A. Gasoline Use Tax Distribution. The House version of HB 1002 includes Taxpayer Friendly changes in the distribution of Gasoline Use Tax revenue (which comes from the 7% sales tax on gasoline purchases made at the gas pump) so that additional new revenue is immediately provided to the State Highway Fund and the Local Road and Bridge Matching Grant Fund. The Senate version of HB 1002 is Taxpayer UNfriendly because it unnecessarily continues to provide Gasoline Use Tax revenue to the state's General Fund, which is not used to improve transportation infrastructure throughout the state.
B. Local Motor Vehicle Highway Account. The
Senate version of HB 1002 includes Taxpayer UNfriendly changes to the Motor
Vehicle Highway Account distribution formula so
that counties and municipalities receive much less new Motor Vehicle Highway
Account funding than what is provided by the House version of HB 1002:
Fiscal Year 2018 - $24.5 million from the Senate version versus $174.5 million
from the House version,
Fiscal Year 2019 - $38.7 million from the Senate version versus $189.8 million
from the House version,
Fiscal Year 2020 - $53.6 million from the Senate version versus $204.2 million
from the House version,
Fiscal Year 2021 - $70.3 million from the Senate version versus $217.9 million
from the House version.
C. Special Fuel Sales Tax. Unlike the House version of HB 1002, the Senate version of HB 1002 eliminates the sales tax on the sale of diesel, biodiesel, and natural gas products sold or used in producing or generating power for propelling motor vehicles.
It is disturbing that both the House and Senate versions of HB 1002 contain similar Taxpayer UNfriendly toll road provisions.
Details supporting these HB 1002 evaluation conclusions are included in the ACT NOW Suggestions and March 14, 2017, Public Hearing Testimony listed below on this web page.
ACT NOW Suggestions
The several ACT NOW suggestions included below urge concerned Hoosiers to contact their General Assembly public servants and let them know what they consider to be good public policy regarding state and local transportation infrastructure funding.
ACT NOW #1: Oppose Toll Roads
Please ACT NOW and contact your elected General Assembly public servants to let them know that you oppose the Taxpayer UNfriendly toll road provisions listed next, and that you want these provisions to be removed from the Indiana House Bill 1002 that pertains to state and local transportation infrastructure funding. Detailed information about these Taxpayer UNfriendly toll road provisions is included under the heading "HB 1002 Component #8" on the web page at http://www.finplaneducation.net/2017_transportation_funding.htm.
(1) The Indiana General Assembly would no longer have to enact a statute authorizing the Governor to (a) approve the location of a tollway on highway lanes that were in existence on July 1, 2011, and (b) impose tolls on motor vehicles for use of Interstate Highway 69. (NOTE: Exceptions include the Illiana Expressway connecting Interstate Highway 65 in northwestern Indiana with an interstate highway in Illinois and a project that is located within a metropolitan planning area that connects the state of Indiana with the commonwealth of Kentucky.) It is Taxpayer UNfriendly to take toll roads approval away from the General Assembly and give it solely to the Governor because it is more difficult for vested interests to use campaign contributions to “influence” 150 members of the General Assembly than it is to get toll roads approval from just the Governor.
(2) The Indiana Department of Transportation (INDOT) would be required to seek a Federal Highway Administration waiver to toll interstate highways. It is unconscionably Taxpayer UNfriendly to take any action whatsoever to establish new toll roads at the same time that 39 tax and fee increases are proposed by HB 1002 to provide a total of $4.0673 billion in additional new revenue for transportation infrastructure funding for Fiscal Years 2018 through 2021.
(3) The first toll lanes established on an interstate highway would have to be located in 32 Indiana counties at least 75 miles from an interstate highway or bridge on which travel is subject to tolling as of July 1, 2017. It is Taxpayer UNfriendly that motorists in these 32 counties would be enticed to congest local roads and bridges to avoid paying interstate tolls.
(4) INDOT would also be required to engage an outside consulting firm to conduct a feasibility study on tolling the interstate highways with a written report to be delivered before November 1, 2017. The tolling feasibility study is expected to increase one-time INDOT expenditures in Fiscal Year 2017 between $200,000 and $700,000 for the outside consulting firm. It is Taxpayer UNfriendly to take hundreds of thousands of dollars away from road funds to hire an outside consulting firm to conduct a Taxpayer UNfriendly feasibility study on tolling interstate highways.
ACT NOW #2: Oppose Transportation Infrastructure Improvement Fee
Please ACT NOW and contact your elected General Assembly public servants to let them know that you oppose
the Taxpayer UNfriendly new $15 annual transportation infrastructure improvement fee, and that you want this new fee to be removed from the Indiana House Bill 1002 that pertains to state and local transportation infrastructure funding. Detailed information about this Taxpayer UNfriendly new fee is included under the heading "HB 1002 Component #4" on the web page at http://www.finplaneducation.net/2017_transportation_funding.htm.Effective January 1, 2018, HB 1002 would establish a new $15 annual
transportation infrastructure improvement fee that applies to all Indiana motor
vehicle registrations EXCEPT for motor vehicles with a declared gross weight
that exceeds 26,000 pounds. HB 1002 would also impact vehicles registered
through the International Registration Plan. Revenue from the new transportation
infrastructure improvement fee would be deposited in the Local Road and Bridge
Matching Grant Fund.
The proposed $15 annual transportation infrastructure improvement fee is
Taxpayer UNfriendly. This new fee would NOT be a true user fee because the fee
amount is not directly proportional to the number of miles driven. The $15
annual fee would be paid by the young pharmaceutical salesman residing in Carmel
who earns $250,000 a year driving his brand new Lexus thousands of miles
throughout Indiana. The same $15 annual fee would also be be paid by the elderly
widow residing in Lebanon surviving on Social Security who drives her 1998 Olds
98 twice a week to the grocery store and church. The $15 annual
transportation infrastructure improvement fee would actually be a regressive tax
that adversely impacts lower income Hoosiers.
NOTE: The Gasoline Use Tax is a 7% sales tax on gasoline purchases made at
the gas pump. If the Gasoline Use Tax distribution is changed so that 14.286% is
deposited in the Motor Vehicle Highway Account, 42.857% is deposited in the
Local Road and Bridge Matching Grant Fund, and 42.857% is deposited in the State
Highway Fund – then the Local Road and Bridge Matching Grant Fund would
receive as much new annual revenue as would be provided by the proposed $15
annual transportation infrastructure improvement fee. Increasing revenue
available to the Local Road and Bridge Matching Grant Fund should increase the
local government transportation infrastructure grants made annually by the
Indiana Department of Transportation.
ACT NOW #3: Oppose Annual Fuel Tax Rates Increase
Please ACT NOW and
contact your elected General Assembly public servants to let them know that you want removed from Indiana House Bill 1002 the proposed increases in the state’s Gasoline Tax, Special Fuel Tax, and Motor Carrier Surcharge Tax rates EACH Fiscal Year 2019 through 2025 using a Taxpayer UNfriendly annual index factor.The subject of this ACT NOW E-mail Update is the provisions in HB 1002 that would increase the state’s Gasoline Tax, Special Fuel Tax, and Motor Carrier Surcharge Tax rates EACH Fiscal Year 2019 through 2025 using an annual index factor. Details regarding these proposed annual increases in the state’s three fuel tax rates can be found online at http://www.finplaneducation.net/2017_transportation_funding.htm (“HB 1002 Component #2 Annual Fuel Tax Rates Increase”) and http://www.finplaneducation.net/indiana_personal_income.htm (“Indiana Personal Income History”).
The annual index factor that would increase the state’s three fuel tax rates is based 50/50 on annual changes in inflation (as measured by the Consumer Price Index) and annual changes in Indiana Personal Income.
Indiana Personal Income should not be used as part of an annual index factor to increase fuel tax rates because Hoosiers surviving on Social Security would pay more than their fair share. Annual percent changes in Indiana Personal Income have been more than the annual percent changes in the Social Security Cost-Of-Living Adjustment in 19 of the last 26 years and 5 of the last 6 years.
Also, the effects of using the annual index factor in HB 1002 to increase the three fuel rates during Fiscal Years 2019 through 2025 can be estimated using actual pertinent data from the past seven Fiscal Years. The estimated Fiscal Year 2025 fuel tax rate increase from Fiscal Year 2018 would be (a) 50.4% more than the estimated inflation increase for the Gasoline Tax, (b) 61.3% more than the estimated inflation increase for the Special Fuel Tax, and (c) 100.0% more than the estimated inflation increase for the Motor Carrier Surcharge Tax.
It is apparent that the annual index factor in HB 1002 is actually a Taxpayer UNfriendly KEEP-YOUR-GOVERNMENT-FAT & HAPPY Index Factor that would provide additional revenues much in excess of overall Consumer Price Index inflation increases
– and it should not be assumed that the increasing costs of transportation infrastructure improvements must be more than the overall rate of inflation.The Indiana Farm Bureau is an unabashed supporter of every one of the 39 tax and fee increases that would be imposed by HB 1002, as evidenced by their participation in writing, lobbying for, and testifying in support of the legislation – and the $2,000 they contributed in 2016 to the campaign of State Representative Ed Soliday, the author of HB 1002. There is nothing necessarily wrong with the Indiana Farm Bureau’s aggressive support of HB 1002 – except they are misrepresenting to their members one of the key provisions of HB 1002.
The March 24 Public Policy Dispatch from the Indiana Farm Bureau includes the following statements: “Key provisions of HB 1002, which passed the House by a vote of 61-36, include increasing the gas tax, special fuel tax and the motor carrier surcharge tax by 10 cents. Those taxes also will be indexed to inflation and Indiana personal income growth through 2024, with a cap of 1 percent increase per year.”
Effective the 2019 Fiscal Year and continuing through the 2025 Fiscal Year, HB 1002 would adjust the Gasoline Tax rate, the Special Fuel Tax rate, and the Motor Carrier Surcharge Tax rate each year based on inflation and Indiana Personal Income increases. However, each of the three annual rate increases would be limited to $0.01 per gallon – which is significantly MORE than “a cap of 1 percent increase per year” as misrepresented by the Indiana Farm Bureau.
HB 1002 would likely increase each of the state’s three fuel tax rates by $0.01 per gallon for every one of the seven Fiscal Years 2019 through 2025 if the state’s current economic environment continues. Assuming effective the 2018 Fiscal Year that the Gasoline Tax rate is increased to $0.28 per gallon, the Special Fuel Tax rate is increased to $0.26 per gallon, and the Motor Carrier Surcharge Tax Rate is increased to $0.21 per gallon, the percent annual increases in the state’s three fuel tax rates for the next seven Fiscal Years would be as listed next.
Expected Gasoline Tax Rates
$0.29 per gallon in Fiscal Year 2019 = 3.57% increase
$0.30 per gallon in Fiscal Year 2020 = 3.45% increase
$0.31 per gallon in Fiscal Year 2021 = 3.33% increase
$0.32 per gallon in Fiscal Year 2022 = 3.23% increase
$0.33 per gallon in Fiscal Year 2023 = 3.13% increase
$0.34 per gallon in Fiscal Year 2024 = 3.03% increase
$0.35 per gallon in Fiscal Year 2025 = 2.94% increase
Expected Special Fuel Tax Rates
$0.27 per gallon in Fiscal Year 2019 = 3.85% increase
$0.28 per gallon in Fiscal Year 2020 = 3.70% increase
$0.29 per gallon in Fiscal Year 2021 = 3.57% increase
$0.30 per gallon in Fiscal Year 2022 = 3.45% increase
$0.31 per gallon in Fiscal Year 2023 = 3.33% increase
$0.32 per gallon in Fiscal Year 2024 = 3.23% increase
$0.33 per gallon in Fiscal Year 2025 = 3.13% increase
Expected Motor Carrier Surcharge Tax Rates
$0.22 per gallon in Fiscal Year 2019 = 4.76% increase
$0.23 per gallon in Fiscal Year 2020 = 4.55% increase
$0.24 per gallon in Fiscal Year 2021 = 4.35% increase
$0.25 per gallon in Fiscal Year 2022 = 4.17% increase
$0.26 per gallon in Fiscal Year 2023 = 4.00% increase
$0.27 per gallon in Fiscal Year 2024 = 3.85% increase
$0.28 per gallon in Fiscal Year 2025 = 3.70% increase
The expected Gasoline Tax rate will increase 25.00% from $0.28 per gallon in Fiscal Year 2018 to $0.35 per gallon in Fiscal Year 2025 – the expected Special Fuel Tax rate will increase 26.92% from $0.26 per gallon in Fiscal Year 2018 to $0.33 per gallon in Fiscal Year 2025 – and the expected Motor Carrier Surcharge Tax rate will increase 33.33% from $0.21 per gallon in Fiscal Year 2018 to $0.28 per gallon in Fiscal Year 2025. The Consumer Price Index inflation only increased 11.87% the past seven years: see http://www.finplaneducation.net/indiana_personal_income.htm.
It is readily apparent that the annual index factor in HB 1002 that would be used to increase the state’s fuel tax rates each Fiscal Year 2019 through 2025 is actually
a Taxpayer UNfriendly KEEP-YOUR-GOVERNMENT-FAT & HAPPY Index Factor that would provide additional revenues much in excess of overall Consumer Price Index inflation increases – and it should not be assumed that the increasing costs of transportation infrastructure improvements must be more than the overall rate of inflation. The Indiana Farm Bureau must quit misleading its membership by incorrectly stating that the annual fuel tax rate increases in HB 1002 are capped at a one percent increase. Instead, the Indiana Farm Bureau should support the Watchdog Indiana Transportation Infrastructure Funding Plan that would eliminate 22 of the HB 1002 tax and fee increases favored by the Indiana Farm Bureau – while still providing 98% as much additional new revenue as HB 1002 in Fiscal Years 2018 through 2021: see http://www.finplaneducation.net/watchdog_transportation_plan.htm.ACT NOW #4: Fiscal Year 2018 Fuel Tax Rates Increase
Please ACT NOW and contact your elected General Assembly public servants to let them know your opinions regarding the Indiana House Bill 1002 ONE TIME $0.10 per gallon rate increases in Fiscal Year 2018 for the state’s Gasoline, Special Fuel, and Motor Carrier Surcharge taxes.
The state's Gasoline Tax rate is now $0.18 per gallon, the Special Fuel Tax rate is $0.16 per gallon, and the Motor Carrier Surcharge Tax rate is $0.11 per gallon. It is expected that HB 1002 would increase each of these three fuel tax rates by $0.10 per gallon in Fiscal Year 2018 - the Gasoline Tax rate would become $0.28 per gallon, the Special Fuel Tax rate would become $0.26 per gallon, and the Motor Carrier Surcharge Tax rate would become $0.21 per gallon. Details regarding the data and conclusions included in this E-mail Update can be found online at http://www.finplaneducation.net/fuel_taxes_history.htm (“Indiana Fuel Taxes History”) and http://www.finplaneducation.net/indiana_personal_income.htm (“Indiana Personal Income History”).
Most Hoosier individuals who drive motor vehicles pay the state Gasoline Tax at the gas pump. The 55.6% Fiscal Year 2018 Gasoline Tax rate increase to $0.28 per gallon from $0.18 per gallon would be significantly more than the 30.4% inflation increase since the rate was set at $0.18 per gallon in 2003. However, the Gasoline Tax paid per citizen declined 10.2% from Fiscal Year 2004 to Fiscal Year 2016 while inflation increased 27.1%. Also, annual Gasoline Tax revenue declined 4.4% from $582,610,736 in Fiscal Year 2004 to $556,824,109 in Fiscal Year 2016 at the same time that inflation increased 27.1%.
The state Special Fuel Tax is imposed at the gas pump on diesel, biodiesel, and natural gas products sold or used in producing or generating power for propelling motor vehicles. The 62.5% Fiscal Year 2018 Special Fuel Tax rate increase to $0.26 per gallon from $0.16 per gallon would be somewhat less than the 93.6% inflation increase since the rate was set at $0.16 per gallon in 1989. However, the annual Special Fuel Tax revenue increased 94.5% from $95,712,300 in Fiscal Year 1990 to $186,164,458 in Fiscal Year 2016 while inflation increased only 83.6%.
The state Motor Carrier Surcharge Tax is paid by carriers who operate commercial motor vehicles on any highway in Indiana based on the total amount of motor fuel consumed by the commercial motor vehicles. The 90.9% Fiscal Year 2018 Motor Carrier Surcharge Tax rate increase to $0.21 per gallon from $0.11 per gallon would be a little less than the 93.6% inflation increase since the rate was set at $0.11 per gallon in 1989. However, the annual Motor Carrier Surcharge Tax revenue increased 84.9% from $54,159,100 in Fiscal Year 1990 to $100,162,396 in Fiscal Year 2016 while inflation increased only 83.6%.
The state’s Gasoline Tax, Special Fuel Tax, and Motor Carrier Surcharge Tax are true user fees in that the amount of money you pay as a driver is directly proportionate to the amount of fuel you consume, which is directly proportional to the amount of driving you do. Watchdog Indiana believes it would be Taxpayer Neutral to increase the three fuel tax rates ONE TIME by $0.10 per gallon effective Fiscal Year 2018.
The three state fuel taxes are important revenue sources for the maintenance and improvement of our state and local transportation infrastructure. The additional new revenues that would result from a ONE TIME increase in the (a) Gasoline Tax rate to $0.28 per gallon from $0.18, (b) Special Fuels Tax rate to $0.26 per gallon from $0.16, and (c) Motor Carrier Surcharge Tax rate to $0.21 per gallon from $0.11 include the following:
Fiscal Year 2018 additional new revenues total $520.9 million:
$310.3 million from Gasoline Tax
$118.8 million from Special Fuels Tax
$91.8 million from Motor Carrier Surcharge Tax
Fiscal Year 2019 additional new revenues total $546.9 million:
$324.5 million from Gasoline Tax
$126.9 million from Special Fuels Tax
$95.5 million from Motor Carrier Surcharge Tax
Fiscal Year 2020 additional new revenues total $569.2 million:
$336.2 million from Gasoline Tax
$134.5 million from Special Fuels Tax
$98.5 million from Motor Carrier Surcharge Tax
Fiscal Year 2021 additional new revenues total $587.7 million:
$345.5 million from Gasoline Tax
$141.2 million from Special Fuels Tax
$101.0 million from Motor Carrier Surcharge Tax
Are Hoosier individuals who drive motor vehicles paying their “fair share” to maintain the roads and bridges throughout our state? It is important to note that annual Gasoline Tax revenue declined 4.4% from Fiscal Year 2004 to Fiscal Year 2016, and that Gasoline Tax paid per citizen declined 10.2% – at the same time that inflation increased 27.1%. The proposed 55.6% ONE TIME Gasoline Tax rate increase in Fiscal Year 2018 to $0.28 per gallon from $0.18 per gallon would result in individual Hoosier motorists equitably sharing in the cost of our state and local transportation infrastructure.
The state’s Special Fuel and Motor Carrier Surcharge taxes are primarily paid by carriers who operate commercial motor vehicles. It is important to note that annual revenues from both the Special Fuel Tax and Motor Carrier Surcharge Tax have kept up with inflation the past 26 Fiscal Years. However, the proposed ONE TIME Fiscal Year 2018 rate increases of $0.10 per gallon for both the Special Fuel and Motor Carrier Surcharge taxes are acceptable because commercial trucks and buses disproportionally damage our roads and bridges. It is possible that some commercial motor vehicles might avoid paying higher Indiana diesel fuel taxes because cumulative diesel fuel tax rates in some surrounding states would be lower – and some diesel fuel tax increases would likely be passed along to individual Hoosiers through higher prices for goods transported by commercial carriers.
It is important that each of the state’s three fuel tax rates be increased $0.10 per gallon ONE TIME only in Fiscal Year 2018 – the Indiana General Assembly could consider increasing the three fuel tax rates again in about 10 years when increased Gasoline Tax revenues have been offset by overall Consumer Price Index inflation increases.
ACT NOW #5: Support Gasoline Use Tax Distribution Changes
Please ACT NOW and contact your elected General Assembly public servants to let them know that you support including in Indiana House Bill 1002 immediate changes in the distribution of the Gasoline Use Tax so that additional new revenues can be dedicated to the State Highway Fund and the Local Road and Bridge Matching Grant Fund.
The Gasoline Use Tax is a 7% sales tax on gasoline purchases made at the gas pump. The Fiscal Year 2017 Gasoline Use Tax revenues are now distributed as follows: 14.286% deposited in the Motor Vehicle Highway Account, 85.714% deposited in the state’s General Fund.
It is Taxpayer Friendly that every sales tax dollar collected on gasoline sales should be immediately dedicated to the construction and maintenance of all the state’s roads and bridges.
Watchdog Indiana suggests that the following changes be made in the distribution of the Gasoline Use Tax revenues starting with Fiscal Year 2018 and continuing every Fiscal Year thereafter: 14.286% deposited in the Motor Vehicle Highway Account, 42.857% deposited in the State Highway Fund, 42.857% deposited in the Local Road and Bridge Matching Grant Fund.
These suggested Gasoline Use Tax distribution changes would result
in the following additional new revenues for the State Highway Fund:
Fiscal Year 2018 - $183.4 million
Fiscal Year 2019 - $191.7 million
Fiscal Year 2020 - $205.2 million
Fiscal Year 2021 - $215.6 million
The suggested Gasoline Use Tax distribution changes would also
result in the following additional new revenues for the Local Road and Bridge
Matching Grant Fund:
Fiscal Year 2018 - $122.3 million
Fiscal Year 2019 - $95.8 million
Fiscal Year 2020 - $102.6 million
Fiscal Year 2021 - $107.8 million
The suggested Gasoline Use Tax distribution changes would provide the additional new revenues necessary to implement the HB 1002 provision that would increase (effective July 1, 2017) the grant award to local units of government from the Local Road and Bridge Matching Grant Fund from 100% to 400% of the amount the local government commits to a project approved by the Indiana Department of Transportation (INDOT). Any money a local government unit is authorized to use for a local road or bridge project would become eligible under HB 1002 as a local match source for awards from the Local Road and Bridge Matching Grant Fund. These changes could increase annual Local Road and Bridge Matching Grant Fund expenditures to local units of government, depending on the decisions of INDOT administrators. Making the necessary Gasoline Use Tax distribution changes to increase awards to local government units from the Local Road and Bridge Matching Grant Fund – by decreasing the local match from 50/50 to 20/80 – is Taxpayer Friendly.
Some legislators express concern that immediately dedicating all of the Gasoline Use Tax to transportation infrastructure needs would result in the state’s General Fund having $305.7 million less in Fiscal Year 2018, $287.6 million less in Fiscal Year 2019, $307.8 million less in Fiscal Year 2020, and $323.4 million less in Fiscal Year 2021. However, there are numerous ways to manage the proposed state General Fund revenue reductions without impacting the delivery of necessary services. For example, use of the Governor’s reversion authority to NOT spend unneeded state General Fund budgeted amounts has averaged $232.1 million the past six Fiscal Years from 2012 through 2017. Also, reducing the state's Fiscal Year 2017 total cash reserves of $1.73060 billion to the prudent Fiscal Year 2018 total state cash reserves of $1.55882 billion would free up $171.8 million for new General Fund spending in Fiscal Year 2018. And, the latest forecast for the state General Fund shows an increase of $420.9 million in Fiscal Year 2018 and $592.6 million in Fiscal Year 2019.
NOTE: Pertinent data supporting the conclusions in this ACT NOW suggestion can be found online at http://www.finplaneducation.net/revenue_forecasts_history.htm (“Indiana State Revenue Forecasts History”) and http://www.finplaneducation.net/state_reserves_history.htm (“Indiana State Reserves History”).
ACT NOW #6: Support Transportation Projects Bonding
Please ACT NOW and contact your elected Indiana General Assembly public servants to let them know that you support including in any approved transportation infrastructure funding legislation the use of existing assets in the Major Moves Construction Fund and the Next Generation Trust Fund to make the debt payments on $500 million of bonds and notes issued by the Indiana Finance Authority for the construction of transportation projects.
The General Assembly has established the Indiana Finance Authority (IFA) as a body politic separate from the state to undertake debt financing for governmental purposes. Indiana Senate Bill 262 (see http://iga.in.gov/legislative/2017/bills/senate/262) would allow the IFA to issue bonds or notes after April 30, 2017, for the construction of transportation projects. The total amount of all such bonds and notes issued by the IFA may not exceed $500 million. The bonds or notes must mature not more than twenty years after the date the bonds or notes are issued. The Board of Trustees of the Indiana Public Retirement System would be authorized to invest in the bonds or notes. All or a part of the bonds or notes sold by the IFA must first be offered to a pension fund administered by the Board of Trustees of the Indiana Public Retirement System, and the IFA may sell the bonds or notes to such a pension fund at a negotiated sale. To the extent a pension fund administered by the Board of Trustees of the Indiana Public Retirement System does not purchase all or a part of the bonds or notes, the IFA may sell the bonds or notes at a public sale. If the state leases facilities financed by the IFA, the lease costs may be impacted by the decisions of Indiana Public Retirement System and/or the public market to purchase all or part of the bonds. The fiscal impact of the SB 262 requirements is indeterminate, but may adversely affect the interest rate that IFA pays on these bonds.
A one-time lease payment for operation of the Indiana Toll Road less costs was deposited into the Major Moves Construction Fund in Fiscal Year 2007. Money in this Fund may be used to pay any obligation incurred by the Indiana Finance Authority, Indiana Department of Transportation, or an operator in connection with the execution and performance of public-private agreements for tollways or toll roads, for lease payments to the Indiana Finance Authority, and to fund projects in INDOT’s transportation plan. Money in the fund may not be used in connection with a public-private agreement concerning a passenger or freight railroad system. The Major Moves Construction Fund had $663 million net assets on June 30, 2016.
The Next Generation Trust Fund was established in FY 2007 with the transfer of $500 million from the proceeds of the lease of the Indiana Toll Road. The income that accrues from investment of the money in this Fund is deposited in the Fund. The Treasurer of State transfers all accrued interest in this Fund to the Major Moves Construction Fund on March 15, 2011, and on March 15 every five years thereafter. The Next Generation Trust Fund had $605 million net assets on June 30, 2016.
In order to avoid tax increases, it is Taxpayer Friendly to use the assets in the Major Moves Construction Fund and the Next Generation Trust Fund to make the debt payments on bonds and notes issued by the Indiana Finance Authority for the construction of transportation projects.
ACT NOW #7: Support Railroad Crossing Remediation Projects
Please ACT NOW and contact your elected Indiana General Assembly public servants to let them know that you support including in Indiana House Bill 1002
a change in the off-the-top distribution of Gasoline Tax revenue so that Gasoline Tax revenue can be used to make prudent payments on bonds or notes issued for state highway railroad crossing remediation projects.Effective July 1, 2017, HB 1002 would (a) permit the Indiana Department of Transportation (INDOT) to approve state highway railroad crossing remediation projects at a stage of critical need, and (b) authorize the Indiana Finance Authority (IFA) to finance approved projects until Fiscal Year 2025 subject to a maximum annual debt service limit of $10,000,000.
Repayment of bonds or notes secured for railroad crossing
remediation projects would impact the State Highway Road Construction
Improvement Fund (SHRCIF), which receives a portion of the state Gasoline Tax
revenue (about $62.2 million for Fiscal Year 2016). HB 1002 would also change
the off-the-top distribution of Gasoline Tax revenue deposited in the SHRCIF
from a 11.11 percent distribution to a flat $70 million annual amount. This
distribution change would be used to make payments on bonds or notes obtained
for state highway railroad crossing remediation projects. The distribution
change is expected to increase revenue to the SHRCIF as follows:
Fiscal Year 2018 additional revenue = $7.9 million
Fiscal Year 2019 additional revenue = $8.3 million
Fiscal Year 2020 additional revenue = $8.6 million
Fiscal Year 2021 additional revenue = $8.8 million
Issuing Indiana Finance Authority bonds or notes the next seven years to improve state highway railroad crossings that are at a stage of critical need is Taxpayer Friendly – and
it is Taxpayer Friendly that Gasoline Tax revenue would be used to make prudent payments on the bonds or notes.ACT NOW #8: Support Transportation Funding Exchange Program Changes
Please ACT NOW and contact your elected Indiana
General Assembly public servants to let them know that you support including in
Indiana House Bill 1002 the proposed Taxpayer Friendly changes in the
Transportation Funding Exchange Program between our state and local government
units.
NOTE: Detailed information about the proposed Transportation
Funding Exchange Program changes in HB 1002 can be found under the heading “HB
1002 Component #16” online at http://www.finplaneducation.net/2017_transportation_funding.htm.
Effective July 1, 2017, HB 1002 would make changes to the Transportation
Funding Exchange Program between the state and local government units. The local
government match requirement for participation in the Exchange Program would be
20%, which is currently the standard local match for the federal Surface
Transportation Program funds that are most often applied for by Indiana counties
and municipalities. The Indiana Department of Transportation (INDOT) will still
have discretion in determining which projects get awarded federal funds through
their normal call for projects procedure, but HB 1002 would make all projects
that have been awarded federal funds eligible for the Exchange Program – to
date, INDOT has only agreed to use the Exchange Program sparingly on a case by
case basis. HB 1002 would also require INDOT to exchange 100% of the local share
with state funding (instead of 75%). In addition, HB 1002 would set aside 25% of
INDOT’s overall annual federal program for local projects funded with federal
dollars. As a result, the maximum estimated State Highway Funds that would be
set aside for local fund swaps under HB 1002 is approximately $200 million, with
the state being required to expend approximately $49 million in State Highway
Funds under the match to use $249 million in federal funds.
Federal dollars enable Indiana counties and municipalities to complete road and
bridge projects that would not be possible with only local funding. However, the
federal process can add a significant amount of time and cost to a project.
Additionally, using state and local dollars for constructing local projects (in
lieu of federal dollars) can allow the projects to be “right-sized” to meet
local transportation needs rather than having to be designed to meet federal
standards that might not be appropriate for all local projects.
What makes the Transportation Funding Exchange Program changes in HB 1002
most appealing for local governments is the increased swap percentage from 75%
to 100%. The total budget for local projects would remain the same since the
federal funds could be swapped 100% for state funds (instead of 75%).
The HB 1002 changes to the Transportation Funding Exchange
Program are Taxpayer Friendly from the standpoint of Indiana counties and
municipalities because (a) local road and bridge projects can be
“right-sized” to meet local transportation needs rather than having to be
designed to meet federal standards that might not be appropriate for all local
projects and (b) the total budget for local projects would remain the same since
the federal funds could be swapped 100% for state funds (instead of 75%).
Public Hearing Testimony
The following public hearing testimony was presented to a joint meeting of the Indiana Senate Tax and Fiscal Policy and the Indiana Senate Homeland Security and Transportation Committee on March 14, 2017:
Mr. Chairmen, members of the Committees, my name is Aaron Smith. I reside in Lebanon, the county seat of Boone County, and I am the Founder of the Watchdog Indiana blog website. The data and analyses supporting my testimony today can be accessed through the Watchdog Indiana Home Page.
Each of the twenty major components of HB 1002 have been analyzed from a Taxpayer Friendly standpoint. An HB 1002 component is Taxpayer Friendly if it is results-oriented, compassionate, and fiscally responsible.
Ten of the HB 1002 components are Taxpayer Friendly and should be included in the final transportation infrastructure funding legislation.
(1) Every sales tax dollar collected on gasoline sales should be immediately dedicated to the construction and maintenance of all the state’s roads and bridges. Some legislators express concern that immediately dedicating all of the Gasoline Use Tax to transportation infrastructure needs would result in state General Fund shortfalls. However, there are numerous ways to manage the state General Fund to avoid the shortfalls. For example, use of the Governor’s reversion authority to not spend unneeded state General Fund budgeted amounts has averaged $232.1 million the past six Fiscal Years from 2012 through 2017. Also, reducing the state's Fiscal Year 2017 total cash reserves to a prudent amount would free up $182.5 million for new General Fund spending in Fiscal Year 2018. And, the latest forecast for the state General Fund shows an increase of $437.3 million in Fiscal Year 2018 and $606.2 million in Fiscal Year 2019.
(2) Increasing awards to local government units from the Local Road and Bridge Matching Grant Fund – by decreasing the local match from 50/50 to 20/80 – is Taxpayer Friendly IF the increased awards use the increased revenues for the Local Road and Bridge Matching Grant Fund that would come from changing the Gasoline Use Tax distribution to 14.286% deposited in the Motor Vehicle Highway Account, 42.857% deposited in the Local Road and Bridge Matching Grant Fund, and 42.857% deposited in the State Highway Fund.
(3) Issuing Indiana Finance Authority bonds the next seven years to improve state highway railroad crossings that are at a stage of critical need is Taxpayer Friendly - as long as the total annual bond debt service payments remain at a prudent amount.
(4) It is Taxpayer Friendly to change the off-the-top distribution of Gasoline Tax revenue so that Gasoline Tax revenue would be used to make prudent payments on bonds obtained for state highway railroad crossing remediation projects.
(5) Changes to the Transportation Funding Exchange Program are Taxpayer Friendly from the standpoint of Indiana counties and municipalities because (a) local road and bridge projects can be “right-sized” to meet local transportation needs rather than having to be designed to meet federal standards that might not be appropriate for local projects and (b) the total budget for local projects would remain the same since the federal funds could be swapped 100% for state funds (instead of 75%).
(6) Developing and maintaining a centralized electronic statewide asset management database would be Taxpayer Friendly IF timely information and "what if" analyses are provided to help make cost-effective resource allocation decisions regarding the state’s transportation infrastructure.
(7) It is Taxpayer Friendly to establish a Weigh-In-Motion Pilot Program to help make the regulation of truck size and weight as efficient as can be practically attained.
(8) Using existing Indiana Department of Revenue resources to study Special Fuel Tax collections would be Taxpayer Friendly if the study results in the identification of practical methods for the owners of motor vehicles propelled by special fuel or natural gas products to more accurately pay their fair share of fuel tax.
(9) It is Taxpayer Friendly to have the Motor Carrier Surcharge Tax paid at the pump instead of through quarterly Indiana Department of Revenue filings if motor carriers will more accurately pay their fair share of fuel tax. It is unfortunate that individuals who operate personal diesel vehicles will have to go to the trouble of claiming a Motor Carrier Surcharge Tax refund.
(10) The heavy vehicles annual registration fee increases are Taxpayer Friendly because heavy vehicles cause a disproportionate share of damage to roads and bridges compared to lighter vehicles.
Six of the HB 1002 components are Taxpayer Neutral and should PERHAPS be included in the final transportation infrastructure funding legislation.
The Funding for Indiana's Roads for a Stronger Safer Tomorrow Task Force has considerable expertise regarding how to identify the state’s transportation infrastructure needs. However, the influence of the Build Indiana Political Action Committee tilts the Task Force outcomes in favor of those who have a vested interest in more public spending on the state’s transportation infrastructure at the expense of taxpayers. For these reasons, continuing the Task Force through December 31, 2018, is Taxpayer Neutral.
If it can be accomplished using existing INDOT resources and funding levels, it would be Taxpayer Neutral to have INDOT study vehicle-miles travelled fees, establish consistent methods to evaluate the condition of state and local roads and bridges, and develop a prioritization system to improve the state and local roads and bridges.
Amending the assessment procedures for motor carrier civil penalties would be Taxpayer Neutral because the amendments appear to be consistent with the procedures in place for most other civil penalties imposed by the state.
The new annual $150 electric vehicle supplemental registration fee would take the place of the Gasoline Tax that electric vehicle owners do not pay so the owners can pay their “fair share” to help build and maintain the roadways and bridges they use. The $150 fee is less than the $201 in annual Gasoline Tax paid by the average licensed Indiana driver. However, the fee is NOT directly proportional to the number of miles driven. Also, if the fee is increased every five years, the increase should be computed using ONLY the Consumer Price Index for all Urban Consumers. Everything considered, the new annual $150 electric vehicle supplemental registration fee is Taxpayer Neutral.
Alternative fuel decal fees are NOT true user fees in that the amount of money paid is not directly proportional to the number of miles driven. However, the fees would not be paid by individual motorists. And most of these fees would be paid by the owners of trucks and buses, which cause disproportional damage to roads and bridges. For these reasons, the increases in the alternative fuel decal fees are Taxpayer Neutral.
The state’s Gasoline Tax, Special Fuel Tax, and Motor Carrier Surcharge Tax are true user fees in that the amount of money you pay as a driver is directly proportionate to the amount of fuel you consume, which is directly proportional to the amount of driving you do. It would be Taxpayer Neutral to increase the three fuel tax rates one time by $0.10 per gallon effective Fiscal Year 2018.
Most Hoosier individuals who drive motor vehicles pay the state Gasoline Tax at the gas pump. The Fiscal Year 2018 Gasoline Tax rate increase to $0.28 per gallon would be 82.9% more than the inflation increase since the rate was set at $0.18 per gallon in 2003. However, the Gas Tax paid per citizen declined 10.2% from Fiscal Year 2004 to Fiscal Year 2016 while inflation increased 27.1%.
The state Special Fuel Tax is imposed on diesel, biodiesel, and natural gas products sold or used in producing or generating power for propelling motor vehicles. The Fiscal Year 2018 Special Fuel Tax rate increase to $0.26 per gallon would be 33.2% less than the inflation increase since the rate was set at $0.16 per gallon in 1989. Also, the annual Special Fuel Tax revenue increased 94.5% from Fiscal Year 1990 to Fiscal Year 2016 while inflation increased only 83.6%. Some commercial motor vehicles might avoid paying higher Indiana diesel fuel taxes because cumulative diesel fuel tax rates in some surrounding states would be lower.
The state Motor Carrier Surcharge Tax is paid by carriers who operate commercial motor vehicles on any highway in Indiana based on the total amount of motor fuel consumed by the commercial motor vehicles. The Fiscal Year 2018 Motor Carrier Surcharge Tax rate increase to $0.21 per gallon would be 2.9% less than the inflation increase since the rate was set at $0.11 per gallon in 1989. Also, the annual Motor Carrier Surcharge Tax revenue increased 84.9% from Fiscal Year 1990 to Fiscal Year 2016 while inflation increased only 83.6%.
Four of the HB 1002 components are Taxpayer UNfriendly and should NOT be included in the final transportation infrastructure funding legislation.
It would be Taxpayer UNfriendly to use the annual index factor in HB 1002 to increase the three fuel tax rates each fiscal year 2019 through 2025. Indiana Personal Income should not be used as part of an annual index factor to increase fuel tax rates each year because Hoosiers surviving on Social Security would pay more than their fair share due to the fact that annual percent changes in the Indiana Personal Income have been more than the annual percent changes in the Social Security Cost-Of-Living Adjustment in 19 of the last 26 years and 5 of the last 6 years. Also, the effects of using the annual index factor in HB 1002 to increase the three fuel rates during Fiscal Years 2019 through 2025 can be estimated using actual pertinent data from the past seven Fiscal Years. The estimated Fiscal Year 2025 fuel tax rate increase from Fiscal Year 2018 would be (a) 50.4% more than the estimated inflation increase for the Gasoline Tax, (b) 61.3% more than the estimated inflation increase for the Special Fuel Tax, and (c) 100.0% more than the estimated inflation increase for the Motor Carrier Surcharge Tax. It is apparent that the annual index factor in HB 1002 is actually a Taxpayer UNfriendly KEEP-YOUR-GOVERNMENT-FAT & HAPPY Index Factor that would provide additional revenues much in excess of overall Consumer Price Index inflation increases – and it should not be assumed that the increasing costs of transportation infrastructure improvements must be more than the overall rate of inflation.
It is unconscionably Taxpayer UNfriendly to take any action whatsoever to establish new toll roads at the same time that 39 tax and fee increases are proposed by HB 1002 to provide a total of more than $4 billion in additional new revenue for transportation infrastructure funding for Fiscal Years 2018 through 2021. Toll roads approval should NOT be taken away from the General Assembly and given solely to the Governor because it is more difficult for vested interests to use campaign contributions to “influence” 150 members of the General Assembly than it is to get toll roads approval from just the Governor. Also, motorists in 32 counties could end up being enticed to congest local roads and bridges to avoid paying interstate tolls. And, hundreds of thousands of dollars should not be taken away from road funds to hire an outside consulting firm to conduct a Taxpayer UNfriendly feasibility study on tolling interstate highways.
The proposed $15 annual transportation infrastructure improvement fee is Taxpayer UNfriendly. This new fee would NOT be a true user fee because the fee amount is not directly proportional to the number of miles driven. The $15 annual fee would be paid by the young pharmaceutical salesman residing in Carmel who earns $250,000 a year driving his brand new Lexus thousands of miles throughout Indiana. The same $15 annual fee would also be be paid by the elderly widow residing in Lebanon surviving on Social Security who drives her 1998 Olds 98 twice a week to the grocery store and church. The $15 annual transportation infrastructure improvement fee would actually be a regressive tax that adversely impacts lower income Hoosiers.
This municipal Excise Surtax and Wheel Tax is NOT a true user fee because the fee amount is not directly proportional to the number of miles driven. Allowing additional municipalities to impose the Excise Surtax and Wheel Tax is Taxpayer UNfriendly because this regressive tax has a disproportionate adverse impact on lower income Hoosiers.
Finally, In order to avoid tax increases, it is Taxpayer Friendly to use the assets in the Major Moves Construction Fund and the Next Generation Trust Fund to make the debt payments on the $500 million of Indiana Finance Authority bonds and notes authorized by Senate Bill 262 for the construction of transportation projects. The provisions of SB 262 should be included in the final transportation infrastructure funding legislation.
Thank you for your patience and attention during this rather lengthy testimony. If it is appropriate, I welcome any questions or comments.
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