Watchdog Indiana Transportation Infrastructure Funding Plan

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WIN Plan Overview

The Watchdog Indiana Transportation Infrastructure Funding Plan (WIN Plan) includes 17 Suggestions to improve the state's transportation infrastructure funding.

WIN Plan would have the following additional revenue impacts to state transportation infrastructure funds as the result of (a) changing the distribution of the Sales Tax collected on gasoline, (b) changing off-the-top distributions of Gasoline Tax revenue, (c) increasing the Gasoline Tax rate in Fiscal Year 2018, (d) increasing the Special Fuel Tax rate in Fiscal Year 2018, (e) increasing the Motor Carrier Surcharge Tax rate in Fiscal Year 2018, (f) collecting the Motor Carrier Surcharge Tax at the pump, (g) changing the distribution of the Motor Carrier Surcharge Tax revenue, (h) instituting an Electric Vehicle Supplemental Registration Fee of $150, and (i) allowing the Indian Finance Authority to issue after April 30, 2017, bonds or notes that do not exceed a total of $500 million for the construction of transportation projects,
Fiscal Year 2018
    $480.1 million State Highway Fund
    $123.1 million Local Road and Bridge Matching Grant Fund
    $    7.9 million State Highway Road Construction Improvement Fund
    $611.1 million TOTAL FY 2018 ADDITIONAL STATE REVENUE
Fiscal Year 2019
    $503.0 million State Highway Fund
    $ 97.8 million Local Road and Bridge Matching Grant Fund
    $    8.3 million State Highway Road Construction Improvement Fund
    $609.1 million TOTAL FY 2019 ADDITIONAL STATE REVENUE
Fiscal Year 2020
    $529.1 million State Highway Fund
    $105.2 million Local Road and Bridge Matching Grant Fund
    $    8.6 million State Highway Road Construction Improvement Fund
    $642.9 million TOTAL FY 2020 ADDITIONAL STATE REVENUE
Fiscal Year 2021
    $549.7 million State Highway Fund
    $111.0 million Local Road and Bridge Matching Grant Fund
    $    8.8 million State Highway Road Construction Improvement Fund
    $669.5 million TOTAL FY 2021 ADDITIONAL STATE REVENUE
After April 30, 2017
    $500 million TOTAL BONDS & NOTES ISSUED BY INDIANA FINANCE AUTHORITY

WIN Plan would also have the following additional revenue impacts to local transportation infrastructure funds as the result of (a) increasing the Gasoline Tax rate in Fiscal Year 2018, (b) increasing the Special Fuel Tax rate in Fiscal Year 2018, and (c) increasing the Motor Carrier Surcharge Tax rate in Fiscal Year 2018:
Fiscal Year 2018
    $220.1 million TOTAL FY 2018 ADDITIONAL LOCAL REVENUE
Fiscal Year 2019
    $231.3 million TOTAL FY 2019 ADDITIONAL LOCAL REVENUE
Fiscal Year 2020
    $240.9 million TOTAL FY 2020 ADDITIONAL LOCAL REVENUE
Fiscal Year 2021
    $249.1 million TOTAL FY 2021 ADDITIONAL LOCAL REVENUE

Additionally, WIN Plan could increase local road funding by making changes to the Transportation Funding Exchange Program.

Total state reserves equal to 10% of forecasted state General Fund revenue are prudently sufficient to meet reasonably anticipated Fiscal Year emergency needs. The current Fiscal Year 2017 state reserves are $196.3 million more than what is needed to prudently meet the state's reasonably anticipated emergency needs. Combining prudent state reserves with the forecasted increases in total state General Fund revenue WITHOUT NEW TAX AND FEE INCREASES results in there being (a) $619.8 million available for new state General Fund spending in Fiscal Year 2018 and (b) $545.6 million available for new state General Fund spending in Fiscal Year 2019. These state General Fund revenues available for new spending in Fiscal Years 2018 and 2019 WITHOUT NEW TAX AND FEE INCREASES can help provide additional transportation infrastructure funding. The analysis used to reach these conclusions is presented online at http://www.finplaneducation.net/state_reserves_history.htm.

The 17 WIN Plan Suggestions are summarized next. WIN Plan Suggestions #2 through #17 use the applicable legal language included in the version of Indiana House Bill 1002 that passed the Indiana House of Representatives on February 16, 2017.

WIN Plan Suggestion #1. Transportation Projects Bonding

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 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. To the extent that 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 bill’s requirement 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.

WIN Plan Suggestion #2. Gasoline Use Tax Distribution Changes

The Gasoline Use Tax is a 7% sales tax on gasoline purchases made at the gas pump. Listed next by state Fiscal Year is how the Gasoline Use Tax revenues are distributed - the changes suggested by WIN Plan are highlighted in bold blue.

Fiscal Year 2017: 14.286% deposited in the motor vehicle highway account, 85.714% deposited in the state general fund

Fiscal Year 2018 and thereafter: 14.286% deposited in the motor vehicle highway account, 42.857% deposited in the local road and bridge matching grant fund, 42.857% deposited in the state highway fund

These Gasoline Use Tax distribution changes would generate the following additional 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

These Gasoline Use Tax distribution changes would also generate the following additional 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

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.

Some legislators apparently are “concerned” that the suggested WIN Plan Gasoline Use Tax distribution changes 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. (Supporting data is compiled at http://www.finplaneducation.net/state_reserves_history.htm.)

WIN Plan Suggestion #3. Local Road and Bridge Matching Grant Fund Changes

Effective July 1, 2017, WIN Plan would increase 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 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.

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 included in the above WIN Plan Suggestion 2.

WIN Plan Suggestion #4. Railroad Crossing Remediation Projects

Effective July 1, 2017, WIN Plan would permit the Indiana Department of Transportation (INDOT) to approve certain railroad crossing remediation projects, and would authorize the Indiana Finance Authority (IFA) to finance approved projects subject to a maximum annual debt service limit of $10,000,000. To be approved, a railroad crossing remediation project would have to be at a state highway and be at a stage of critical need. The IFA would be authorized to obtain bonds for railroad crossing remediation projects until Fiscal Year 2025. State expenditures could increase by a maximum of $10 million per year in future years to pay down the principal and interest on any bonds and notes secured during that time period for eligible projects. Actual expenditures will depend on the amount of financing secured by the IFA and interest rates on the bonds or notes. Repayment of bonds or notes secured for railroad crossing remediation projects could impact the State Highway Road Construction Improvement Fund, which receives a portion of the state Gasoline Tax revenue (about $62.2 million for Fiscal Year 2016).

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.

WIN Plan Suggestion #5. Gasoline Tax Distribution Changes

WIN Plan would change the off-the-top distribution of Gasoline Tax revenue deposited in the State Highway Road Construction Improvement Fund (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 obtained for state highway railroad crossing remediation projects (see WIN Plan Suggestion D above). 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

WIN Plan would also remove off-the-top 5.56 percent distributions of gasoline tax revenue to both the State Highway Fund and local units of government through the Motor Vehicle Highway Account funding formula.

These two distribution changes will have a negligible impact on the Gasoline Tax revenues that go to the State Highway Fund, counties, cities, and towns.

It is Taxpayer Friendly that Gasoline Tax revenue would be used to make prudent payments on bonds obtained for state highway railroad crossing remediation projects.

WIN Plan Suggestion #6. Transportation Funding Exchange Program Changes

Effective July 1, 2017, WIN Plan would make changes to the Transportation Funding Exchange Program between the state and counties and municipalities. 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 (STP) funds that Indiana counties and municipalities most often apply for – it appears that the 20% match requirement would be more than the 10% match that federal law requires for the infrequently used Congestion Mitigation and Air Quality (CMAQ) and Highway Safety Improvement Program (HSIP) funds. 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 all projects that have been awarded federal funds would be eligible for the Exchange Program – to date, INDOT has only agreed to use the Exchange Program sparingly on a case by case basis. WIN Plan would also require INDOT to exchange 100% of the local share with state funding (instead of 75%). In addition, WIN Plan would set aside 25% of INDOT’s overall annual federal program for local projects funded with federal dollars. As a result, an estimated $249 million in State Highway Funds would be set aside for local fund swaps. The $249 million in set-aside funds does not necessarily represent a state expenditure increase as (a) local units will decide if they want to utilize the state funding swap, (b) local units are required to provide a 20% match of swapped funds, and (c) federal funds swapped for state funds could be utilized for state road projects with the state required to provide the 20% match required by the Federal Highway Administration. The maximum estimated State Highway Funds that would be used from the set-aside (after deducting the local match requirement) is approximately $200 million, with the state being required to expend approximately $49 million in State Highway Funds under the match to use the $249 million in federal funds.

The WIN Plan 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%).

WIN Plan Suggestion #7. Motor Carrier Surcharge Tax Payment Change

WIN Plan would require the Motor Carrier Surcharge Tax to be paid at the pump instead of through quarterly filings made with the Indiana Department of Revenue (DOR). As a result, the state is expected to collect an additional $20 million annually from motor carriers, which includes $10 million in previously uncollected tax revenue and an additional $10 million from the Motor Carrier Surcharge Tax rate increase for Fiscal Year 2018. Because the Motor Carrier Surcharge Tax will be paid at the pump, individuals who operate personal diesel vehicles would also pay the Motor Carrier Surcharge Tax at diesel pumps in the state. However, these individuals would be eligible for annual refunds equal to $100 for each state-registered diesel vehicle. Additional refunds could be claimed if proof is provided that Motor Carrier Surcharge Taxes paid during the year exceed the $100 refund. Net revenue collections will depend on (a) nonresident personal vehicles that purchase diesel in the state but do not claim a refund from the DOR, (b) actual diesel fuel consumption for resident personal vehicles, (c) the extent to which owners of resident vehicles claim payments greater than the $100 amount, and (d) the extent to which the $100 annual payment is greater than actual taxes paid. Issuing refunds to individuals who use diesel vehicles for personal use would increase agency workload. Expenses of providing a refund to personal diesel vehicle owners would come from the state Motor Vehicle Highway Account.

It is Taxpayer Friendly to have the Motor Carrier Surcharge Tax paid at the pump instead of through quarterly DOR 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 from the DOR.

WIN Plan Suggestion #8. Heavy Vehicles Annual Registration Fee Increase

Effective July 1, 2017, WIN Plan would increase the annual fee to register a truck, a tractor used with a semitrailer, or a for-hire bus as follows:
$315 (from $300) for a declared gross weight greater than 26,000 pounds and equal to or less than 36,000 pounds
$529 (from $504) for a declared gross weight greater than 36,000 pounds and equal to or less than 48,000 pounds
$756 (from $720) for a declared gross weight greater than 48,000 pounds and equal to or less than 66,000 pounds
$1,008 (from $960) for a declared gross weight greater than 66,000 pounds and equal to or less than 78,000 pounds
$1,423 (from $1,356) for a declared gross weight greater than 78,000 pounds
NOTE: HB 1002 would also divert 5% of the total registration fee to the Local Road and Bridge Matching Grant Fund (see HB 1002 component #4 above).

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.

WIN Plan Suggestion #9. Centralized Electronic Statewide Asset Management Database

Effective July 1, 2017, WIN Plan would appropriate $250,000 of Motor Vehicle Highway Account (MVHA) funds annually to the Indiana Department of Transportation for the Local Technical Assistance Program to develop and maintain a centralized electronic statewide asset management database. As a result, the State Highway Fund would receive approximately $133,000 less revenue from the MVHA and local units of government would receive approximately $117,000 less in local MVHA revenue per year.

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. It will be interesting to see if there is significant “conflict” between the priorities developed from using the centralized electronic statewide asset management database and the allocation decisions included in the various county, city, and town asset management plans. Some Federal Highway Administration resources pertaining to transportation asset management are available online at https://www.fhwa.dot.gov/asset/.

WIN Plan Suggestion #10. Weigh-In-Motion Pilot Program

WIN Plan would establish the Weigh-In-Motion Pilot Program. The Indiana Department of Transportation (INDOT) reports that currently there are no estimated state costs to operate the Weigh-In-Motion Pilot Program. The Pilot Program is expected to be provided by a third-party vendor, with INDOT, the Indiana State Police, and the Indiana Department of Revenue providing minimal staffing support. Any increases in state workloads are expected to be accomplished under current funding and resource levels.

Truck size and weight are regulated using federal and state legislation and policies for the purposes of safety and infrastructure preservation. Data on the actual characteristics of the trucks using the transportation infrastructure (including weights, volumes, and configurations) are necessary for many applications, including design, research, maintenance, and preservation. Weigh-in-motion (WIM) systems are designed to capture and record axle weights and gross vehicle weights as vehicles drive over a measurement site. Unlike static scales, WIM systems are capable of measuring vehicles traveling at a reduced or normal traffic speed and do not require the vehicle to come to a stop. This makes the weighing process more efficient, and, in the case of commercial vehicles, allows for trucks under the weight limit to bypass static scales or inspection. A literature review focused on the development of WIM systems, concepts for measuring axle loads, the applications of WIM sensors for pavements, and recent advancements in bridge WIM systems can be found online at https://www.fhwa.dot.gov/publications/research/infrastructure/structures/ltbp/16024/16024.pdf.

It is Taxpayer Friendly to make the regulation of truck size and weight as efficient as can be practically attained.

WIN Plan Suggestion #11. Special Fuel Tax Study

WIN Plan would require the Indiana Department of Revenue (DOR) to study by September 1, 2017, gross retail tax collections on special fuel. Licensed special fuel suppliers and permissive suppliers must now file their monthly information reports and Special Fuel Tax payments with the DOR by the 15th day of each month. Tax-exempt persons who purchase special fuel and subsequently use the fuel in a taxable manner must now file quarterly reports and Special Fuel Tax payments with the DOR by the 15th day of the month following the end of the quarter. DOR workload increases would be expected to be accomplished with existing resource and funding levels.

Using existing DOR 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 (CNB and LNG) to more accurately pay their fair share of fuel tax.

WIN Plan Suggestion #12. Fiscal Year 2018 Fuel Tax Rates Increase

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. WIN Plan 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. The additional tax revenue collected from the Gasoline Tax and Special Fuel Tax rate increases would be distributed 53.5% to the State Highway Fund and 46.5% to local units of government. WIN Plan would change the distributions of Motor Carrier Surcharge Tax revenue by (a) reducing the distribution to the Motor Carrier Regulation Fund from 9% to 4.5% and (b) increasing distributions to the State Highway Fund and the Motor Vehicle Highway Account from 45.5% to 47.75% for both funds. The distribution change for revenue received from the Motor Carrier Surcharge Tax is expected to have no net annual impact on revenue to the Motor Carrier Regulation Fund, but would increase revenue to the State Highway Fund and the Motor Vehicle Highway Account. The three fuel tax rate increases would generate the following additional revenues:
Fiscal Year 2018 additional revenues:
    $310.3 million from Gasoline Tax rate increase to $0.28 per gallon from $0.18
    $118.8 million from Special Fuels Tax rate increase to $0.26 per gallon from $0.16
    $91.8 million from Motor Carrier Surcharge Tax rate increase to $0.21 per gallon from $0.11
Fiscal Year 2019 additional revenues:
    $324.5 million from Gasoline Tax rate increase to $0.28 per gallon from $0.18
    $126.9 million from Special Fuels Tax rate increase to $0.26 per gallon from $0.16
    $95.5 million from Motor Carrier Surcharge Tax rate increase to $0.21 per gallon from $0.11
Fiscal Year 2020 additional revenues:
    $336.2 million from Gasoline Tax rate increase to $0.28 per gallon from $0.18
    $134.5 million from Special Fuels Tax rate increase to $0.26 per gallon from $0.16
    $98.5 million from Motor Carrier Surcharge Tax rate increase to $0.21 per gallon from $0.11
Fiscal Year 2021 additional revenues:
    $345.5 million from Gasoline Tax rate increase to $0.28 per gallon from $0.18
    $141.2 million from Special Fuels Tax rate increase to $0.26 per gallon from $0.16
    $101.0 million from Motor Carrier Surcharge Tax rate increase to $0.21 per gallon from $0.11

NOTE: The data and computations used to reach the conclusions listed next can be found online at http://www.finplaneducation.net/indiana_personal_income.htm and http://www.finplaneducation.net/fuel_taxes_history.htm.

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 (CNB and LNG) 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.

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.

The 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. 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.

WIN Plan Suggestion #13. Alternative Fuel Decal Fees Increase

Effective the 2018 Fiscal Year, WIN Plan would increase the alternative fuel decal fees by 50%. An estimated 400 alternative fuel decals are expected to be sold annually. Under the new fee amounts, this bill is expected to increase alternative fuel decal fee revenue by $46,500 each year, which would be distributed as follows: 53.5% to the State Highway Fund, 35.25% to local units of government through the Motor Vehicle Highway Account distribution formula, and 11.25% to the Local Road and Street Account.

The owner of one of the following motor vehicles that is registered in Indiana and that is propelled by alternative fuel must obtain an alternative fuel decal for the motor vehicle and would pay an annual fee in accordance with the following schedule:
(a) annual fee increase from $100 to $150 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,
(b) annual fee increase from $100 to $150 for a recreational vehicle that is owned by a public or private utility,
(c) annual fee increase from $175 to $262.50 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,
(d) annual fee increase from $250 to $375 for an alternative fuel delivery truck powered by alternative fuel, the declared gross weight of which is greater than 11,000 pounds,
(e) annual fee increase from $300 to $450 for a truck or bus, the declared gross weight of which is greater than 11,000 pounds, except an alternative fuel delivery truck,
(f) annual fee increase from $500 to $750 for a tractor designed to be used with a semitrailer.

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.

WIN Plan Suggestion #14. Electric Vehicle Supplemental Registration Fee

Effective January 1, 2018, WIN Plan would require a person who registers an electric vehicle to pay a supplemental annual registration fee of $150. This new supplemental registration fee would increase every five years beginning January 1, 2023, based on an index factor that would be computed using the Consumer Price Index for all Urban Consumers, U.S. city average, all items, using the index base period of 1982-84 equal to one hundred (100), as published by the Bureau of Labor Statistics of the United States Department of Labor. Revenue from this new fee would be deposited in the Local Road and Bridge Matching Grant Fund as follows:
Fiscal Year 2018 - $0.8 million
Fiscal Year 2019 - $2.0 million
Fiscal Year 2020 - $2.6 million
Fiscal Year 2021 - $3.2 million

Owners of all motor vehicles must pay an annual Indiana registration fee. The 2017 annual Indiana registration fee for a passenger car is $21.35. In addition to the $21.35 annual registration fee, WIN Plan would require electrical vehicle owners to also pay an annual $150 supplemental registration fee starting January 1, 2018. The purpose of the new annual $150 supplemental registration fee would be to take the place of the Gasoline Tax that electric vehicle owners do not pay.

Electric vehicle owners should pay their “fair share” to help build and maintain the roadways and bridges that they use. The question is whether a flat $150 annual fee is an equitable fair share.

WIN Plan would increase the state's Gasoline Tax rate to $0.28 per gallon in Fiscal Year 2018. The U.S. Environmental Protection Agency reported November 1, 2016, that the average fuel economy of 2015 model-year vehicles was 24.8 miles per gallon. According to CarInsurance.com at http://www.carinsurance.com/Articles/average-miles-driven-per-year-by-state.aspx, the U.S. Department of Transportation Federal Highway Administration reports that 17,821 annual vehicle miles are driven per licensed driver in Indiana. Therefore, according to WIN Plan, the average licensed Indiana driver would pay $201 in Gasoline Tax for Fiscal Year 2018 (17,821 miles / 24.8 miles per gallon = 719 gallons X $0.28 per gallon = $201).

From the standpoint of electric vehicle owners, some might contend that it is Taxpayer Friendly for electric vehicle owners to pay an annual $150 supplemental registration fee because this fee is less than the $201 in annual Gasoline Tax paid by the average licensed Indiana driver. However, the $150 supplemental registration fee is Taxpayer UNfriendly because the fee amount is NOT directly proportional to the number of miles driven. Also, it would be Taxpayer Neutral to increase the supplemental registration fee every five years based on an index factor that would be computed using ONLY the Consumer Price Index for all Urban Consumers.

THE BOTTOM LINE: The $150 annual electric vehicle supplemental registration fee would be Taxpayer Neutral.

WIN Plan Suggestion #15. Motor Carrier Civil Penalties Assessment Procedures

WIN Plan would amend the assessment procedures for motor carrier civil penalties under Indiana Code 9-20-18-14.5. The Indiana Department of Revenue's notice of proposed assessment under IC 6-8.1-5-1 would be presumptively valid. A person against whom a civil penalty is imposed under this section could protest the penalty and request an administrative hearing. If a hearing is requested, the department must hold an administrative hearing at which the person has an opportunity to present information as to why the civil penalty should not be assessed.

Indiana Code 9-20-18-14.5 pertains to the civil penalties enforcing the size and weight regulation of motor vehicles. IC 6-8.1-5-1 pertains to procedures related to assessments made by the Indiana Department of Revenue when a person has not reported the proper amount of tax due. IC 9-20-18-14.5 currently provides that a civil penalty may be assessed against a person only after an administrative hearing has been conducted. WIN Plan would change this procedure so that the civil penalties must be paid unless the person requests an administrative hearing and presents information as to why the civil penalty should not be assessed. This HB 1002 procedural change is Taxpayer Neutral because it appears to be consistent with the procedures in place for most other civil penalties imposed by the state.

WIN Plan Suggestion #16. Additional INDOT Duties

WIN Plan would charge the Indiana Department of Transportation (INDOT) with (a) studying transportation funding provided from a tax levied on vehicle miles traveled, (b) establishing state and local metrics to evaluate infrastructure needs, and (c) developing a state and local road and bridge prioritization system based on safety, congestion, environment, regional and state economic contribution, potential intermodal connectivity, and total cost of ownership. Requiring INDOT to institute the condition and prioritization metrics, including the appointment of two economic professionals and engineers, is expected to be accomplished with existing resources and funding levels.

Vehicle-miles travelled (VMT) fees are generally distance-based fees levied on a vehicle user for use of a roadway system. As opposed to tolls, which are facility specific and not necessarily levied strictly on a per-mile basis, these fees are based on the distance driven on a defined network of roadways. In a broad sense VMT fees' application is envisioned through the use of an onboard vehicle device to capture the distance driven by a vehicle through GPS or other technology and relate that to a method of charging, which could range from manual cash payment to automatic deduction for a prepaid customer account. In an ideal world, replacing all state fuel taxes and other related fees with a state VMT fee where heavier vehicles pay a higher rate than passenger cars MIGHT be Taxpayer Friendly IF a practical and reliable method is devised to accurately capture the Indiana miles driven by each motorist. Imposing state VMT fees in addition to increased state fuel taxes and other related fees would be Taxpayer UNfriendly. Considerable VMT fee information is available through the Federal Highway Administration web page at https://www.fhwa.dot.gov/ipd/revenue/road_pricing/defined/vmt.aspx.

If it can be accomplished using existing INDOT resources and funding levels, it would be Taxpayer Neutral to have INDOT study VMT 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.

WIN Plan Suggestion #17. Funding for Indiana's Roads for a Stronger Safer Tomorrow Task Force

WIN Plan would continue the Funding for Indiana's Roads for a Stronger Safer Tomorrow (FIRSST) Task Force through December 31, 2018. The Task Force must review and study funding for transportation infrastructure. The Task Force met five times during Calendar Year 2016 at a total cost of $10,000, but had an annual budget of $16,500. Depending on the number of meetings held by the Task Force, General Fund expenditures would be expected to increase by up to $16,500 per year for Fiscal Years 2018 and FY 2019.

The Task Force members are:
(1) The chairperson of the house of representatives ways and means committee (Tim Brown).
(2) The chairperson of the senate appropriations committee (Luke Kenley).
(3) The chairperson of the senate tax and fiscal policy committee (Brandt Hershman).
(4) The chairperson of the house of representatives roads and transportation committee (Ed Soliday).
(5) The chairperson of the senate homeland security and transportation committee (Michael Crider).
(6) The director of the office of management and budget (Micah Vincent).
(7) The public finance director of the Indiana finance authority (Dan Huge).
(8) One member who represents counties and is appointed by the governor after considering the recommendation of the Association of Indiana Counties (Don G. Brewer, Orange County Commissioner).
(9) One member who represents municipalities and is appointed by the governor after considering the recommendation of the Indiana Association of Cities and Towns (Joseph E. McGuinness, prior Franklin Mayor and current INDOT Commissioner).
(10) One member appointed by the governor after considering the recommendation of the Build Indiana Council (Dennis Faulkenberg, Appian Advisors).
(11) One member appointed by the governor who is an employee of the Indiana department of transportation (Brandye Hendrickson, prior INDOT Commissioner).
(12) One member appointed by the governor who is a member of the Indiana Motor Truck Association (Michael E. Sodrel, Sodrel Truck Lines).
(13) One member appointed by the governor who represents taxpayers (Christopher D. Atkins, SAP Vice President - Digital Government Transformation).
(14) One member of the general assembly who is a member of the majority party of the house of representatives and is appointed by Brian Bosma, speaker of the house of representatives (Holli Sullivan).
(15) One member of the general assembly who is a member of the minority party of the house of representatives and is appointed by Brian Bosma, speaker of the house of representatives, in consultation with the minority leader of the house of representatives (Gregory Porter).
(16) One member of the general assembly who is a member of the minority party of the senate and is appointed by David Long, president pro tempore of the senate, in consultation with the minority leader of the senate (Karen Tallian).

Special note should be made that one Task Force member is appointed by the governor after considering the recommendation of the Build Indiana Council. See http://buildindianacouncil.org/boardofdirs.php to recognize that the Board of Directors for the Build Indiana Council consists of members from numerous businesses that have a vested interest in more public spending on the state’s transportation infrastructure. The Build Indiana Political Action Committee is the Build Indiana Council’s “collective method of supporting the campaigns of candidates who support our industry.” The 2016 state campaign contributions made by the Build Indiana Political Action Committee can be found online at http://campaignfinance.in.gov/PublicSite/Filings/Schedules/ViewExpenditureSchedule.aspx?FilingID=60152 and http://campaignfinance.in.gov/PublicSite/Filings/Schedules/ViewExpenditureSchedule.aspx?FilingID=60153.

Six of the eight Indiana General Assembly members on the Task Force benefited directly and indirectly from the following 2016 campaign contributions by the Build Indiana Political Action Committee:
Eric Holcomb for Indiana = $15,000
Committee To Elect Brian Bosma = $20,000
Citizens for Tim Brown = $12,000
Citizens for Crider = $500
Hershman For Senate = $7,500
Elect Luke Kenley = $7,500
David Long For State Senate = $11,500
Friends of Ed Soliday Committee = $12,000
Committee to Elect Holli Sullivan = $2,000
House Republican Campaign Committee = $38,000
Senate Majority Campaign Committee = $10,000
Indiana Republican State Committee = $15,000

The 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 the vested interests at the expense of taxpayers. For these reasons, continuing the Funding for Indiana's Roads for a Stronger Safer Tomorrow Task Force through December 31, 2018, is Taxpayer Neutral.

This page was last updated on 05/04/17.