Changes to Indiana law that are designed to make the state’s road funding more sustainable went into effect July 1, and by most accounts it was not noticed at the pump. However, residents should begin to see the effects immediately, said Justin Schneider, INFB state government relations director.
House Enrolled Act 1002 provided $260 million this next year for local roads and bridges and more than $6 billion in new money for state and local roads over the next seven years.
The funding framework authorized by the 2017 General Assembly relies on user fees: increased fuel taxes, uniform registration fee increases and a shift of revenues from sales tax on gasoline to road funding.
INFB’s delegate body developed policy a few years ago that supported increased fuel taxes and fees as a way of improving infrastructure in order to maintain Indiana’s competitive advantage in moving products and commodities. That policy guided the organization’s efforts on HEA 1002, said INFB President Randy Kron.
Gasoline saw a 10 cent tax increase, and diesel is subject to an increase of 10 cents for the diesel tax and an additional 10 cents for the motor carrier surcharge. There is no longer a sales tax on diesel to accommodate the motor carrier surcharge which will not be collected at the pump and which totals 21 cents. Registration fee increases are modest and equalize the share of road funding paid by traditional vehicles with combustion engines as compared to hybrid and electric vehicles.
In addition, registration fees go up by approximately 25 percent for trucks over 26,000 pounds.
Farmers, however, are being given an opportunity for a refund this year that will probably be in effect only one year. An error in the legislation’s language allows all non-carrier motor vehicles, including farm vehicles, to get a refund on the surcharge tax they pay when diesel fuel is delivered to them or they purchase it at a gas station. Information on how to file for a refund is available on the Department of Revenue’s website.
“Since it was included in error, the refund will probably last only one year,” Schneider said.
The bill also requires that 50 percent of funds distributed to a local government from the motor vehicle highway account be used for construction, reconstruction or maintenance of roads instead of road-related personnel. For small counties and cities (counties with a population of 50,000 or less or cities with the population of 10,000 or less) to be eligible for Community Crossings grants for local roads and bridges, the bill requires only a 25 percent match from the local government unit rather than the 50 percent match for larger counties and cities.