The Associated Press has a story on HB 1001 introduced by Rep. Soliday which was heard by the House Roads and Transportation Committee and passed by a vote of 8 to 5 as amended. I don’t know what the committee amendment said. The story says that it would raise additional road funding by increasing the State’s cigarette tax by a dollar per pack and raise the state’s gas tax from 18 cents per gallon to 22 cents per gallon. It also gives local governments the discretion to raise certain taxes to fund local projects.
This is at odds with Gov. Pence’s plan which is to come up with $480 million through a combination of borrowing and spending a chunk of the State’s reserves.
Gov. Pence’s ideological commitment to not raise taxes is misplaced here — particularly if one is committed to a use tax model of paying for roads. I’m not necessarily convinced it’s the best model, but we like the gas tax because it’s a proxy for road use. If you use the road more, you pay more in taxes to support the road. It definitely has an appeal. (I think that sound infrastructure has indirect economic benefits to people other than those who are actually on the roads — but that’s probably a battle for a different post.)
We are not currently keeping up with the wear and tear on our roads. In other words, we are using more of our roads than we are paying for. So, it makes sense to raise taxes to a level that matches our use of the roads. What we pay in taxes for our roads is chump change compared to the value we get out of having good roads. With gas prices low, this is the time to raise the gas tax. Gas prices are down a dollar or more from levels we found sustainable. As variable as gas prices are, four cents is not going to be noticeable to most Hoosiers. (I’m not a fan of smoking and, personally, find the habit disagreeable, but the cigarette tax strikes me as an odd choice for funding roads. Just raise gas taxes or something road-related to wherever they need to be to sustain road maintenance.)