by Leslie Bonilla Muñiz, Indiana Capital Chronicle
January 28, 2025
Cash-strapped local governments could soon pick from a broader menu of ways to self-fund transportation infrastructure — including through contentious delivery fees or township surplus funds — but wouldn’t get any more financial aid directly from the Statehouse.
“We need investment and assistance from the state, but this legislation doesn’t include it,” said Ryan Hoff, government affairs director and general counsel for the Association of Indiana Counties. He was among nearly two-dozen witnesses who testified before the House’s Roads and Transportation Committee on Monday.
The wide-ranging House Bill 1461 also changes allocations and adds requirements for the popular Community Crossings Matching Grant Program; cracks down on economic development incentives; and brushes some dust off long-untouched tolling possibilities.
Author Rep. Jim Pressel, R-Rolling Prairie, called his proposal “37 pages of options.”
“There’s some really good things in here, there are some things that are maybe not so great, but we need a conversation on: is this good policy?” he told the committee, which he chairs.
Lawmakers seek road-funding changes, hope to avoid fiscal cliff
Pressel and others spent almost two years studying up on revenue-raising possibilities to head off an anticipated fiscal cliff.
Motor fuel taxation yields eight of every 10 state dollars that fund roads and bridges for both the Indiana Department of Transportation (INDOT) and local governments. But as Hoosiers upgrade to more fuel-efficient vehicles — or try electric and hybrid options — there is less money to work with.
And inflation means those dollars aren’t stretching as far.
INDOT Legislative Director Aaron Wainscott said his agency has lost out on $1 billion already and has had to postpone 300 projects.
Hoosier communities, meanwhile, face an annual funding gap of nearly $500 million per year in construction costs just to keep road conditions as-is, according to Purdue University’s Local Technical Assistance Program — plus more to see improvements and to fund bridges.
Witnesses offered mixed testimony at the hours-long meeting.
“There’s a little bit of everything in this bill,” said Brian Gould, executive director of the Build Indiana Council. “… I have yet to talk to one stakeholder that’s said, ‘I love everything in this bill,’ but I think everyone I’ve talked to has also said, ‘We can work with this. This is a good place to begin the conversation.’”
The committee didn’t vote on the measure. Pressel hopes to hear amendments at the body’s next meeting.
Local options abound
Hoosiers could see new fees tacked onto their Amazon, DoorDash and other delivery orders.
Pressel’s legislation would empower counties to impose fees — of between 50 cents and $1 — per retail delivery. Purchases not subject to sales tax, like groceries, would be exempt.
A fiscal analysis by the nonpartisan Legal Services Agency estimated that a fee of 50 cents per delivery could raise $22-$27 per resident, and more if counties choose a higher rate.
A range of business advocates opposed the fee, saying it would hurt family restaurants and other small businesses, and would present a complex administrative burden.
Pressel, meanwhile, read a list of fees — totaling about $12 — off a constituent’s $35 order of chicken wings. “I just find it hard to believe that 50 cents on top of those fees would be cumbersome,” he said.
Brianna January, representing technology industry coalition Chamber of Progress, argued that elderly and disabled residents on fixed incomes rely heavily on delivery and rideshare services.
The legislation additionally would let communities tap into surplus money held by townships. These units of local government are county subdivisions.
If, at the end of a calendar year, a township’s reserves are more than 15% higher than its estimated budget for the next year, the excess money would go to a township transportation infrastructure fund. Townships would collaborate with cities, towns or counties on bidding out projects improving infrastructure within township boundaries.
Deborah Driskell, executive director of the Indiana Township Association and Delaware township trustee, said townships hold reserves for good reasons, like for emergencies, and asked to “tighten up” the measure.
She read aloud messages from consultants advising that townships keep six months of operating revenue on hand. The bill’s 15%, she noted, would be just a fraction of that.
The proposal also offers the state’s capital and largest community — the consolidated Indianapolis-Marion County — ways to raise more money for transportation infrastructure. For that community alone, it increases caps on the vehicle excise and wheel tax.
And it introduces a referendum-based “metropolitan thoroughfare district” tax levy specific to the consolidated city-county.
It’s unclear if three-term Mayor Joe Hogsett would take advantage. His administration has long resisted raising local taxes for transportation infrastructure, protesting that the state’s funding formula shortchanges the community.
Much-loved program could see changes
The legislation would also add a $150 million cap to Community Crossings, a matching grant program that local governments can use to fund local road and bridge projects. What’s left above the cap would get siphoned off for other purposes.
For one year, an estimated surplus of $207 million would fund fixes for dangerous at-grade railroad crossings, according to the fiscal analysis.
In later years, the excess would go to the Motor Vehicle Highway Account. That’s the pot of money behind the state’s transportation infrastructure funding formula; INDOT gets about 62% of it and Hoosier communities split the remaining 38%. On average, between fiscal years 2026-2030, the to-be-transferred surplus is estimated at $62.6 million annually.
County and municipality representatives critiqued the legislation for diverting Community Crossings money — which goes to local governments — into an account that sends large shares of money to INDOT.
House Bill 1461 also tweaks Community Crossings itself.
It adds new application requirements: local governments must adopt ordinances implementing the wheel tax and excise surtax if they can.
All counties are eligible; so are municipalities with more than 5,000 people. There are 37 counties and 107 municipalities that could adopt such taxes but haven’t, according to the fiscal analysis and Accelerate Indiana Municipalities. And there are more communities that do levy the taxes but don’t max them out. Purdue University’s Local Technical Assistance Program has estimated a capacity of $458 million, but receipts in 2022 only added up to $123 million — leaving $335 million untapped.
Knox County Commissioner Kellie Streeter said her county uses other local funding mechanisms in lieu of the unpopular wheel tax.
Instead of requiring that communities adopt it, she suggested Pressel consider the percentage of local effort put into roads and bridges.
“Our constituents looked at that twice. They didn’t want it, so we used other … sources. I just ask (that) we be able to have that local control and that decision-making,” Streeter said. “We want to help ourselves. Many of us do, and we know you want us to help ourselves. So let us have that choice.”
Pressel’s bill also lowers matching requirements for sparsely populated communities, to the delight of advocates. Lawmakers heard, over the interim, that it takes small local governments years to save up for matches.
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A look at economic development
Another provision would bar the controversial Indiana Economic Development Corp., a quasi-public agency, from offering incentives unless the recipient is on the hook for the transportation infrastructure needed to serve its economic development project.
The IEDC has been under fire for land acquisitions, water supply plans and significant investments in the Limitless Exploration/Advanced Pace manufacturing park. Lawmakers have sought to tighten the reins.
Business groups, including a statewide and local chamber of commerce, opposed the measure.
“Requiring private business to pay for road infrastructure, if other incentives are involved, could delay and stall important projects,” said Jenna Bentley, the Indy Chamber’s vice president for government affairs.
“We’d really like to see increased communication without shifting that burden to business,” she added.
What’s next for tolling?
Indiana lawmakers gave the governor the power to add tolls to more roads and bridges in 2017. Former Gov. Eric Holcomb, who held office from 2017 until early this month, never took them up on the offer.
House Bill 1461 gives that language a refresh. It would let INDOT, with the governor’s approval, submit a request for a tolling waiver to the federal government. If the waiver is granted, the Indiana General Assembly wouldn’t need to approve authorizing legislation.
“Probably most importantly in this bill is the language initiating an updated conversation about tolling. It is a necessary step forward,” said David Ober, vice president of taxation and public finance for the influential Indiana Chamber of Commerce.
Construction, business and other advocacy groups expressed interest in tolling, but others protested the possibility.
Indiana Motor Trucks President Gary Langston said trucks engaged in interstate commerce already pay user fees on “every mile they drive on every road throughout the United States.” He also noted that truckers will keep contributing fuel tax revenue, with diesel alternatives far off for the industry.
Langston called for more analysis “before we make any long-term decisions,” adding, “Once you put in a toll, it never goes away. All it does is go up.”
Tolling could generate $4.2 billion in revenue over the first five years of implementation, starting in fiscal year 2029, according to the fiscal analysis. Indiana could receive an estimated $38.2 billion in revenue over the 22 years between 2029 and 2050.
But how’s new Gov. Mike Braun feel about that? An office spokesperson didn’t provide comment before publication time.
Looking forward
Numerous witnesses agreed: something has to change.
“Relying on our current funding mechanisms means … guaranteed shortfalls in funding, delays on much-needed projects, and the burden to fund our infrastructure will continue to fall on the backs of Hoosiers,” said the Build Indiana Council’s Gould.
“Folks aren’t coming in looking and asking to pay more,” Gould continued. “But … I can’t have anybody say … ‘Please don’t fix my road. I enjoy the congestion driving bumper-to-bumper on I-65. I like the bumpy ride on I-70.’ We know there’s work to be done, and this is a great place for us to start that.”
