Indiana’s “orange cone season” isn’t just about traffic headaches this year – it’s about money, and whether the state can keep paying for the roads Hoosiers expect.
The Build Indiana Council – the coalition that represents Indiana’s road and bridge builders, quarries, and material suppliers – is warning that the dollars simply aren’t adding up.
Executive Director Brian Gould says Indiana went into this year already facing about a $1 billion annual shortfall between what the state knows it needs for infrastructure and what current revenues will actually cover. Then lawmakers layered on a temporary gas tax suspension, meant to give drivers a break at the pump.
Add that in, Gould says, and you’re now talking about roughly another billion dollars in forgone revenue.
And that’s where the concern begins.
Gould is quick to point out: Indiana is not a horror story when it comes to roads. In fact, he notes, over the past decade, after lawmakers passed a major infrastructure bill, the percentage of roads in fair or better condition has steadily improved. National outlets like CNBC routinely rate Indiana’s infrastructure among the best in the country, a key factor when companies decide where to locate, build, and ship their products.
In other words, the system Indiana built has been working.
The problem is the way the state pays for it.
Indiana is one of the top fuel-tax-dependent states in the nation when it comes to funding roads and bridges. The model is simple: drivers pay at the pump, that money is collected as a user fee, and within 45 to 60 days it flows back out to the Indiana Department of Transportation and local governments for projects. It’s relatively cheap to administer, and it has one big benefit for Hoosiers – it lets the state collect from out-of-state motorists who use Indiana as the Crossroads of America.
But that model is running into 21st century reality.
Cars are getting better gas mileage. A new Toyota Camry, Gould notes, is now getting roughly 35 miles per gallon, up from the high 20s just a decade ago. Electric and hybrid vehicles, while not completely taking over the market, still eat away at taxable gallons. At the same time, the cost of building roads has been anything but static: after seeing construction inflation north of 35% in 2022 and 2023, costs are still running almost double the traditional industry average, hovering in the 4.5 to 5 percent range.
So, less revenue per mile driven, and higher costs per mile built.
That is the squeeze the Build Indiana Council is talking about.
Indiana has tried to get ahead of some of this. The state was an early mover in adding registration fees for electric and hybrid vehicles, and Gould says policymakers here are closely watching what other states – both red and blue – are experimenting with: vehicle-miles-traveled fees, expanded tolling, and public-private partnerships where private concessionaires lease and operate roads in exchange for toll revenue.
Indiana has already gone that route once. The northern Indiana Toll Road lease – a signature initiative of former Governor Mitch Daniels – created the Major Moves program and helped pay for big-ticket projects like I-69. More recently, lawmakers have opened the door a bit wider for tolling and P3s tied to specific revenue streams, even as they’ve slammed the brakes on any talk of another gas tax hike.
At the local level, those same funding pressures are playing out in real time.
This week, the Indianapolis City-County Council voted to override Mayor Joe Hogsett’s veto of a new municipal wheel tax. While that’s not the centerpiece of BIC’s statewide agenda, Gould says it’s exactly the kind of “skin in the game” state lawmakers have been pushing for: local governments using the tools they’ve been given before coming back to the Statehouse asking for more.
For Indianapolis, the wheel tax is more than just a line on a registration bill. It is expected to bring in tens of millions of dollars annually and, just as important, it positions the city to tap larger state distributions through programs like Community Crossings, which now favor communities that have adopted wheel taxes.
Even so, Gould is clear: tools like the wheel tax help at the margins, but they do not solve Indiana’s looming, structural road funding problem.
For the Build Indiana Council, the guiding principle remains simple: if you use it, you pay for it. The challenge now is building a long-term, politically realistic funding plan that honors that user-pays model without leaning entirely on one tax, one fee, or one good year of state budget surpluses.
And that, Gould says, is going to take more than orange cones and summer construction crews. It’s going to take lawmakers willing to make hard choices.
“This is going to be a very difficult decision,” he says, arguing Indiana needs “thoughtful policy leaders” with the intestinal fortitude to make infrastructure a priority, even when it’s easier to talk about cutting or freezing taxes.
Because for the people who back out of their driveway every morning – headed to work, school, or just trying to get across town – the expectation is simple: the road should be there, it should be safe, and it shouldn’t tear up their car.
The question the Build Indiana Council is putting on the table is just as simple: how long can Indiana keep meeting that expectation on yesterday’s funding model?
