Chelsea Schneider, and Tony Cook

IndyStar

House Republicans proposed a plan Wednesday to raise about $800 million in new funds for state roads and bridges over the next two years, mostly by hiking gasoline taxes.

House Speaker Brian Bosma’s plan would initially increase the state’s gasoline tax by 10 cents a gallon, resulting in a tax increase of $48 per year for the average Hoosier motorist.

The proposal also would create a new $15 per year fee on every vehicle registered in the state. Electric vehicles would pay more at $150 per year as a way to compensate for using less gasoline. Those fees are expected to generate an estimated $92 million per year with that funding going toward local roads.

In the long run, House GOP leaders say the plan — along with potential new highway tolls — is expected to generate the projected $1.2 billion per year needed to maintain state and local roads and fund expansions. Under the plan, gasoline taxes would see an initial boost, and then regularly increase with inflation and Hoosier income growth.

“The overarching goal of the House Republican caucus this year is to have a sustainable, long-term and comprehensive road funding program," said Bosma, R-Indianapolis. "For far too long, we’ve kicked this can down the road and been concerned about a single session or a two-year term or the next administration. It’s time for us to think about the next generation."

The announcement amounts to the second year in a row House Republicans have sought tax increases to support long-term road funding. Last year, those plans were blocked by Senate Republicans and Gov. Mike Pence who were hesitant to support tax increases.

But this year, Senate leaders seem more open to the role tax hikes could play in highway funding, though Senate Republican leader David Long declined to comment Wednesday. Incoming Gov. Eric Holcomb has said “all options” were on the table and is expected to say more on road funding Thursday.

"I’m very encouraged by where we are all starting on the many important issues we’ll be discussing over the next several months," Holcomb said in a statement. "When it comes to road and bridge funding, we all share the same goal — creating a long-term, sustainable plan that strongly positions us for the future, and I’m confident we’ll have one before we adjourn."

The House GOP plan would send nearly $300 million in new dollars to state roads in 2018 and then $480 million in 2019, House fiscal leader Rep. Tim Brown said. An estimate by the nonpartisan Legislative Services Agency estimates higher revenue in 2019 at $540 million.

In 2018, the state would begin shifting more of the sales tax on gasoline to highway funding, a move that’s expected to raise more than $360 million when fully implemented in 2022, Brown said.

However, the shift would leave a hole in the state's general fund. Bosma made no commitment to plug the gap, but suggested lawmakers could look to increase taxes on cigarettes. Last year, House Republicans proposed to increase the tax by $1 per pack to help pay for roads.

The conservative Americans for Prosperity-Indiana plans to oppose the tax hike through door-to-door visits with Hoosier voters, as well as by phone and mail.

"Before any tax increases are discussed, gasoline sales tax revenue should be moved to a designated fund immediately, and spending should be frozen at current levels using a portion of revenue increases to fill the gap," state director Justin Stevens said. "Hoosiers overwhelmingly agree that if lawmakers aren’t using existing money to make roads a priority, they should not be trusted with more of our hard-earned paychecks.”

Economists told IndyStar that the proposal when placed in the context of recent tax breaks could be viewed as a shift of the state’s tax burden from higher income to middle income Hoosiers. Taxes lawmakers have cut since 2011 have tended to benefit wealthier individuals. They include the elimination of the inheritance tax, corporate and financial institution tax cuts and a 5 percent reduction to Indiana’s flat personal income tax.

The proposed tax hikes, on the other hand, would likely hit a broader socio-economic group.

House Minority Leader Scott Pelath, D-Michigan City, said Democrats share the same urgency as Republicans in increasing road funding. But Pelath hit on already approved tax cuts in addressing House members on the chamber's first day.

"Recognizing that these planned cuts disproportionately benefit folks at the top, we find $1.3 billion in potential funds without taking a dime from what people already have," Pelath said. "I am well-versed in the many tax policy arguments and counterarguments, but do not rich and poor, boardroom and shop floor, flashy and modest alike have a shared interest in rebuilding our infrastructure?"

Republican leaders argue they've cut more than they're seeking to raise and point to older tax cuts such as the cap on property taxes approved under former Gov. Mitch Daniels. They also say cuts to the corporate tax rate and inheritance tax have spurred economic growth.

Legislative leaders say new revenue is needed because the state's 18 cents-a-gallon gasoline tax has not been increased since 2003. The introduction of more fuel-efficient vehicles since then has caused that revenue stream to stagnate.

The House plan also would increase the special fuel tax and motor carrier tax by 10 cents a gallon. It also would require the Indiana Department of Transportation to study the potential for tolls on existing interstate highways.

Call IndyStar reporter Chelsea Schneider at (317) 444-6077. Follow her on Twitter: @IndyStarChelsea.

Call IndyStar reporter Tony Cook at (317) 444-6081. Follow him on Twitter: @indystartony.