By Steve Bittenbender | The Center Square contributor
(The Center Square) – A new report shows the Indiana gas tax increases are paying dividends for the state.
According to the Midwest Economic Policy Institute, reforms passed in 2017 by the Indiana General Assembly led to an 80% increase in transportation funding in the state. During the 2016 fiscal year, the state transportation budget totaled $1.5 billion, but that figure rose to $2.7 billion in the 2022 fiscal year.
Most of the funding for roadwork comes from the state’s gas tax. In 2016, the state received $558.3 million from that tax, and six years later, that amount grew to $981.6 million.
The tax was 18 cents per gallon in 2017 and 33 cents now. On July 1, the tax will increase by a penny.
With the increased tax, MEPI has found the quality of Indiana’s roads and bridges has improved. In 2017, 36% of the state’s paved lane miles were considered poor, and 7% of bridge decks were rated poor. In 2021, those figures were down to 31% and 5%. Meanwhile, the percentage of lane miles graded as good nearly doubled from 14% in 2017 to 27% in 2021.
“In terms of the reliability of funding for transportation projects and improved road and bridge conditions, it is clear that Indiana is getting what it paid for,” said MEPI Transportation Director Mary Tyler. “During a time when many states were struggling with decades of maintenance backlogs and insufficient revenues, Indiana took proactive steps to create a sustainable transportation financing system, and the data shows that it is already generating a solid return on investment.”
A gas tax increase wasn’t the only step taken by Hoosier lawmakers. The 2017 reforms also included a $15 hike in car registration fees, a 25% raise for larger vehicles, and new fees on electric and hybrid cards that use less or no gas. Vehicle fees increased from $186.3 million in 2016 to $302.5 million in 2022, a 62.4% increase.
The reforms also allowed local communities to implement their own taxes on vehicles. Through last year, 54 of the state’s 92 counties and 13 cities have taken advantage of the law, and the MEPI study found that counties with a local-option tax had road improvement rates five times higher than other counties.
“It is clear that expanding the authority of municipal governments to raise local transportation revenues and to better access state grant programs has enabled more Indiana communities to address community-specific needs and to deliver better outcomes,” Tyler said.