Gas tax fuels budget debate

The debate over a proposed gas tax increase is one of many money issues that will be voted on at this session's General Assembly.\nRep. Ron Liggett, D-Redkey, introduced a bill Monday, which calls for a graduated 10-cent increase in the state's gasoline tax. If approved, the tax would raise the current 18 cents per gallon gas tax to 25 cents over the next three years.\nStarting in July, the gas tax would go up by 2 cents. A 4-cent increase would follow in 2003 and 2004.\nBy the third year, the tax increase would boost the annual revenue to $330 million. \nThe additional funds generated by the increase would go toward the financially-strapped local government and the Indiana Department of Transportation (INDOT) for the sole purpose of maintaining and improving Indiana's highways, roads and bridges. \nThe long list of tax-reform proposals and the budget deficit have lawmakers divided over how to prioritize this session's agenda. \n"I oppose the timing of the gas tax increase proposal more so than the tax itself," Rep. Mark Kruzan, D-Bloomington, said. "With all the other taxes on the table, now is not the time to pile on."\nMembers of the Build Indiana Council (BIC), a group of associations representing member companies in the transportation construction industry, argue that Indiana's local roadway funding is inadequate.\n"Indiana's current budget deficit has distracted the attention of legislators from the vital need to enact more funding for the maintenance and improvement of highways, roads and streets," said David V. Finley, public relations rep. for BIC.\n"Historical revenue sources, such as the Federal Highway Trust Fund and current taxes on fuel sales, are overburdened and insufficient to meet the state's highway needs," Rep. Liggett said in a press release from the BIC.\nIndiana's 15-cent gas tax is the sixth lowest in the nation and has not been increased since 1988. But the increase would place the state's tax well above the 18-cents national average gas tax if it increases to 25 cents per gallon.\nAdvocates of the tax increase say the bill is justified because it taxes the people using the roads.\n"The timing may be good," said Bruce Jaffee, professor of business economics and public policy. "Gasoline prices are currently low, so a tax increase of, say, 10 cents, would not bring prices to the level of, say, last summer."\nJaffee thinks the tax hike might go over well with drivers, as well.\n"If the increased funds can be earmarked in part for road and bridge improvements, that would help 'sell' the increase as a type of user charge," Jaffee said.\nAn additional $200 million in annual revenues will be needed through 2010 for improvements and repairs of local roads, according to the Local Government Transportation Needs Assessment Report, prepared by the Indiana Local Technical Assistance Program at Purdue University.\nIf the General Assembly fails to allocate additional funds to INDOT and local governments, all Hoosiers will be economically impacted, Finley said.\n"Every sector of the state's economy will feel the strain of inadequate roadways," he said. "The foundation of Indiana's economy, ranked 18th largest in the nation in terms of value of goods and services produced, is built upon safe and efficient transportation."\nThe legislature voted down a gas tax increase, House Bill 1811, in 2001. But supporters of the current proposal said the chance that lawmakers will approve the current gas tax increase is better.\n"The new increase dedicates stable, long-term funding for both local government and INDOT highway needs without tampering with any other state programs," Finley said.