INDIANAPOLIS -- Motorists in Indiana would eventually pay 7 cents more in state taxes per gallon of gasoline under legislation approved by the Senate Wednesday.\nThe bill, approved 38-10, is likely headed to a conference committee where differences between it and a 2-cent increase passed by the House will be sought.\nA gas-tax increase has enjoyed bipartisan support this session and is backed by many Republicans who oppose any tax increase to help shore up the state's projected $1.3 billion budget deficit.\nUnder the plan passed by the Democrat-controlled House and the one approved Wednesday by the Republican-ruled Senate, all revenue from a gas-tax increase would be spent on state and local road projects.\nIU economist Morton Marcus said that makes a gas-tax increase an easier sell in the General Assembly.\n"In the minds of most people there is a close relationship between the tax and gasoline usage and highways," Marcus said. "It fits nicely into the concept of benefit taxation, which is untrue of the sales tax and income tax and property tax."\nWith those taxes, Marcus said, "there is no clear relationship between what you pay and what you get in terms of government services."\nUnder the bill passed Thursday, the gas tax would increase from 15 cents to 18 cents per gallon in 2003. It would go up another 2 cents the next year and another 2 cents in 2005. Each penny increase would generate about $33 million in new revenue for road construction.\nThe revenue would be divided equally between state and local road projects, but one penny of the increase would be used to fund about $350 million worth of bonded construction during the first year of the increase.
When funding generated by the state's Crossroads 2000 bonding program expires in July 2003, the Indiana Department of Transportation's annual budget is expected to drop from about $700 million to $500 million.\nMoney from that program has been used for state highway projects, although the General Assembly provided $100 million for local roads in 1997 and $100 million in 1999.\nA study issued last year by the Indiana Local Technical Assistance Program at Purdue University concluded that an additional $200 million in annual revenue will be needed through 2010 to upgrade local roads, bridges and streets.\n"Without an increase in the gas tax at this time, projects will have to be put on hold while the state uses all its available money for maintenance -- no expansions, no additional lanes, no new highways," said Sen. Vi Simpson, D-Bloomington.\nMotorists pay the state gasoline tax in Indiana, along with federal taxes and the state's sales tax.
