Plan directs $245M to local roads now and creates $250M Local Road Improvement Incentive Plan

INDIANAPOLIS –Senate Democrats laid out a plan to inject $245 million in short-term stimulus to fix local roads and bridges while providing up to $250 million to incentivize local governments to embrace long-term funding solutions in a Wednesday morning media availability. Senate Democratic Leader Tim Lanane (D-Anderson) highlighted the need to bypass the Statehouse and provide tools for local governments to address long-term infrastructure funding needs.

“The American Society of Civil Engineers graded Indiana’s infrastructure at a D+,” said Lanane. “Unique to Indiana or not, that’s a problem. We’re tackling the issue on two fronts by providing funding for shovel-ready local projects now and rewarding local governments for reaching long-term solutions that work in their communities.”

Senate Bill 338, filed by Lanane, sweeps $245 million in local option income tax reserve accounts to local governments for immediate-term infrastructure projects. The funding would be distributed to local governments by May. The balance of the local option income tax surplus would remain as a hedge against future economic downturns.

“Drive a road in any Indiana city or town and it’s clear we’ve got to do something,” said Lanane. “Our bill means potholes are getting filled and streets that Hoosiers live and work on are getting repaired now.”

The measure would also create the Local Road Improvement Incentive Fund in Fiscal Year 2018, seeded with $250 million in surplus funding to reward local units for taking a long-term approach to local infrastructure funding. The bill unlocks four fiscal policy tools to help locals keep up their roads. It expands the current public safety local option income tax to be used for road safety projects like installing traffic signals or guardrails, filling potholes or repairing bridges. The proposed bill decouples the excise and wheel surtax, allowing local governments to levy or raise one independent of the other. It also provides more latitude for local governments to hold a referendum on directing property tax revenue to repair local roads and bridges and adopting a local option gas tax. Lanane emphasized the importance of empowering local governments considering the impasse on long-term road funding at the Statehouse.

“Our plan ensures Hoosiers’ tax dollars are going to fill potholes and repair bridges in their community now,” said Lanane. “We’re also rewarding bold vision and local governments that step up to the plate and take a long-term approach to maintaining their infrastructure.”

From the $250 million Local Road Improvement Incentive Fund, a one-time cash incentive would be awarded to communities that enact one of the four aforementioned funding options. The amount for communities would be determined using the Motor Vehicle Highway Account formula.