Indiana will be seeing more highway construction and better roads in the coming years, but they’ll also be seeing the price at the pump rise.
Gov. Eric Holcomb signed House Enrolled Act 1002 into law in late April that will increase the gas tax and will seek federal approval to turn interstate highways into toll roads. Tolling the state’s highways is a way to collect funds from out-of-state drivers passing through without paying anything to Indiana unless they stop and make a purchase.
The construction will start as soon as this summer to improve the infrastructure of the “Crossroads of America.”
“I can assure you and all of you that come July you are going to smell asphalt morning, noon and night,” Holcomb said when he signed the bill into law.
Under the law, Hoosiers will pay an additional 10 cents per gallon of gas in taxes. Currently, the gas tax in Indiana is 18 cents and beginning July 1 the rate will be 28 cents. The per gallon tax will be pegged to the rate of inflation after the first year, but cannot be raised more than a penny each year.
The legislation will create $1.2 billion in additional revenue by 2024 through new taxes and fees, with $350 million of the revenue going to fund local roads and $850 million funding state roads and bridges.
Holcomb said this will be the largest non-stop, sustained building program the state has ever seen and one of the largest in the nation.
“It’s going to truly connect Indiana to the world and help bring the world back to Hoosier soil,” Holcomb said.
Willard Witte, an associate professor emeritus in economics at Indiana University, said the gas tax will have a significant impact on the money available for road funding, without affecting many Hoosiers.
“I don’t think it will have much of an effect basically because gas prices jump around a lot and a 10-cent change isn’t much,” Witte said.
Witte explained that conditions of the oil and gas markets will play into how many people notice the tax increase. He said that if the week of July 1, when the law goes into effect, conditions in the overall oil and gasoline market produce a 20 percent rise and then you have the 10 cents on top of that, so gas prices go up 30 cents in that week, then most people will notice. However, if gas prices drop 10 cents then there won’t be any change and Hoosiers will not notice at all.
“Ten cents in gas these days is just not much,” Witte said.
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