Legislative Update: 3.14.25
Legislative Update: 3.14.25
As we write, revelers are lining the streets and pubs of Downtown Indianapolis to celebrate St. Patrick’s Day, per tradition, on the Friday closest to the holiday. But earlier this week on Market Street, the mood was a bit more... sober.
Lawmakers put their noses to the grindstone this week on road funding, the budget, election reforms, and property taxes. Solutions to some of these issues may be as elusive as four-leaf clovers—which is why we’re calling it an Irish blessing that there are six more weeks until the end of session!
There’s plenty to update in the meantime, though, so raise a pint and read on.
May the Road Rise up To Meet You
There’s broad consensus that the jig is up when it comes to relying heavily on gasoline taxes to pay for infrastructure. A combination of more efficient gas-powered vehicles, new vehicle technology, and less driving for remote work has made that source less reliable over the last decade.
Finding new ways to pay for Indiana’s infrastructure needs remains a top priority for lawmakers, and HB 1461 provides an initial plan to find some green. With that bill coming before the Senate’s Homeland Security and Transportation Committee on Tuesday, March 18, we wanted to provide a roadmap for routes to new revenue.
- Tolling: Adding tolling to interstate highways could result in billions of new revenue for the state and ensures out-of-state travelers are also paying to use Indiana’s infrastructure. HB 1461 would grant the Indiana Department of Transportation authority to request a waiver from the federal government to toll interstate highways, with approval from the governor and without requiring a new statute enacted by the legislature. How the tolling would be implemented would depend heavily on the executive branch, but we’d be remiss not to acknowledge that in a state in strong need of road funding, tolling could provide a pot of gold.
- Community Crossings Matching Grant: This state grant program was established in 2016, and since 2017, it has been funded through a combination of gasoline use taxes and supplemental fees paid on vehicles at registration. Lucky as a leprechaun, those funds have continued to grow since the program was established. HB 1461 includes new provisions for how the total dollars would be allocated.
- The initial $200 million would be divided into two buckets: $100 million that all communities are eligible for and $100 million for municipalities and counties that have adopted a wheel tax. Under that formula, communities with wheel taxes would qualify to receive about three times as much funding as those without it.
- Dollars above $200 million would be distributed in a combination of ways:
- In 2026, the revenue beyond the $200 million would go towards railroad crossing remediation projects.
- Beginning in fiscal year 2027, Marion County would receive $50 million of the additional funds if they can match that amount with new local dollars. The additional funds would then be directed to communities based on total lane miles versus centerline miles.
- Under that calculation, a four-lane highway would collect more funding than a two-lane road, a small shift towards funding going towards heavily-used roads is a win for growing communities.
- Beginning in January 2028, a local unit must have a surtax and wheel tax to apply for Community Crossings funds.
- Wheel and excise taxes: It’s worth noting that Marion County has wheel and excise taxes, but HB 1461 allows Marion County to adopt a higher wheel tax and excise surtax than in the current code. The bill also includes protections to help taxpayers avoid double taxation. In the event that both their municipality and county of residence impose wheel and excise surtaxes, they only pay one tax.
- In welcome news for business, lawmakers removed a provision of the bill that stipulated IEDC could not pay businesses incentives unless those businesses paid for the new road and infrastructure updates near the development.
- And in good news for those who love deliveries, the bill no longer allows communities to impose fees for delivery services.
Indianapolis Mayor Joe Hogsett’s administration has expressed support for the House-passed version of the bill, which could evolve as it moves through the Senate.
Luck of the Irish?
As the Senate continues its hearings on the state budget (HB 1001), there’s tepid optimism that the wind may be at our back and the sun shining upon our faces. For the third straight month, state revenue collections outpaced the forecast. February general fund revenues exceeded the forecast by about 7.8 percent at $94 million, and year-to-date collections are $150 million, or 1 percent, higher than December’s forecast.
While it’s looking brighter, the revenue picture is not all sunshine and rainbows. In the big scheme of things, the budget is still tight, and lawmakers are still working through requests from state agencies and universities to determine the best way to allocate funds.
- Want to dive deeper into what agencies are asking for? Check out the links to the budget presentations below:
Guinness vs. Harp—or Half and Half
School board candidates currently don’t have to declare a political party to run in Indiana, but we may be giving the days of nonpartisan school board elections an Irish goodbye. A bill making its way through the legislature would require candidates to label themselves as Republicans or Democrats or declare themselves as independent or non-partisan.
- SB 287 would’ve required school board candidates to run in primary elections, but the bill was amended in the House Elections and Apportionment Committee this week to require only a general election party designation. It was passed out of committee and is headed to second reading, where it could be amended further.
- It’s unclear whether the bill itself will get the Irish goodbye. A House bill with similar provisions never made its way off of the third reading calendar, and efforts in past years to make school board elections partisan have failed.
- Those advocating for the change say the public deserves the right to know which party candidates represent, while those who oppose it say school issues shouldn’t be partisan.
Speaking of transparency debates… HB 1681 aims to shine a light on referendums for school funding by requiring those measures to be placed on the ballot only during general elections, which historically have greater voter turnout. The bill is scheduled to be heard on Monday, March 17 in Senate Elections and Apportionment.
Looking for Green
Statehouse Republicans are continuing to develop the property tax relief legislation started by the Senate in an effort to provide homeowners with more green while protecting the resources of local communities. In a press availability this week, House Speaker Todd Huston outlined the goals of providing relief and stability for homeowners, encouraging economic development, and giving locals the resources they need to provide the communities that their constituents want to live in. He also stated an immediate goal of making 2026 property tax bills less than 2025 bills, a focus that Senate President Pro Tempore Rodric Bray shares.
House Ways & Means Committee Chairman Jeff Thompson introduced a bill this week that outlines long-term tax reforms for the state, including decoupling property tax and local income tax collections. But that bill will face amendments in the coming weeks as lawmakers seek to balance the interests of taxpayers’ pocketbooks with providing the services constituents need. Also on the table over the long-term is consolidation of government units to ensure greater efficiency.
Check back in with us over the next couple of weeks to learn what develops. In the meantime, enjoy your weekend, and Happy St. Patty’s Day!
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