The Indiana Board of Finance unanimously approved a transfer of more than $121 million between state funds to make local governments whole for a portion of the gas tax holiday.
The board approved the $121,159,722.89 transfer Tuesday from the state highway fund to the motor vehicle highway account, the highway, road and street fund and the local road and bridge matching fund, according to a news release from Gov. Mike Braun’s office.
The transfer amount represents the gasoline use tax and gasoline excise tax revenue that local governments didn’t receive from April 8 through May 31. The board will consider similar transfer requests at future meetings to address missing revenue during the remaining months of the gas tax holiday, according to the release.
Braun decided to declare the gas tax holiday in the spring, after the U.S. and Israel attacked Iran in February, which caused gas prices to increase as shipping through the Strait of Hormuz, a major port globally for oil, has largely stalled.
Indiana’s average gas price is one of the lowest in the country at $3.34 per gallon of regular, according to AAA, but prices are inching up from the early July low of $3.125 per gallon as fighting has intensified in the past few weeks.
Each month that the gas usage tax is suspended the state doesn’t receive $50 million in revenue and each month that the gas excise tax is suspended the state doesn’t receive $90 million in revenue, Braun previously said. The state did not suspend the excise tax the first month, he said. Since April, when Braun first instituted the gas tax holiday, and including the new extension for July, the state is projected to miss out on $470 million in revenue.
The money from the approved transfer will be distributed to local governments under the standard statutory framework for gasoline use tax and gasoline excise tax collections, with the portion designated for local distribution available to local government units within 2 to 3 days, according to the release.
“Over the last 18 months, we have right-sized government and done more with less. And because of that, we were able to make life more affordable for Hoosiers this summer with the cheapest gas in the country. Today we honored our commitment to ensure that this tax relief for Hoosiers had no adverse effect on roads and infrastructure in our communities,” Braun said in the release.
Braun extended the state’s gas tax holiday for the third and final time earlier this month, and it will last for 30 days. Any future extensions would require support from the state legislature.
Lake County Councilman and Lake County Republican Party Chairman Randy Niemeyer said it “is a no brainer” to transfer funds to make local governments whole amid the gas tax holiday given the recent announcement of the state’s surplus.
“Local communities depend on that revenue to make needed repairs and improvements. I am glad the state is addressing this,” Niemeyer said.
Lake County Board of Commissioners President and Lake County Democratic Party Chairman Michael Repay said the transfer was a good move by state officials.
“County government and local units are responsible for most of the roads and critical infrastructure that’s funded by the gas tax. It makes sense that the state should replace that funding,” Repay said.
