La Grange, IL:  Over the past six years, funding for Indiana’s state and local transportation projects has increased by $1.2 billion annually, the percentage of the state’s road miles considered in “good” condition has nearly doubled, and its percentage of bridges in “poor” condition has shrunk, according to a new analysis by the non-partisan Midwest Economic Policy Institute (MEPI). 

Read the study, “Indiana Transportation Funding:  Analyzing Recent State and Local Government Revenue Changes & Their Reach.”

Specifically, the study links Indiana’s improved transportation revenue and infrastructure conditions with the state’s passage of HEA 1001 in 2016, HEA 1002 in 2017, and HEA 1290 in 2018 – laws that increased access to project funding for local governments, boosted vehicle registration fees, and increased motor fuel taxes.

“In terms of the reliability of funding for transportation projects and improved road and bridge conditions, it is clear that Indiana is getting what it paid for,” said MEPI Transportation Director Mary Tyler.  “During a time when many states were struggling with decades of maintenance backlogs and insufficient revenues, Indiana took proactive steps to create a sustainable transportation financing system and the data shows that it is already generating a solid return on investment.”

To increase transportation revenue, Indiana lawmakers boosted taxes on gasoline, special fuels and aviation fuels by $0.10 per gallon in 2017, and pegged annualized increases in gasoline and special fuels taxes to inflation through 2024.  The special fuel tax was again increased by $0.21 per gallon in 2018, following the elimination of the motor carrier surcharge tax.

To further support the maintenance and modernization of the state’s transportation infrastructure, HEA 1002 increased registration fees on passenger vehicles by $15, increased registration fees on large vehicles by 25%, and initiated additional fees on electric and hybrid vehicles less reliant on gasoline. HEA 1002 also changed the distribution of sales tax on motor fuel from the state’s general fund to transportation specific funds—creating a larger and more reliable stream of revenues to support future transportation needs.

Beyond the direct impact on statewide transportation revenues included in HEA 1002, the report notes that the law included a number of measures to enhance the ability of local and municipal governments to directly raise transportation funds through local excise and wheel taxes paid at the time of vehicle registration, and by reforming the state’s Community Crossings Matching Grant Program to enable smaller sized communities to better access state transportation grants.

“In passing HEA 1002, Indiana lawmakers recognized that different communities each face different transportation maintenance and modernization needs that can make one-size-fits all statewide solutions needlessly limiting,” Tyler added.  “It is clear that expanding the authority of municipal governments to raise local transportation revenues and to better access state grant programs has enabled more Indiana communities to address community-specific needs and to deliver better outcomes.”

As one example, Tyler noted in her analysis that the 54 counties that raised wheel and excise taxes were more likely to reduce the number of roads rated in “poor” condition than those without these local taxes.  And, due to reforms in the state’s Community Crossings Matching Grant Program included in HEA 1002 – which reduced the local matching funds requirement for smaller communities from 50% to 25% – Tyler found that 485 different municipalities and every county in the state had been able to receive matching grant awards up to $1 million for transportation projects over the past 7 years.

“By making the hard choices needed to provide significant increases to the amount and predictability of funding, and enhancing the ability of local governments to meet community-specific needs, Indiana is well on its way to building and optimizing a 21st Century transportation infrastructure system that can support long term economic growth,” Tyler concluded.  “Going forward, the key challenge for state and local officials will be to sustain this progress and prevent the emergence of the kind of costly maintenance backlog, which has plagued so many other states.  To support these goals, lawmakers should consider extending its inflationary adjustment to fuel taxes beyond 2024 and encourage more local governments to take advantage of the local transportation revenue authority that HEA 1002 has made possible.” 

The Midwest Economic Policy Institute is an affiliate of the non-partisan Illinois Economic Policy Institute—a non-profit organization which uses advanced statistics and the latest forecasting models to promote thoughtful economic growth for businesses, communities, and working families across the Midwest.  

Media Contact: Todd Stenhouse, 916-397-1131,