RFRA 2.0 and Road Funding


statehouse picElection year dynamics, conservative Republican super majorities and the non-budget nature of the “short” session create the context for all issues facing the Indiana General Assembly in 2016. In economic development, the only issues to see much traction are adding LGBT civil rights protections to the Indiana Code and a short-term fix for the state’s roads and highways with an emphasis on local funding. Other issues will arise, but are unlikely to gain much attention.

Last spring’s rancorous debate over the Religious Freedom Restoration Act (RFRA) damaged Indiana’s brand in the international marketplace for jobs and investment. It led to an economic boycott of Indiana, a viral trashing of our state’s reputation in the international media and a black eye for our state’s political leadership. Moreover, the enduring stigma attached to Indiana as a discriminatory and unwelcoming place, especially among a Millenial generation that represents our future workforce, endangers our prosperity. That is why the Indiana Chamber has made adding protections for the LGBT community in state law a priority for the upcoming session.

New legislation will start in the Senate, where Sen. Travis Holdman (R-Markle) has drafted a bill that attempts to strike a balance between the religious and LGBT communities. The bill, as it stands, will probably not make either of those constituencies happy. The synopsis prohibits discrimination based on sexual orientation or gender identity while also providing protection for religious liberty and conscience. Additionally, it also preempts local civil rights ordinances that conflict with the state civil rights law. Look for an interesting debate as the session progresses.

In the area of transportation infrastructure, the General Assembly likely will take only baby steps to address an acknowledged nearly $1 billion annual funding gap between current revenues and maintenance needs. Legislative leadership seems content to wait until 2017 before pursuing any significant changes to the way Indiana funds its roads, bridges and highways. Nevertheless, armed with the results of a major road funding study by the Indiana Department of Transportation (INDOT) presented over the summer, all legislators will be able to evaluate proposed solutions in 2016 – it is just unlikely that they will move on them, especially any tax or fee increases. (The INDOT study examined existing fuel excise taxes, their future revenue potential and alternative funding mechanisms and revenue streams, such as vehicle miles traveled [VMT] or tolling.)

The legislation to watch is HB 1001, which will contain a number of reforms and potential funding mechanisms based upon the initial data from the INDOT study. The Indiana Chamber collaborated with key legislators in crafting HB 1001, which can be likened to a block of stone delivered to a sculptor’s studio: It will be an array of many options that will be chipped away at during the legislative session, hopefully into something recognizable (and helpful) in the end.

The condition of our infrastructure has already become highly politicized with partisan accusations and dueling proposals from Gov. Pence, House Democrats and the Republican majority caucuses, but nevertheless we expect several issues to be examined in sobering detail: gasoline and diesel fuel excise tax increases; fees for electric or alternative-fuel vehicles; repurposing the 7% sales tax on gasoline for the state’s highway fund; and a discussion of indexing fuel taxes for inflation, among other proposals.

Given the controversial nature of these topics and a near allergic reaction by politicians to tax increases in an election year, we anticipate it will be a very contentious and interesting session.

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