Tolls, trolls, taxes fuel debate

Steven Olmstead drives his 2002 Saab 40 minutes to work each weekday from his home in Greenwood to his job in Greenfield.

Along the way he hits I-65 and I-70. So when he heard that the Indiana General Assembly might convert some freeways to toll roads, he was fuming.

“I am already paying gas taxes so now they want to charge me again?” said Olmstead, 45. “Am I going to pay a toll every day just to get to work? I don’t see the point of it. I am really disappointed with these lawmakers.”

Olmstead is not the only driver blowing a gasket about tollways in Indiana. Truckers, anti-tax groups and good government types also dislike the idea for various reasons. If the proposal gains traction in the coming years, legislators could hear more and louder voices in opposition, among them AAA, experts said.

 But transportation analysts and politicians say toll roads, although years away, are all but inevitable. In short, legislators are in a jam about as bad as any rush hour snarl.

That’s because Indiana highways are deteriorating and the primary way we pay for them, with federal and state gas taxes, is not keeping up. The federal tax on gasoline has not been raised since 1993, while the cost of fixing and building roads has gone up. 

In response, many states have been forced to raise their own fuel taxes to pay for highways, a much tougher political decision than letting Congress do it for them. Indiana hasn't raised its gas tax since 2003.

At the same time, the new taxes aren't going to generate as much money in the future as they used to because gas consumption is slowing thanks to high mileage cars, electric vehicles and a fewer drivers.

Which is why more states are implementing tolls.

“The gas tax as a sufficient means of funding our roads will be obsolete in 20 years,” said Robert Poole, director of transportation at Reason Foundation, which has advised four presidents on transportation policy. “Tolls should be part of the permanent replacement of per-gallon fuel taxes.”

The Indiana Senate President Pro Tempore David Long, R-Fort Wayne, said lawmakers know that, too, even if drivers don’t yet see it.

“I do believe as states become more and more responsible for their roads, tolling is the future,” Long said. “That’s definitely going to happen. We’ve been told that by the federal government. The (gas revenue) is going to change dramatically in about four years."

That reality adds another layer of irony for Indiana’s Republican-dominated, fiscally conservative General Assembly. The GOP lawmakers want to build tolls and raise the state gas tax by 10 cents a gallon, which has upset a portion of their base. The hike would earn about half of the $1.2 billion needed each year to repair and build highways, roads and bridges in Indiana.

 The General Assembly was cornered into the position by the dismal conditions of the state’s infrastructure. Many leaders said the anger from constituents about shoddy highways exceeds even that of taxes and tolls.

“It’s a very close call to say which of the three angers people most,” said Andy Downs, a political scientist at Indiana University-Purdue University Fort Wayne. “But I’d say it’s tolls because they affect how you get somewhere. It’s all something new for most of the state. It creates a more intense dislike. It’s a classic political conundrum for our lawmakers.”

Just as local lawmakers developed the political moxie to propose unpopular tax hikes, however, the rules of the game started to change. Economists who study driving trends now predict that fuel efficient cars, hybrids and electric vehicles will mean less gas will be burned in the coming decades — and the fewer gallons consumed means fewer taxes collected.

A report by a Joint Committee on Taxation in Congress projects that federal gas tax revenues will drop from $24.1 billion in 2017 to $20.3 billion in 2025.

And as Indiana legislators are turning to tolls, trolls are turning to legislators, accusing them on social media of abandoning their conservative principals.

“The Indiana Republican Supermajorty wants to give Indiana the 5th highest gas tax in America!!! No need for the GOP,” tweeted Monica Boyer, whose profile describes her as a Ronald Reagan Republican.

The Indiana Petroleum Marketers and Convenience Store Association plans an ad campaign against the tax. One proposed ad it is considering asks: "Guess who's responsible for paying Indiana's NEW GAS TAX?" Next to it there's a cutout of a head with the words "your face here."

There’s also an online petition drive by NoTollsIndiana, which declares that “Voters hate toll roads. Tolls hurt businesses and motorists. So why is #InLegis pushing this through?”

About the only thing left that could make these shifting alliances even more unusual would be the Democrats  coming out against a tax increase. That happened, too.

Meanwhile, the toll industry is ready to jump at the business opportunities.

“We explain to (governments) that tolls can be an important tool for their overall transportation funding,” said Kevin Hoeflich, senior vice president at HNTB, a construction firm that promotes and builds tolls. “Not only are fuel tax revenues going down, but in some ways people are driving less, taking Uber, ride sharing.”

Hoeflich acknowledged that tolls have a bad reputation among some motorists. But he said their perception is outdated. The days are gone when thousands of cars would be backed up at a booth, idling, coughing up exhaust while an attendant counts quarters.

Booths today have cashless tolling, in which window transponders let drivers zip through special lanes without stopping. In Indiana it’s called the E-ZPass. In Illinois it’s the I-PASS. Georgia has the Peach Pass and Florida the SunPass.

 “Tolls are faster and safer because of that, there are no rear-end collisions,” Hoeflich said.

Public opinion on tolls has been mixed and depends on who did the polling and how the questions were phrased. But in a well-regarded recent Rueters/Ipsos poll, 50 percent of the respondents answered yes to the question: “I am willing to pay tolls and user fees to fund infrastructure improvements.”

Toll opponents stress that they are a double tax — once for gas and once for the toll. But toll systems in the future should be able to give drivers credit for their gas taxes by using transponders to read the make and model of car, compute its gas efficiency and deduct the tax from the toll charge.

The General Assembly hasn’t done any polling on tolls, but some residents might hold them in low regard based on the history of the state's only toll, the Indiana Toll Road, which stretches 157 miles from Illinois to Ohio at the top of the state.

Former Gov. Mitch Daniels leased the road for 75 years to a private company in 2007 for $3.8 billion, which was spent on roads in a project called “Major Moves.”

The company that leased the toll road raised rates 30 percent and went bankrupt six years later when ridership declined by 42 percent.

The road has since been purchased by another company, which is planning $200 million in improvements.

Recently a second toll was added in Indiana, on the I-65 bridge over the Ohio River into Kentucky. The pass for that one is named RiverLink.

Legislators have so far talked only about tolling I-69 and I-70. They also said tolls were unlikely on I-465 around Indianapolis.

But all the hand-wringing over more tolls here may be premature — by several years.

 Legislation allows the Department of Transportation to seek approval from the federal government to get a waiver to place tolls on any interstate highway.

But the Interstate System Reconstruction and Rehabilitation Pilot Program requires money from the tolls be spent for upgrades only on the toll road. That would seem to undercut the legislature’s goal of using toll revenue to rebuild roads statewide.

In addition, the pilot program has only three slots and a waiting list. And in its 10-year history, no state that has signed up for it has converted a highway to a toll road.

The state can always build a new tollway,  put toll lanes on other federal highways or add toll lanes to existing highways.

One of those options is probably coming.

Gov. Eric Holcomb said that day is probably about seven years away.

"We’re going to have to ask ourselves do we want to raise taxes more or do we want to entertain tolling," Holcomb said Friday. "In year 6, 7, 8, we’re going to have to seek more revenue outside (of taxes)."

Sen. Luke Kenley, R-Noblesville, said tolling was a more dependable bank than gas taxes.

“A lot of people think that in the end, ultimately (tolling) is a resource that doesn’t continue to diminish like the gas tax does,” he said. "It may not be the solution for today, but for the long term, I don’t think you’re going to realistically be able to deal with this problem without taking that path.”

Call IndyStar reporter John Tuohy at (317) 444-6418. Follow him on Twitter and Facebook.