Gov. Mike Pence proposes $1B in new road funds
The state would spend an additional $1 billion on Indiana road and bridge improvements over the next four years under a legislative proposal unveiled Tuesday by Gov. Mike Pence.
The governor's 21st Century Crossroads plan would be funded through a combination of dipping into the state's reserves, creating new spending and borrowing money through bonding. But he said no new taxes would be required.
About $241 million would come from reserves at the end of the fiscal year, reducing reserve funds to 11.5 percent of the state budget.The governor wants the legislature to approve another $450 million in new spending over a three-year fiscal cycle ending in 2020. The plan also would also take $50 million in interest out of the Next Generation Trust Fund and borrow $240 million through bonds.
Most of the spending increases will require legislative approval.
"The infrastructure of the state has contributed to the widening prosperity of the people of the state of Indiana," Pence said at a news conference at the Indiana Department of Transportation's Traffic Management Center in Indianapolis. "This administration knows roads mean jobs."
But Democrats said the proposed investment was too small and lacks the immediacy needed to address the state's infrastructure troubles.
“"Even now, the governor makes what he calls a ‘significant’ infrastructure investment with traditional construction season winding down and no new dollars available until July 2016," Senate Democratic Leader Tim Lanane said in a statement. “We can repave state highways all we want, the fact is the majority of roads in the Hoosier State are maintained by local governments."
Pence said he would work with the legislature and local officials to address local road needs.
The political fight over the condition of the state's bridges and highways has been escalating for weeks.
Unions and Democrats — including presumed nominee for governor John Gregg — have blamed Pence for the monthlong shutdown of 33 miles of I-65 due to a broken bridge and tens of millions of dollars in potentially faulty road projects first disclosed last month in The Indianapolis Star.
“Mike Pence continues to lead from behind," Gregg said in a statement Tuesday afternoon. "As he’s done in the past, it’s only after an embarrassing public relations crisis that he has stepped up to offer any ideas."
Pence and the Indiana Department of Transportation have fired back, unleashing a torrent of press releases and tweets in recent days defending the administration's record.
"I always like to say Hoosiers are entitled to their opinion, but you’re not entitled to your own facts," Pence said Tuesday. He said the state has already spent an additional $1.26 billion on infrastructure since he took office in 2013.
But the administration has acknowledged that INDOT is examining more than 170 recent road projects amid concerns that contractors used a faulty asphalt mix that could cause roads to crumble years earlier than anticipated. The agency is already seeking $5 million from Brooks Construction, a contractor responsible for a 3-mile stretch of the Hoosier Heartland highway near Logansport that INDOT says is cracking and falling apart prematurely.
But lawmakers — including some of Pence's fellow Republicans — have expressed skepticism about the Pence administration's assertion that contractors alone are to blame. Brooks Construction and other industry representatives have emphasized that INDOT approved the mix designs and asphalt used in the projects, suggesting the state's specifications are to blame.
Pence has also defended his administration's handling of the I-65 shutdown, noting that new construction — not neglect — caused the northbound bridge over Wildcat Creek near Lafayette to sink more than a foot.
Leaders of the Republican-controlled legislature applauded the governor for offering ideas on Tuesday, but they stopped short of enthusiastically embracing them.
"We are concerned about taking on any debt against the state’s ongoing operating expenses," House Ways and Means Chairman Tim Brown said in a statement. "I will continue working with our leadership team to determine the best route for road funding as we move forward."
The governor's plan represents a departure from some of his past positions.
During last year's budget process, for example, he said he wanted to keep reserves at at least 12.5 percent. Now, he said, he is comfortable with 11.5 percent.
He has also traditionally opposed borrowing, though he said the new bonds will come online as previous ones are phased out, preventing an increase in the state's debt load. First, however, he'll have to persuade lawmakers to end a moratorium on such bonds that has been in place since 2007.
The new spending Pence is proposing would also be used to maintain existing roads and bridges, whereas one-time annual increases of $100 million or $200 million during the past two budget cycles were targeted for new projects, including additional lanes on heavily traveled interstates.
Reaction was mixed from Indiana's business community. Indiana Chamber of Commerce CEO Kevin Brinegar said in a statement he was "encouraged" by Pence's near-term plan.
“Future needs, however, have been well documented," he said. "Policymakers must come together in a bipartisan manner to begin serious conversations about the long-term challenges that include a nearly $1 billion gap annually in required road and bridge maintenance — not to mention funding for new construction, added travel lanes and more to fuel future economic growth."
One of the state's largest labor unions echoed that sentiment, albeit in harsher tones.
James Sweeney, president of International Union of Operating Engineers Local 150, called Pence's plan "a drop in the bucket of what is needed."
"Today, merely preventing the mediocre condition of our roads and bridges from worsening would require more than $1 billion annually," he said in a statement. "Anything less than that is a Band-Aid that will enable the further decay of our infrastructure. Today’s announcement would spread that amount over four years."
At the very least, Pence's announcement offers a starting point for a road funding debate that legislative leaders have said will be their primary concern during the upcoming legislative session, which begins in January.
“We sincerely appreciate the governor's recognition that road and bridge funding will be our top priority for this next legislative session," House Speaker Brian Bosma said in a statement. "We appreciate the governor’s proposals and will keep his proposals in mind as we work together to address challenges facing infrastructure funding in both the short term and long term.”
About Gov. Mike Pence’s $1 billion road funding plan
Where the money will come from:
$450 million would come from $150 million in additional state budget appropriations in fiscal years 2018, 2019, 2020. This would require approval from the General Assembly and is on par with the $100 million to $200 million they’ve appropriated during the past two budget cycles.
$241 million would come from the state’s $2 billion reserves at the end of the current fiscal year in July 2016. This is projected to reduce reserve levels to 11.5 percent of the state budget.
$240 million would come from new bond issues. The state currently has a moratorium on such borrowing, so legislative approval will be required.
$50 million would come from interest on the state’s Next Generation Trust Fund. Those funds would be tapped in 2019, two years ahead of schedule.
$26 million would come from refinancing the state’s existing bonds. At current interest rates, state officials believe the state can save $6.5 million in each of the next four years.
When the money will be spent:
FY 2017: $487.5 million
FY 2018: $156.5 million
FY 2019: $206.5 million
FY 2020: $156.5 million
Source: Gov. Mike Pence's office
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Call Star reporter Tony Cook at (317) 444-6081. Follow him on Twitter: @indystartony.