Gas tax reimbursement is good policy and politics | Opinion

Gov. Mike Braun made the right call when he suspended Indiana’s gas tax to relieve Hoosiers during the current energy emergency. He is making another sound move by directing his administration to make local governments whole for the revenue they lost while drivers received relief at the pump.

That matters because tax relief should not come at the expense of counties, cities and towns responsible for maintaining the roads Hoosiers drive every day. For local governments, missing revenue can mean delayed planning, tighter cash flow or uncertainty over paving and maintenance schedules.

Allen County did not have an exact estimate of the lost revenue because gas tax receipts vary from month to month, according to Chris Cloud, chief of staff for the Board of Commissioners. But based on recent receipts, the county highway department thought the loss could be as high as $4 million, depending on how long the suspension lasted.

That is real money. Braun’s announcement recognizes that.

The administration will calculate the revenue local governments missed during the gas tax suspension. State Budget Director Chad Ranney is expected to ask the Board of Finance on July 21 to transfer State Highway Fund money for April and May. If approved, local governments should receive distributions within five to seven business days.

Similar requests could follow this fall, and the administration says local governments should be made whole no later than Nov. 1.

Braun’s announcement sits at the intersection of good policy and good politics. It reflects the practical instinct he has shown on some other affordability issues, including his criticism of the Indiana Utility Regulatory Commission’s AES rate decision and his push for more transparency at the Indiana Economic Development Corp. He will get deserved credit for this.

But the gas tax cut shows the connection among taxes, consumers and local governments. Roads do not improve because state officials have good intentions. They improve because counties and cities have the money to patch, pave, plow and rebuild them.

Cloud said there has been no direct impact to date on Allen County projects because of a two-month lag between gas taxes being paid at the pump and distributed to local units. Projects already underway had their funding in place before work began.

That is reassuring, but it should not obscure the risk. Had the suspension continued long term, Cloud said, it might have soon begun to push back project bidding and would have affected planning for next year’s work.

The caveat is what happens if there is another flare-up in the Gulf or anywhere else global oil supplies are threatened. Will the governor, whoever is in office, suspend the gas tax and reimburse local governments?

In this case, Braun was smart to make clear that tax relief for drivers and fiscal responsibility for communities do not have to be opposing ideas. Well, at least this time.

That is the balance Hoosiers should expect: relief that is real, responsible and not paid for by quietly passing the problem down to counties, cities and towns.