LOUISVILLE, Ky. (WDRB) — Indiana Gov. Mike Braun is moving to reimburse local governments for road funding lost after the state temporarily suspended its gas tax this spring.
The reimbursement plan comes after Braun paused Indiana's gas tax in April as fuel prices climbed during the conflict involving Iran. The suspension has saved Indiana drivers about 62 cents per gallon at the pump.
While the tax break has provided relief for motorists, it also reduced revenue that normally flows to local governments for road and infrastructure maintenance.
In Clark County, where the revenue is used to pave 20-30 miles of road annually, the reduction is forcing that work to be reduced to just "five or six" miles of paving in 2026, according to county commissioner Jack Coffman.
"Now we have to tighten up to make that happen," Coffman said.
To make up for those losses, the Indiana state budget director is expected to formally request approval July 21 to transfer money from the State Highway Fund to cover the revenue local governments missed in April and May.
If the request is approved, state officials expect cities, towns and counties to receive the reimbursement within five to seven business days. Braun said those cities and counties would be made whole by Nov. 1.
Because of the uncertainty over when the lost funds would be reimbursed, it doesn't help counties in the same position as Clark.
"By November we'll be out of the paving season," Coffman said, noting that funding would not be able to pay for this year's paving. Instead, the money would be used to cover payroll and other expense that could come up late in the year.
For counties like Floyd, there will be no interruptions if the reimbursement of lost funding comes by November.
County leaders say this year's paving in Floyd County is already scheduled and funded, and the money lost would impact paving in 2027 if it is not reimbursed.
"It sounds like the governor listened to constituents, as well as local office holders, and decided to take some proactive measures to eliminate any shortfall that we might have had in that," Floyd County Commissioner Al Knable said.
State officials said additional transfer requests will be made later this year to reimburse local governments for gas tax revenue lost in June and the following months while the suspension remains in effect.
The move is intended to ensure local communities can continue funding road maintenance and transportation projects while drivers continue to benefit from lower fuel costs.
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