From the way Indiana officials are running around crowing to the media about the new federal transportation funding law, you'd think their high school team just won the state basketball championship. On the surface, the numbers would seem to support them. Indiana's level of transportation funding is up 52% over the old ISTEA bill. This translates into $211 million extra dollars a year. Indiana's will now be getting back 90.5% of the gas taxes it sends to Washington instead of 85.7% under the old law. How can anyone argue with that?
Well, the reality is that while Indiana is certainly doing better than in years past, it is still not faring well compared to other states. For example, the 90.5% return on gax taxes is actually the lowest return rate in the entire US. That's right, Indiana ranks 50th out of 50 in it's return on the gas tax dollar. In fairness, there are several other states that also recieve that percentage since it is the minimum guarantee under the new law, but even being tied for last is not something I would be bragging about.
This apparent good times/bad times contradiction can easily be explained. The new transportation law dramatically increases transportation funding across the board. Every state except Massachusettes saw an increase in transportation funding. In this rising tide scenario, it is important to stay focused on Indiana's relative standing, not just its absolute fuding.
This paper documents the level of funding for Indiana highway and transit system and compares it with peer states and national averages in order to show how Indiana fares under TEA 21.
Indiana will receive $617 million per year. This is broken down into several different funding categories as outlined in the following table.
| Funding Category | Amount |
| Interstate Maintenance/National Highway System (IM/NHS) | 263,848 |
| Surface Transportation Program (STP) | 165,802 |
| Bridge Program | 48,191 |
| Congestion Mitigation and Air Quality Improvement Program (CMAQ) | 16,396 |
| Recreational Trails | 800 |
| Metropolitan Planning | 3,044 |
| High Priority Projects | 33,167 |
| Minimum Guarantee | 86,138 |
| Total | 617,387 |
Note that all amounts in the preceeding table are in thousands
Indiana's annual funding represents a 90.5% rate of return on the gas tax dollar sent to Washington. This is the minimum guaranteed rate under TEA21. This is up from 85.7% under the old funding formula. This funding level is 2.36% of the total amount of nationwide funding. This percentage is up only slightly from the 2.33% under the previous transportation law.
Compared to surrounding states, Indiana did about average. Michigan, Ohio, and Kentucky saw increases that brought them up to the minimum level. Illinois and Wisconsin continue to have somewhat more than the minimum level (though Illinois' national share actually declined). Minnesota is receiving more than a 100% payback, as is Pennsylvania.
Conclusions: Indiana will see a substantial increase in federal funding that reduces but does not eliminate its status as a donor state. Indiana will still be at the bottom of the list in its rate of return compared to both peer states and the national average. However, the disparities between Indiana and the rest of the nation have been reduced.
The TEA21 law contains funding for numerous specifically named projects selected by Senators and Representatives for their district. The list of projects is in the table below.
| Project | County | Price (millions) |
| Improve SR 31 in Columbus | Bartholomew | 0.375 |
| Ohio River Bridge Study at Jeffersonville | Clark | 40.000 |
| Safety Improvements on McKinley and Riverside in Muncie | Delaware | 6.825 |
| Munice RR relocation study | Delaware | 0.045 |
| Reconstruct Wheeling Ave. in Muncie | Delaware | 1.200 |
| Remove and Replace Walnut St. in Muncie | Delaware | 1.605 |
| Install Signalization System in Muncie | Delaware | 0.675 |
| Conduct rail-highway feasibility study in Muncie | Delaware | 0.075 |
| Safey improvements on Conrail line in Elkhart | Elkhart | 1.500 |
| Construct Hazeldell Parkway in Carmel | Hamilton | 4.125 |
| Widen 116th St. in Carmel | Hamilton | 1.125 |
| Expand 126th St. in Carmel | Hamilton | 0.750 |
| Construct SR-9 bypass in Greenfield | Hancock | 2.363 |
| Construct I-70/Six Points Rd. Interchange | Hendricks | 14.963 |
| Upgrade 93rd Ave. in Merrillville | Lake | 4.425 |
| Construct Gary Marina Access Road | Lake | 5.000 |
| Construct Marina Access Road in East Chicago | Lake | 1.000 |
| Upgrade Ridge Rd. between Griffith and Highland | Lake | 3.300 |
| Upgrade county roads in LaPorte County | LaPorte | 6.000 |
| Extend East 56th St. in Lawrence | Marion | 4.875 |
| Construct East 79th St. in Lawrence | Marion | 3.000 |
| Bloomington to Evansville Southwest Highway | Multiple | 27.000 |
| Hoosier Heartland Corridor | Multiple | 18.75 |
| Upgrade RR warning system Terre Haute to Evansville | Multiple | 0.300 |
| Upgrade RR warning system Gary to Auburn | Multiple | 1.050 |
| Repairs on South Shore RR | Multiple | 0.275 |
| SR 37 feasibility study from Noblesville to Marion | Multiple | 0.450 |
| State Priority Projects | Multiple | 47.046 |
| Extend SR 149 from SR 130 to US 30 in Valpariso | Porter | 3.000 |
| Reconstruct US 231 from SR 66 to Dubois County Line | Spencer | 0.600 |
| Upgrade US 31 and other roads | St. Joseph/Elkhart | 4.500 |
| Lafayette railroad relocation project | Tippecanoe | 22.050 |
This list of projects might seem quite impressive. However, any money given to Indiana in the form of special project money simply reduces the amount given to Indiana under the minimum gaurantee. This does not represent an increase in funding for the state.
I am unable to explain the large number of special funding projects in Munice, but it is certainly interesting.
There are a few specific transit items that received funding in TEA21. These are shown in the following table:
| Project | Price (millions) |
| Chicago/Northwest Indiana Fixed Guideway Modernization | 78.170 |
| New Gary busses | 1.250 |
| New Indianapolis busses | 5.000 |
| Indianapoils commuter rail | 10.000 |
Note that it is highly unlikely that more than small fraction of the $78 million in fixed guideway modernization funds will come to Indiana. Virtually all of it will surely be spent in Illinois.
The proposed northeast Indianapolis light rail line received authorization for preliminary engineering and $10 million. Originally local officials were asking for $60 million so the state fell very short here. Sen. Richard Lugar was supposed to be the champion for the Indianapolis rail system, but he elected not to earmark any funds for any project.
Peer cities of Indianapolis also received some light rail funding. Cincinnati, whose system is about at the same level of development as Indianapolis', received $65 million. Louisville's light rail proposal was authorized for construction, but received no earmarked funds.
Under TEA21, Indiana will receive a somewhat larger percentage of its gas tax contribution back in the form of highway funds, but is still at the bottom of the list in terms of funding. It's share of federal transportation funds remains virtually the same as under previous legislation. Nevertheless, TEA21 benefits Indiana because of the large increase funding. It also starts down the path of equity in transportation funding for the state.
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