Gov. Mike Braun’s administration has asked lawmakers to tap into state cash reserves to cover losses from Indiana’s gas tax suspension, but top legislative leaders aren’t ready to commit to the plan just yet.
“The Speaker (Todd Huston) and I said the same thing: We can never promise something in a future budget because we don’t know where we’re going to be,” said state Sen. Ryan Mishler, R-Bremen.
Mishler’s comments came during a road projects presentation to the State Budget Committee Thursday. He is the Senate architect of the state budget. The Indiana Department of Transportation reported projected losses to local governments and the State Highway Fund will reach a combined $1.1 billion should the gas tax suspension continue through Dec. 4.
The state’s general fund cash reserves neared $4 billion by the close of fiscal year 2026 on June 30 and are projected to reach $5.2 billion by the same time next year, providing lawmakers one option to backfill those losses.
The State Highway Fund finished the fiscal year with $500 million in its own reserves, though the fund is projected to reach a $427 million deficit by the end of fiscal year 2027 if gas tax losses are not replenished.
Braun directed his administration to make local governments whole from the State Highway Fund, but would need legislative approval to use state reserves to do the same for INDOT.
Lawmakers will begin writing the state’s next two-year budget when they return in January.
Mishler told the State Budget Committee Thursday he assured the Braun administration lawmakers “would make it a priority to consider where we can access funds to replenish the $1.1 billion.”
Huston issued a similar statement praising Braun’s decision this month to issue a new energy emergency suspending the state sales and excise taxes on gasoline for at least 30 days, rather than call a special legislative session.
The order is set to expire Sept. 5 unless it is renewed.
The suspension comes at a time when INDOT is already contending with inflation and a loss of purchasing power.
The average cost per interstate lane mile went from $8.4 million in 2015 to $46 million in 2026, INDOT Commissioner Lyndsay Quist said.
The agency is actively comparing its costs to other states, though Midwest states are reporting similar increases, she said.
Still, Quist said INDOT has not delayed any projects since the gas tax suspension took effect April 8.
The rising costs suggest lawmakers may need to revisit the state’s gas tax structure in the near future.
“If this gas tax delay or slow down had never occurred, it appears we are already on a path where our current funding mechanisms are inadequate,” said state Rep. Ed DeLaney, D-Indianapolis, adding, “which means we were going to face some kind of request for an increase even if there had been no gas tax pause.”
“We’ve got one huge, real problem,” he said.