Governor announces final extension of gas tax breaks; further action to require legislation

Gov. Mike Braun on Thursday announced his final extension of gas tax breaks for Hoosier drivers — which for weeks have driven Indiana gas prices to the lowest in the nation.

“I want to make sure that Hoosiers, not only when it comes to gasoline costs, … know that we’re doing everything we can to make their lives easier,” Braun said.

“These savings will carry us through the heavy travel time of summer, across the Fourth of July and beyond,” he added, during a news conference in his Statehouse office.

Drivers will save about 61 cents on every gallon of gas this month through Braun’s suspension of the state sales tax on gasoline — which is 25 cents for July — and a separate gas excise tax of 36 cents.

His latest announcement extends the tax holidays through August 6.

Gas cost an average of $3.12 per gallon in Indiana on Thursday, the lowest of the 50 states and District of Columbia, according to AAA.

Braun’s move, however, comes as gas prices soften across the country. The national average has declined for five straight weeks, AAA reports, and has stayed below $4 per gallon for a second week.

Four months of discounts

Fuel prices began rising after the U.S. and Israel attacked Iran in late February. Iran closed the Strait of Hormuz — a key transit hub for oil imports — in retaliation.

Governor directs state to reimburse local governments for gas tax holiday revenue

Braun first declared a 30-day energy emergency on April 8, lifting the 7% sales tax on gasoline for the next month. That initial tax suspension cost the state an estimated $50 million.

The governor announced a 30-day extension of the emergency and sales tax break May 6, and also lifted the gas excise tax. He declared a second emergency and renewed both suspensions on June 3, through July 7.

The 30-day-tax suspensions are expected to cost the state $92 million and local units of government $52 million, Braun said.

The Department of Revenue didn’t immediately provide an estimate for the total cost of the suspensions going back to April.

Collection of gas tax revenue — which is directly paid by fuel distributors — lags about a month from when gas is sold at the pump. State officials then split the money between the Indiana Department of Transportation and local governments for road spending.

Braun’s administration said Tuesday that the state will reimburse local governments for any revenue lost to the gas tax holidays. The money transfer is expected at the end of the month.

The governor said the state’s healthy economy enabled the reimbursement.

“If you run government efficiently, and you’re getting the right economic development on the revenue side, you get a win-win,” he told reporters. “State revenues are exceeding expectations, and from the time my crew has come in here, we’ve looked at state government; we’re saving a lot on how it operates, meaning that we can spend money on things that are necessary, like an energy emergency that we’ve been going through.”

What’s next

Drivers seeking relief beyond August must turn to the Legislature for further action.

Braun suspended the gas taxes using a state statute that allows the governor to declare a state of emergency for up to 60 days.

“The governor may not renew or extend a proclamation more than once without approval of the general assembly,” Indiana Code reads.

Braun’s first executive order, however, declared an emergency for just 30 days. The next order “extended” it for another month, and the following one “declared” a “second” emergency.

The governor told reporters in May that he believed he couldn’t continue the tax breaks beyond June without a special legislative session. Later that month, he said there may be “flexibility.”

By June, Braun said statute granted him the authority through August, citing the 120-day maximum in law.

Now, by any logic, the road ends next month unless lawmakers act.

The governor said he has not discussed the possibility of a special session with legislative leaders but didn’t rule it out.

“I’m going to take everything into consideration, but obviously if we did do anything, the Legislature would have to be interested in doing,” he said.

Attorney General Todd Rokita’s office, meanwhile, is monitoring fuel prices across the state to enforce price gouging protections. Thirty major fuel distributers were under investigation for potential price gouging as of late May.