Governor extends gas tax reprieve through end of July, says state can backfill local losses

The governor announced he will extend suspensions of the gasoline usage tax and the fuel excise tax for 30 days, taking the reprieves through the end of July, saying the move is intended to ease affordability pressures on residents.

"I'm going to extend both reprieves for another 30 days," the governor said, framing the step as temporary relief the state can afford because of stronger cash flow and reserves. He said the policy responds to affordability concerns across costs such as gas, property taxes and health care.

The governor said the suspensions are possible under an emergency authority in the code when an energy emergency is declared and that the statutory emergency window can total 120 days. He noted that future extensions would be considered within those legal limits and in coordination with the legislature.

Why it matters: the suspensions reduce what drivers pay at the pump but shift revenue away from transportation agencies and local governments. The governor acknowledged INDOT and local governments see lower receipts but said the state will "backfill those lost revenues into locals" and expects to use reserves and improved cash flow to do so.

Asked how much the suspensions cost, the governor said suspending the gas-usage tax reduces state receipts by about $50 million per month and suspending the excise tax reduces receipts by about $90 million per month; he added roughly 30 to 35 percent of that revenue typically goes to local governments. "Each month that the gas tax use tax is suspended, it's roughly $50 million. Each month that the excise tax [is suspended], it's roughly $90 million," he said.

The governor said the state's recent forecast and stronger revenue collections put reserves and cash flow in a "much better place," allowing the administration to cover the temporary shortfall without canceling projects. He repeated that longer-term road funding will require legislative action and referenced the 2017 road-funding package (which raised diesel and gas taxes) as a model of the kind of comprehensive discussion needed.

On legal questions, the governor said officials would review the timing of any formal opinions from the attorney general and that the administration would "pay attention" to any guidance; the transcript records brief, potentially conflicting back-and-forth on whether an opinion has already been issued. He also cited the latitude provided by the code for energy emergencies when explaining why the executive could act.

What's next: the suspension is in place through the end of July; further extensions are possible only within the limits of the emergency authority and would likely require coordination with the legislature. The governor said the administration will review revenues monthly and work with lawmakers to ensure long-term transportation funding and local reimbursements.

The governor closed by linking the reprieve to broader fiscal priorities, saying stronger economic growth and better vendor management could free funds for pre-K, child care and infrastructure investment.