Indiana Gov. Mike Pence signed the state’s transportation package into law.

DALLAS -- Indiana Gov. Mike Pence Wednesday signed into law $1 billion in new road and bridge funding for the next two years.

"While our roads and bridges rank above the national average, these bills make clear our commitment to further improving the Crossroads of America," Pence said in a press release.

The plan provides $328 million for state highway projects and $254 million for local roads over the next two fiscal years, tapping Indiana's budget surplus for the funds. Another $430 million of excess local option income taxes that the state has been withholding will be released to local governments. There are no new taxes in the package; no bonding or debt and no tolling of existing roads.

Pence had originally sought $1.4 billion under his "21st Century Crossroads" funding plan for state highways that relied on $240 million of new highway bonds and $241 million from the $2 billion budget surplus, but no new taxes. The plan included annual budget appropriation of $150 million in fiscal years 2018, 2019 and 2020.

The final bill does not include increases in the state's gasoline and diesel taxes that House members favored but were opposed by Senate Republicans and the GOP governor.

The House adopted a bill in early February that would have raised the state's gasoline tax by 4 cents from the current 18 cents per gallon and the diesel tax by 7 cents from the current 16 cents per gallon, as well as index them to inflation.

The tax increase would have generated $500 million per year for transportation projects.

The bill also moved $42 million from the recent tax amnesty program to the Regional Cities initiative -- the state's grant program aimed at encouraging counties and cities to collaborate on regional development projects.

Indiana earmarks about $570 million per year on state roads, but a 2015 transportation funding study said the state needs to spend $1.5 billion per year over the next 20 years to keep its existing transportation infrastructure in good condition.

A transportation study commissioned by Pence and conducted by Cambridge Systematics said the $450 million per year that Indiana's fuel taxes now generate will dwindle to $300 million due to inflation over the next 10 years.

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