DALLAS -- A transportation funding fight is brewing in Tennessee after state House Republican leaders proposed a no-new-tax road plan to counter Republican Gov. Bill Haslam's attempt to raise the state's gasoline tax for the first time since 1989.
The plan outlined by state House Republican leader Rep. Glen Casada and assistant majority leader Rep. David Hawk on Feb. 2 would divert to transportation 0.25% of Tennessee's 7% sales tax to bring in $194 million per year for state roads and $95.5 million per year for county and city roads.
Haslam's proposal calls for adding 7 cents to the state gasoline tax of 21.4 cents per gallon and 12 cents to the 18.4 cents per gallon diesel tax as well as raising vehicle registration fees and levying a $100 per year fee on electric vehicles.
Haslam said a gasoline tax increase is needed if the state hopes to begin whittling down its $10.5 billion backlog of almost 1,000 unfunded transportation projects.
The higher fuel taxes and fees would generate $227.8 million a year for state roads and $117.1 million per year that would be shared with cities and counties, Haslam said.
The sales tax diversion proposed by the House GOP leaders would take money out of the general fund now used for a number of government programs, he said.
"Show me the math on your plan and show me what you want to take out of the general fund if you're going to pay for it with general fund money," Haslam said. "Or show me what tax that you're proposing to cut that you don't want to cut now because you want to use that money for roads."
Tennessee's gasoline tax has not been increased since 1989.
Lawmakers in nine states are considering 22 bills that would boost transportation funding, with increases in the state gasoline tax to provide additional revenues in 11 of the measures, according to the Transportation Investment Advocacy Center.
The House plan in Tennessee is another option to consider rather than an effort to quash the governor's proposal, Hawk said.
"We're simply supplying a plan that I feel has merits, and we at least need to begin looking at whether transportation funding is truly a priority in Tennessee," he said.
Lt. Gov. Randy McNally, a Republican from Oak Ridge who serves as speaker of the Senate, was cool to the House Republicans' plan for shifting transportation funding away from the gasoline tax.
"We have an outstanding pay-as-you-go road system that operates with little to no debt. We accomplished this with dedicated funding through our gasoline user fee," said McNally, a former chairman of the state Senate's finance committee. "Any move away from the formula and the use of dedicated funding opens the door to debt and puts our fiscal stability at risk."
Tennessee should not move on transportation until it becomes clearer how much the state would have available under President Donald Trump's infrastructure proposal, said state Sen. Mark Green, a Republican from Ashland City who is expected to run for governor in 2018 to replace the term-limited Haslam.
However, a new study by the American Action Forum said the reliance on public-private partnerships in the Trump program would favor revenue-producing projects in heavily populated areas rather than rural roads.
"The most likely candidates for increased private sector participation are the urban roads bearing the most vehicle traffic, and thus having the potential to generate enough toll or congestion-pricing revenues to offset costs," the AAF report said.
