Tennessee Gov. Bill Haslam’s proposed gasoline tax increase took a haircut from state lawmakers.

DALLAS -- Higher state gasoline taxes are on the line in Tennessee and South Carolina legislative battles over how to increase transportation funding.

Tennessee Gov. Bill Haslam has signed off on a state Senate panel's reductions in the gas tax increase he is seeking, while a South Carolina legislator warned of the third filibuster in three years against a proposed state gas tax hike.

The Tennessee Senate's transportation committee on Monday approved an amended version of Haslam's IMPROVE Act that would raise the state gasoline tax by 6 cents per gallon and the diesel tax by 10 cents per gallon over three years rather than the governor's proposal to add seven cents per gallon to the gasoline tax and 12 cents to the diesel tax.

Haslam's tax plan would have generated $278 million per year of new money for state roads and $117 million per year for city and county roads.

The revised rates when fully phased in would provide an additional $250 million per year for the state, $35 million per year for cities, and $70 million per year for counties, according to a Haslam spokesman.

The state Senate's amendment would phase in the fuel tax hikes, with four-cent increases for both on July 1, the beginning of Tennessee's fiscal year.

The gasoline tax would then go up by one cent in fiscal 2019 and again in 2020. The diesel tax would go up by three cents in fiscal 2019 and another three cents in 2020.

The amended version does not include the original bill's linkage of the fuel tax rates to inflation.

Tennessee motorists currently pay state fuel taxes totaling 21.4 cents per gallon of gasoline and 18.4 cents per gallon of diesel, according to the American Petroleum Institute.

The panel's changes also eliminated a proposed 3% increase in the state tax on rental cars.

The measure would immediately cut the state sales tax on groceries to 4% from the current 5%, resulting in a potential cut of $120 million per year in state revenues, and raise the value of residential property on which disabled veterans can claim tax breaks to $135,100 from the current $100,000.

The Tennessee House's Transportation Committee amended the governor's proposal early this month with a diversion of 0.25% of annual revenues from the state's 7% sales tax to road projects in lieu of the fuel tax increases.

The House will take up the transportation committee's version of the bill next week, said majority leader Rep. Glen Casada, a Republican from Franklin.

"We are moving forward," he said. "The Senate has ideas and the House has ideas and we'll reconcile those either between now and floor vote or conference committee," he said.

In South Carolina, the state Senate's budget panel has approved a transportation funding package that includes a gasoline tax hike of 12 cents per gallon to raise almost $800 million a year for state roads.

The measure faces opposition in the full Senate, said Sen. Tom Davis, a Republican from Beaufort.

"Right now, it appears that people have drawn their lines in the sand," said Davis, who has successfully filibustered similar proposal in the past two legislative sessions.

The South Carolina House approved a 10-cent per gallon increase in the gasoline tax earlier this month, but Gov. Henry McMaster said he does not support the tax hike.

Part of the state's transportation funding problem is the diversion of gasoline tax revenues to non-road needs, said McMaster spokesman Brian Symmes.

"The governor believes that the revenue generated by the current gas tax needs to be directed to improving roads and bridges before raising taxes on the people of the state is even considered," Symmes said.

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