Gas tax increase gains momentum in Tennessee
A push is mounting for Tennessee's first gas tax increase in a quarter-century, buoyed by growing interest from Gov. Bill Haslam and Republican legislative leaders who have historically opposed tax hikes of any sort.
The intrigue at Capitol Hill comes as more than 40 Middle Tennessee mayors have called on the governor to find additional revenue for transportation projects that have piled up across the state.
And in a flip from recent years, the politically powerful Tennessee Farm Bureau no longer includes opposition to an increase in Tennessee's gas tax among its legislative priorities.
An updated policy statement approved at its annual meeting in Franklin this month now says that "good highways, roads, and bridges are of vital interest to agriculture and to rural people."
Combined with some of the lowest gas prices in years, it all adds up to perhaps the broadest support for raising the tax in Tennessee — or perhaps any tax in this state — since the levy was last increased in 1989. And yet any proposal would face a big hurdle in the Tennessee General Assembly — one made even higher because it lacks the support of some state Democrats who might have been considered possible backers.
Haslam, who did not raise a single tax in Tennessee during his first term, is confident a legislative proposal to up the tax is imminent. The bill could come as early as the upcoming legislative session, which begins in January.
"At some point and time soon, either this year or next year, I think there will be a bill about gas tax," he told The Tennessean editorial board last week.
"It's incumbent upon us as the administration to show here's what we would do with that money if you increased the fuel tax, and then it's also I think important for all of us not to just increase it so that ... three years from now we're back in the same position."
Road projects face backlog
Tennessee imposes 21.4 cents in taxes per gallon of fuel. The federal gas tax, which hasn't changed since 1993, is 18.4 cents per gallon, meaning drivers in Tennessee pay a total of 39.8 cents on each gallon of gas purchased.
The state portion provides an estimated $658 million a year and, according to Tennessee Department of Transportation Commissioner John Schroer, costs the average driver less than $300 a year. He said Tennessee has the 13th-lowest gas tax in the country.
During TDOT's budget hearing this month, Schroer said Tennessee is becoming a "maintenance-only state" when it comes to transportation projects. His department earlier this year delayed 12 construction projects and 21 right-of-way acquisitions totaling $400 million because of uncertainty over federal funds.
Congress has not completed a full six-year highway bill, which TDOT officials rely upon as a predictable source of revenue to schedule long-term projects.
TDOT's full list of backlogged projects is $8 billion.
Haslam said gas tax revenue goes exclusively to help fund roads, and in no way helps the state general revenue fund. Although he hasn't explicitly started pushing for an increase, he's framed the issue as something that must be addressed.
"What I've said all along is, there's no way the state can continue on the path that we're on now," the governor said after a budget hearing. "The math doesn't work."
Lt. Gov. Ron Ramsey, R-Blountville, said he could favor an increase as long as it's part of a larger comprehensive measure, though he didn't elaborate on what that could look like. He questioned whether such a plan could be finished and passed during the upcoming legislative session, but acknowledged Tennessee roads will need the help sooner rather than later.
House Speaker Beth Harwell, R-Nashville, hasn't revealed a position.
"Between cars that are more efficient, and uncertainty coming from Washington with regards to future funding, I understand the need to look ahead," she said in a statement. "I don't know what the plan would look like or when it will be pursued, but the role of the General Assembly will be to give that plan a fair hearing, along with a thorough discussion and debate."
Area mayors seek more revenue
More than one-third of the state's gas tax revenue goes to local municipalities for use at their discretion. The Middle Tennessee Mayors Caucus, composed of 40 mayors in Middle Tennessee, including Nashville Mayor Karl Dean, has listed additional transportation revenue — and a road-funding system that keeps pace with inflation — atop its state legislative priorities.
"Mayors know firsthand the impact that aging infrastructure and traffic congestion have on our local communities and quality of life," Franklin Mayor and caucus chair Ken Moore said in a statement last week. "We're looking forward to engaging with members of the legislature to find real solutions this year."
A gas tax increase also is getting a push from chambers of commerce, including the Nashville Area Chamber of Commerce, whose CEO and President Ralph Schulz called Ramsey's recent comments on the issue "encouraging."
"This is a region that depends on transportation and transit as a primary economic driver, and there's not enough money to take care of the roads," Schulz said. "That's one helpful alternative to funding road and transit improvements."
Michael Skipper, executive director of the Nashville Area Metropolitan Planning Organization, which oversees transit planning for the Middle Tennessee area, said the state and federal gas tax rates have lost their "buying power" because neither increases with inflation.
In addition, he said pushes toward more fuel-efficient cars and more judicious travel will further erode funds for transportation infrastructure.
"This has been on our radar for some time," Skipper said, adding that the MPO also believes a comprehensive strategy is needed. "Just increasing the gas tax alone is only a short-term solution. We're going to have to consider at least some modest reforms to the way we raise that revenue."
But the gas tax, which funds the state's transportation improvement program, is not an option as a dedicated funding source for mass transit, which Dean and others have called for in the past.
The Tennessee Farm Bureau, which has more than 650,000 family members, isn't calling for an increase. But the group no longer opposes one. Its leaders also say any additional tax revenue should be used for solely the maintenance of roads and bridges.
"We've been seeing areas around the state where weight limits have been lowered on roads in order to extend the life of the roads," said Rhedona Rose, executive vice president of the Tennessee Farm Bureau. She said that troubles members because they rely on roads to take their goods to the marketplace.
The Tennessee Road Builders Association routinely advocates for an increase.
"Since Tennessee now ranks 50th in per capita spending, we believe that an increase and reform is appropriate and necessary," said Kent Starwalt, an executive and lobbyist with the organization.
Battle for approval
Getting a tax hike approved in the Republican-dominated state legislature would mean collecting votes from many Republicans who campaigned on keeping taxes of all types low. And it would apparently require overcoming skepticism from the state's dwindling number of Democrats.
House Minority Leader Craig Fitzhugh, D-Ripley, issued a statement opposing an increase. He also jabbed at Republican tax cut efforts, including the proposed elimination of the Hall tax on investments.
"The leader thinks this is the wrong time to pursue an increase in the gas tax," Fitzhugh spokesman Zak Kelley said. "Working families are just now getting their feet back under them and it would hit them hardest. It's especially inappropriate while Republicans are pursuing a cut to the Hall tax, giving 4 percent of Tennesseans a $4,000-a-year tax break."
Most Republicans don't like the Hall tax. Haslam himself has said he doesn't support the tax, but acknowledged the state doesn't have a way to replace the roughly $270 million it provides annually to state coffers. State Republicans also have proposed cutting the sales tax rate from 7 percent to 6.75 percent, a move that would mean hundreds of millions less in tax revenue.
In general, Haslam has said any discussion of taxes must be considered in the context of ongoing budget issues. State agencies prepared budget presentations with a 7 percent cut. Although Haslam has said that cut isn't guaranteed, he said some reductions will happen.
Meanwhile, U.S. Sen. Bob Corker, R-Tenn., is leading the charge for increasing the gas tax at the federal level. In the summer Corker proposed increasing the 18.4-cents-per-gallon tax 12 cents over the next two years. A 30-cent tax would put the federal levy inline with inflation. The proposal gained little momentum.
Reach Dave Boucher at 615-259-8892 and on Twitter @Dave_Boucher1. Reach Joey Garrison at 615-259-8236 and on Twitter @joeygarrison.
How does Tennessee's gas tax stack up with other states?
• Tennessee's gas tax is 13th lowest in the nation, according to the Tennessee Department of Transportation.
• It's in line with neighboring states, but Alabama, Mississippi, Missouri and Virginia all have lower state gas taxes than Tennessee as of October, according to the American Petroleum Institute.
• Kentucky drivers pay almost 32 cents per gallon in state taxes. North Carolina charges 36.75 cents per gallon in taxes and fees, while Arkansas and Georgia also charge rates higher than Tennessee's.
• The national average for state gas taxes and other fees is 30.88 cents per gallon, according to API.
History of Tennessee gas tax
1923: 2 cents per gallon
1981: 9 cents per gallon
1986: 16 cents
1989 (current rate): 20 cents, not including the 1.4-cent-per-gallon special petroleum fee
Source: Tennessee Department of Transportation
How much do you pay?
How much you pay in gas taxes in Tennessee depends on how far you drive and the fuel efficiency of your vehicle. If you drive an all-electric Nissan Leaf, for example, you would not pay any gas taxes.
Here's a look at how much you would pay in state and federal gas taxes if you drove some of the most popular vehicles in the nation. The calculations are based on driving 15,000 miles a year only in Tennessee using the combined city/highway EPA fuel economy rating.
Ford F-150 pickup 2WD: $398
Honda Accord: $206
Toyota Camry: $213
Nissan Altima: $193
Chevrolet Tahoe 4WD: $351
Toyota Prius: $119
Source: Fueleconomy.gov