Gov. Haslam doesn't know if 2015 is year to seek increased taxes for roads

Gov. Bill Haslam speaks at an economic development announcement in Cookville, Tenn., on Monday, Aug. 25, 2014.
Gov. Bill Haslam speaks at an economic development announcement in Cookville, Tenn., on Monday, Aug. 25, 2014.
photo Gov. Bill Haslam speaks at an economic development announcement in Cookville, Tenn., on Monday, Aug. 25, 2014.
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NASHVILLE -- Gov. Bill Haslam says he has not yet decided whether to seek new funding for Tennessee roads next year and won't unless he has a solution "that's more than just bridging the gap."

The governor said in budget hearings this month that within the next two years or so, the state would have to address revenue shortfalls because of higher vehicle efficiency and years of congressional inaction on transportation funding.

Haslam, in a year-end interview with the Times Free Press, said he knows the state will have to find more road money "at some point," but added, "We certainly have not given anyone any indication that we're committed to doing it this year [2015]."

Earlier this week, Rep. Dan Howell, R-Cleveland, was quoted by the Cleveland Daily Banner as saying Haslam "has already signaled this is something he is going to do."

Haslam said his top two priorities when the 109th General Assembly convenes Jan. 13 are passing his proposed Insure Tennessee program and addressing lawmakers' concerns over Common Core education standards.

"We have to consider how much you can lift at one time," Haslam said.

Anyway, he said, "I really don't want to [propose a transportation funding method] until I say, here's a thoughtful way to do this that's more than just bridging a gap.

"It's more than just putting a Band-Aid on and saying, 'Oh, gosh, we're short money for roads. Let's increase the tax."

Tennessee fuel taxes -- 21.4 cents per gallon for gasoline and 18.4 cents per gallon -- haven't risen since 1989.

Each penny of the gas tax generates $30 million. About 60 percent -- $18 million -- goes to the Department of Transportation, while 38 percent goes to cities and counties. Two percent goes to the general fund for inspection fees. Each penny on the diesel tax generates about $12 million. Tennessee now has the 13th-lowest fuel taxes among the 50 states, state officials say.

Haslam said that when he decides what is needed, "I'd like to have something that's a little more thoughtful so we're not just back -- whoever the governor is four years from now -- back with the same thing."

Lawmakers and others have discussed a variety of solutions. Ideas include raising the existing tax or indexing fuel taxes so they rise or fall with price of fuel.

Other possibilities include a mileage fee on trucks, which in-state firms could deduct from business taxes they pay. There's also talk about fees on electric vehicles and hybrids, which use state highways but pay little or no fuel taxes. Earlier this year, state transportation Commissioner John Schroer mentioned a mileage fee for highway users.

Asked about indexing fuel taxes, Haslam acknowledged a "declining base" from which to raise revenue.

"I honestly don't know what the long-term answer is, but I think one of our hesitancies in pushing toward something forward next year is we really don't have a comprehensive plan on how that should work, No. 1," he said.

"And then No. 2, while we have a bunch of road needs -- and we have an $8 billion backlog of projects -- I don't know that I have a thoughtful proposal that I could go around to legislators and say here's exactly what we would spend the additional revenue [on] other than what's next in line" on the list.

Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550.

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