Despite new road money, Coppinger, Berke not yet ready to endorse Haslam's gas tax plan

A motorist prepares to pump gasoline in Detroit. A coalition of business interests calls for higher taxes to fix Michigan's bad roads, as Gov. Rick Snyder's road funding plan gets little traction in the Legislature. Snyder has proposed an increase in the gasoline tax and higher vehicle registration fees to pay for $1.2 billion per year in road maintenance and repairs over the next decade.
A motorist prepares to pump gasoline in Detroit. A coalition of business interests calls for higher taxes to fix Michigan's bad roads, as Gov. Rick Snyder's road funding plan gets little traction in the Legislature. Snyder has proposed an increase in the gasoline tax and higher vehicle registration fees to pay for $1.2 billion per year in road maintenance and repairs over the next decade.
photo Republican Gov. Bill Haslam speaks at the state Capitol in Nashville, Tenn., on Wednesday, Jan. 18, 2017, about his plan to boost transportation funding while also cutting taxes. Haslam's plan would hike gas taxes by 7 cents per gallon. (AP Photo/Erik Schelzig)

The Hamilton County and Chattanooga governments would see a combined $3.52 million in new money annually for local transportation needs under Gov. Bill Haslam's proposed IMPROVE Act, according to administration estimates.

But despite that, neither Hamilton County Mayor Jim Coppinger nor Chattanooga Mayor Andy Berke are ready to say they're behind the Republican governor's plan, which seeks to raise new money through gas and diesel tax increases for the first time in 27 years to address existing state and local transportation needs.

Instead, both mayors say they need more time to study the proposal, announced earlier this week by Haslam.

The governor's plan calls for raising the state's existing statewide gas tax, currently at 21.4 cents per gallon, by 7 cents while increasing diesel, now 18.4 cents per gallon, by 12 cents. The increases would cost the average motorist about $4 a month, he said.

Should the legislation pass muster in the General Assembly, which isn't clear at this point, Hamilton County government would receive $1.7 million in new money for transportation.

photo Hamilton County Mayor Jim Coppinger

The city of Chattanooga would see $1.82 million.

Coppinger said he would reserve comment until he has had a chance to fully review the governor's proposal.

Berke, a former state Democratic senator who is running for re-election, said in a statement that "as a vibrant and growing city, we want to see infrastructure investment here in Chattanooga and maximize the economic development opportunities that come with it."

The mayor said the city's paving budget has been doubled since he took office "and we want to do more.

"At the same time, we should take into consideration the impact that any change to our revenue stream has on all citizens," Berke added.

He noted that "because of losses in revenue, Chattanooga, like most Tennessee cities, has seen additional pressure put on local city residents to fund critical services like fire and police.

"At this time, my office is still looking over [Haslam's] proposal to understand what future implications it may have, and we are happy to learn more about any solution that would lessen the impact on citizens while building critical infrastructure," Berke said.

photo Mayor Andy Berke

Nashville Mayor Megan Barry, meanwhile, is wholeheartedly backing Haslam's proposal, praising a provision the governor included that would allow traffic-choked cities like Nashville to push public referendums in which voters would decide whether to raise sales taxes to transit projects.

"Over the coming weeks and months, we will continue to advocate on behalf of Governor Haslam's comprehensive transportation legislation that will keep Nashville and Tennessee moving forward," Barry said in a statement.

Haslam's plan raises $278 million more through increases in taxes and fees for transportation, which come from a dedicated-tax highway fund.

In addition to proposing gas and diesel tax increases for transportation, the governor is recommending lawmakers raise vehicle registration fees by $5-$20, depending on the size of the vehicle.

There is also a proposal for a new $100 fee on electric vehicles and a new 15-cent-per-gallon tax on vehicles fueled by natural gas and a 3 percent incremental charge on rental cars. Haslam also wants to index fuel prices to the Consumer Price Index, a measure of inflation.

Another facet calls for passing a new law that would prohibit passengers in vehicles from consuming alcohol. That's because of a federal statute that requires states to have such laws. Because Tennessee doesn't have a so-called "open container ban," $18 million that would normally go toward roads maintenance, repairs and new construction is now restricted for state anti-drunken driving initiatives.

The governor wants the law to pass so he can plow the money into roads. The various taxes and fees would raise a total of $296.57 million for state transportation.

The state's share of the gas and diesel tax increases is projected at $227.8 million. Under state law, local governments get a share of fuel tax revenues. The share of new money for the state's 95 counties is $78 million, while towns and cities would split $39 million under Haslam's plan.

At the same time, Haslam's plan cuts some taxes used to fund general government to address Republican lawmakers' concerns about the revenue surpluses there, as well as his own issues. The state has a $1 billion surplus in one-time revenue. It's also projected to have nearly $900 million in recurring revenue this year, which is between $400 million and $500 million above the usual revenue growth.

The governor is specifically recommending cutting the state's 5 percent sales tax on food by a half-percent, which would cost the state $55 million in revenue. He wants to change a weighting factor used to calculate corporate income tax on manufacturers, which would result in a $113 million cut for these companies. The governor said manufacturers generate well-paying jobs and experience ripple effects from suppliers.

The current weighting factor has discouraged some major corporations from relocating to Tennessee, while in-state corporations have been discouraged from expanding, Haslam said.

Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow him on Twitter @AndySher1.

Contact staff writer Paul Leach at 423-757-6481 or pleach@timesfreepress.com. Follow him on Twitter @pleach_tfp.

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