Governor plans road show on possible gas tax hike for roads

Governor plans road show on possible gas tax hike for roads

June 14th, 2015 by Andy Sher and Dave Flessner in Politics State

Tennessee Governor Bill Haslam speaks during a meeting with the Chattanooga Times Free Press editorial board.

Photo by John Rawlston /Times Free Press.

State gas tax rates

Alabama: 20.87 cents per gallon

Georgia: 26.53 cents per gallon

Tennessee: 21.4 cents per gallon

Federal tax: 18.4 cents per gallon

Source: American Petroleum Institute

 

POLL: Does Tennessee need a higher gas tax to fix roads?

Gov. Bill Haslam will hit the road this summer to talk about roads and how to build and maintain them.

The main source of money for road needs, taxes on gasoline and diesel fuel, isn't keeping up with the spiraling costs of construction and maintenance.

Tax rates have been frozen for decades, and better mileage means drivers are buying less gas. The average Tennessee motorist is paying about a third less per mile for use of roads than a generation ago, Haslam said.

"Better gas mileage is good for the environment and good for people's pocketbooks, but it's not good for our roads," Haslam said in an interview with the Times Free Press last week.

He stopped short of calling for a tax increase any time soon, but hinted he would like to see some added revenue for roads before he leaves office in January 2019.

"You are paying on cents per gallon and that is going down," Haslam said. "But the cost of concrete, asphalt and engineering work has gone up, not down. We can't kid ourselves into thinking that we can keep doing that and things will be fine."

Haslam said he plans to travel the state "sometime in late summer or early fall" to talk about the issue and to help convince voters of the options and need for a tax increase.

"It won't just be a listening tour," Haslam said. "We want to show some things you could do in each community."

Haslam, whose Insure Tennessee plan to provide health insurance to 280,000 low-income state residents was killed by his fellow Republicans earlier this year, concedes he could face a similar uphill battle if he pushes for a gas tax hike. But he said he will have more time to make the case for a gas tax increase than he had for his Medicaid expansion plan.

"The reality is that we're going to have to do something and I think we're going to have to do something while I'm still in office," he said.

Tennessee last raised its gas tax in 1988, to 21.4 cents per gallon. The last diesel tax increase was in 1989, to 18.4 cents per gallon. The federal government imposes another 18.4 cents per gallon. Inflation has cut the value of a 1989 tax dollar to the equivalent of just 52.4 cents today.

In March, the Georgia Legislature boosted that state's gas tax and raised other fees to generate nearly $1 billion more for road projects. In April, the South Carolina Legislature approved the equivalent of a 10-cents-per-gallon increase to generate another $400 million a year for highways. Gas taxes in both states are now about a nickel a gallon more than in Tennessee.

State Sen. Jim Tracy, R-Shelbyville, chairman of the Senate Transportation Committee, said he'll hit the road in September for the same reason as Haslam.

He believes Tennessee roads and highways are in better shape than in most states. Tennessee is a "pay as you go" state, meaning it doesn't borrow for road projects. But convincing motorists to pay more taxes when they fill up their vehicles is a tough sell, Tracy said.

"We know that good roads are key to economic development, so we hope to meet with local leaders and talk about their transportation needs before we determine what may be the best course," Tracy said.

Competing messages

But another voice will also take to the highways this summer with an opposing message.

Andrew Ogles, director of Americans for Prosperity-Tennessee, is expected next week to unveil plans for 60 or more visits across Tennessee to rally the public against higher taxes or fees of any kind.

"Raising the gas tax is hurting the people who need the tax relief the most," Ogles said last week in an interview, especially low-wage workers or those who face long commutes because of a lack of jobs in their rural communities.

He acknowledged that funding issues will have to be addressed, but said state government "needs to tighten its belt and look for ways to save before looking for ways to spend."

"That's the approach [officials] typically take: spend, spend, spend, raise taxes," Ogles said. "I think we should cut until it hurts. We're going to fight tooth and nail to stop them."

He questioned a $180 million "surplus" recognized in the state budget taking effect July 1, and $120 million set aside for a new Tennessee State Museum.

If roads are such a high priority, why isn't that going into transportation? Ogles asked.

Congressional gridlock over highway bill

Tennessee's debate on any gas tax increase also will be shaped by action in Washington, D.C.

The federal Highway Trust Fund is running huge annual deficits because fuel taxes, its primary source of revenue, generate less money as fuel efficiency improves. Also, the 18.4-cent-per-gallon gas tax hasn't been raised since 1993. Without any tax or program changes, the trust fund is projected to have a a $170 billion shortfall over the next decade.

Last month, Congress approved another two-month rescue of the trust fund by borrowing to make up the revenue shortfall — the 33rd such short-term patch of that program.

Tennessee's U.S. senators both have suggested solutions: Bob Corker has proposed raising fuel taxes by 12 cents a gallon, and Lamar Alexander has suggested restricting what road projects can be paid for by federal highway funds.

"I think it is indefensible not to have a long-term highway bill with a secure source of funding," Alexander said.

Corker has chided fellow Republicans for failing to raise the gasoline tax or cut what is spent on roads from the Highway Trust Fund.

"We're becoming a party [where] what conservatism means is spending almost the same amount of money, in some cases more, but not paying for it," Corker said.

Tax impact on local projects

In Tennessee, the state share of funding for roads, bridges and other needs come from two primary sources: fuel taxes and vehicle registration fees. It's known as "dedicated" revenue, to be used specifically for transportation purposes.

The Tennessee Department of Transportation said it uses no money from the state's general fund, which relies heavily on the sales tax, in any of its programs. That 92-year-old policy began with Gov. Austin Peay, who believed the burden of highway improvements needed to be transferred from property tax owners to motorists to fund faster work on state highways.

As a member of the state Senate Transportation Committee, Sen. Todd Gardenhire, R-Chattanooga, said he intends to sit down with Tracy and TDOT officials on the situation.

"I want to get a better handle on where they're prioritizing the money" — where it goes, what the needs are and how funding matches up, he said.

"Even though we've gotten a ton of money here in Chattanooga on interstates, we're still decades behind on I-24," Gardenhire said.

He pointed to TDOT's plans to widen Interstate 24 from four to six lanes from the Georgia state line, around Lookout Mountain and into Chattanooga. The projected price tag is $217.8 million.

"That's going to be a major project that has to be done," Gardenhire said.

Meanwhile, areas of I-24 in Nashville are already six and even eight lanes, the senator said. Moreover, Interstate 40 through Memphis is six lanes.

Yet Interstate 75 starts off at six lanes coming into Tennessee at Chattanooga from Georgia, but quickly peters out to four lanes before it even hits Bradley County and Cleveland, let alone Knoxville, the senator said.

Gardenhire said he's been looking at what he considers "warm and fuzzy" spending and has discovered at least some of it is federal funding coming into specific categories that can't be used for roads. Federal transportation enhancement money is used for projects such as bike lanes and sidewalks — including the popular Tennessee Riverwalk in Chattanooga.

He said he recently had a conversation with an elderly constituent who contrasted the costs of cigarettes, beer and cellphone usage with increases to fund transportation projects.

Noting he had a "little bit of a dust-up with the head of the Road Builders Association" last session, Gardenhire said, "I'm not beholden to any group" but "just trying to do my work quietly."

"Where I am right now, I don't know," he said. "But we need it. And I know what we're doing right now is not working."

Contact staff writer Dave Flessner at dfless ner@timesfreepress.com or 423-757-6340.

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