NASHVILLE — Two top House Republican leaders today countered Gov. Bill Haslam's proposed gas tax increases for better roads with an alternative plan calling for diverting a quarter percentage point from the state's existing sales tax that pays for general government functions.
"A quarter percent of one percent of those funds would simply allocate those to transportation funding needs," said Assistant Majority Leader David Hawk, R-Greeneville, who unveiled the plan at a news conference with Majority Leader Glen Casada, R-Greeneville.
Haslam's plan seeks to raise the existing 21.4 cents per gallon gas tax by 7 cents and the 18.4 cents diesel tax by 12 cents. He says the hikes are necessary to tackle an estimated $10.5 billion backlog of nearly 1,000 transportation projects across the state.
Other aspects of the Haslam revenue plan include raising vehicle registration fees and imposing a $100 fee annual fee on electric vehicles. Add it all up and it comes to about $278.5 million for state transportation needs while cities and counties would see a combined $117.1 million for theirs.
Tennessee has relied on the gas tax, which is considered a user, to fund roads for nearly a century. It was created in 1924.
But Haslam, a Republican, has been facing push back for months on the proposal for two reasons. One is the GOP-dominated General Assembly's aversion to tax increases. The House especially has had such large turnover in the past six years since they seized control, that most members have never had to deal with raising taxes.
The other is an estimated $1.1 billion surplus in one-time, non-recurring revenue and some $957 million in expected recurring money. Haslam has proposed cutting several general fund taxes that pay for most areas of government in order to produce a revenue neutral effect to soothe fellow Republicans.
Even before Hawk and Casada presented the plan, it was already getting a chilly reception from Lt. Gov. Randy McNally, R-Oak Ridge, the new Senate speaker, who warned any departure from dedicated fuel taxes to pay for roads "puts our fiscal stability at risk."
"Tennessee is one of the most fiscally sound states in the nation," said McNally, the former Senate Finance Committee chairman who over a 38-year legislative career has seen the gyrations of state finances during good times and bad.
"Our taxes are minimal, our debt per capita is low and we have a small and efficient government," the speaker said. "We accomplished this by being frugal, disciplined and smart. We have an outstanding pay-as-you road system that operates with little to no debt. We accomplished this with dedicated funding through our gasoline user fee.
"Put simply," McNally added, "our formula for fiscal stability is proven, established and envied," McNally said. "Our system has earned us a Triple-A bond rating from all three ratings agencies. Any move away from the formula and the use of dedicated funding opens the door to debt and puts our fiscal stability at risk."
Hawk, meanwhile, began his news conference with Casada by insisting that "as much as this press conference may seem to be adversarial I am not working against the governor in the proposal. We're simply supplying a plan that I feel has merits and we at least need to begin look at whether transportation funding is truly a priority in Tennessee."
Earlier today, Republican House Speaker Beth Harwell of Nashville could be seen speaking with both Hawk and Casada in the chamber after the day's session.
Asked by a reporter specifically where she stood on the then-expected Hawk plan, Harwell said "I know that there are two or three proposals, alternative proposals to the governor's, and I'm giving my members the opportunity to pursue these. And I believe that our Transportation Committee will vet all of them.
"I think the good news is that we acknowledge that we need to put more money into roads," said Harwell, widely seen as a potential 2018 gubernatorial candidate. "And so that's the first step."
She said the governor's bill would go to the Transportation Subcommittee, where proponents believe Haslam's proposal could face going. Panel members are named by the speaker, including the chairman, Rep. Terry Lynn Weaver, R-Lancaster.
Weaver joined Hawk at the news conference.