Haslam proposes first Tennessee gas tax hike since 1989

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)

NASHVILLE, Tenn. (AP) - Republican Gov. Bill Haslam on Wednesday proposed Tennessee's first gas tax hike in 27 years to fund an ambitious roadbuilding program that would carry through well after he leaves office in two years.

Haslam's plan would generate about $278 million per year in new transportation funding, while at the same time cutting about $270 million in taxes for shoppers buying groceries, manufacturing companies investing in the state and people earning income from stocks and bonds.

The governor also wants to index further gas tax increases to inflation, though he acknowledged that might be the most challenging aspect of his plan for lawmakers to accept. But Haslam argued that the state's $6 billion backlog in transportation projects should spur legislators into action.

"Hard stuff is hard to do," the governor said.