Haslam's gas tax increase for roads jolted by legislative potholes, quarreling

Haslam's gas tax increase for roads jolted by legislative potholes, quarreling

February 3rd, 2017 by Andy Sher in Local Regional News

Tennessee Gov. Bill Haslam has revealed his gas tax proposal to legislators and the public.

Photo by Erik Schelzig

NASHVILLE — Better buckle up Tennesseans, the road to new transportation funding to address the state's $10.5 billion backlog of highway and bridge projects is already getting pretty rocky, and the trip has just begun.

House and Senate GOP leaders are playing bumper cars as multiple transportation plans surface as rivals to Republican Gov. Bill Haslam's proposed gas tax increase to fund nearly 1,000 projects.

Senate Republican leaders said Thursday they felt sideswiped by a proposal offered up Wednesday by House Majority Leader Glen Casada, R-Franklin, and Assistant Majority Leader David Hawk, R-Greeneville.

It calls for scuttling the governor's plan to raise $278.5 million for the state and an additional $117 million for counties and cities. Hawk and Casada's idea is avoiding any increase and instead grabbing a quarter percentage point off the 7 percent sales tax from the state's general fund, which pays for most non-transportation programs.

In fact, they think it may be the only thing that can move through a key House Transportation subcommittee.

Republican Senate Speaker Randy McNally, a former Finance Committee chairman and 38-year legislative veteran, argued the state has relied for decades on fuel taxes as a dedicated source of revenue for roads.

Meanwhile, McNally, who has seen the impact of recessions on Tennessee finances in 1981, 1991, 2001 and 2008, warned the economy is cyclical and sales taxes take a nose dive when a downturn strikes. It's been nine years since the last recession, he noted.

"Our economy runs in cycles," the Oak Ridge lawmaker said. "I'm hopeful with the new president we can extend our run, but nine years is a long time to have growth in the economy."

Haslam has proposed boosting the state's 21.4 cents-per-gallon gas tax for the first time since 1989 by 7 cents. Diesel, now at 18.4 cents per gallon, would rise by 12 cents. Because the state is expecting some $950 million in new revenue this budget, half or more of what it usually sees, the governor is coupling fuel tax increases with the same amount of tax cuts supporting the general fund.

Sen. Jim Tracy, R-Shelbyville, a former Transportation Committee chairman, argued that relying on the sales tax for a set amount of revenue in a state that has a pay-as-you-go policy on road construction and maintenance is too risky.

And Senate Majority Leader Mark Norris, R-Collierville, questioned why House proponents didn't come speak to him. He said he can't tell at this point whether Hawk's proposal will be one of several debated to change Haslam's yet-to-be-introduced bill or as a separate measure.

"It's better to work together toward a common end," Norris said. "If the game is to divide and conquer, then the game is over. If it dies in the House, it dies."

Hawk said this week that his plan is far more simple and has fewer "moving parts" than Haslam's. He said the issue of tax cuts can be addressed in a separate measure.

Haslam, meanwhile, told reporters Thursday his bill will put gas tax increases and tax cuts in other areas in one package. Describing gas taxes as "user fees," the governor argued it's the fairest way to fund transportation needs.

"I don't like the idea that somebody that barely drives has money go to subsidize a road for somebody from California that's driving down I-40," Haslam said. "That just doesn't seem fair."

Meanwhile, Andy Ogles, executive director of Americans for Prosperity-Tennessee, held a news conference Thursday saying $200 million a year from the general fund should be earmarked for roads. He also said he sees no immediate crisis, and he pointed to the state's $1 billion surplus in one-time money and the nearly $1 billion in new revenue.

"When you have a billion-dollar surplus in recurring revenue being paid by hardworking families, you don't raises taxes. That's nonsensical, that is disingenous and, quite frankly, I would call it theft," The Associated Press quoted Ogles saying.

Meanwhile, minority Democrats appeared to be enjoying the GOP's rough ride and likened it to Haslam's disastrous proposal to expand Medicaid two years ago, which Ogles helped torpedo as the group flooded some Republicans' districts with radio ads attacking them for supporting "Obamacare."

"It's Groundhog Day, and here we are four days into the session and the supermajority has sabotaged the governor's key initiative," jabbed Senate Democratic Caucus Chairman Jeff Yarbro of Nashville.

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