NASHVILLE — In a state faced with declining fuel tax revenues but growing road needs, many expect Tennessee legislators to wrestle next year over whether to hike gas and diesel taxes for the first time in a quarter century.
But among the list of proposals on the General Assembly's plate are two that appear to pose less pain to consumers as the state desperately seeks more money to maintain a transportation system that last year claimed the No. 2 ranking in quality nationwide.
That's because a weight- distance fee and a fuel surcharge both would fall pretty much on out-of-state trucking firms whose vehicles speed along Tennessee interstates and highways, lawmakers say.
Firms based in Tennessee would be allowed to deduct fees from their business franchise and excise taxes. Because it only applies to freight-hauling trucks, individual consumers would never see the increases at the pump.
Yet, depending on what rate is set, rough estimates are the two fees could collectively add as much as $140 million a year to the state's $1.81 billion transportation budget at a time when state and federal funding have hit technological and political potholes.
About $960 million of the fund comes from the federal government and the rest through state taxes and fees.
Senate Speaker Ron Ramsey, R-Blountville, cited the truck weight fee proposal last week as he told reporters he is seeking a "very comprehensive" approach to generating more revenue for transportation.
While the discussion has to include gas and diesel fuel increases, Ramsey said, a number of other things are on the table as well with lawmakers seeking a "long-term solution."
"This is a problem caused by the advancements in technology," he said. "Higher gas mileage, electric cars, the natural gas -- if they're on the road they need to pay their fair share, and apparently they aren't right now. It's going to take a very comprehensive bill."
Ramsey said he's not sure whether lawmakers will arrive at an agreement on any of the funding in the legislative session that begins Jan. 13. Given all the other issues before lawmakers, it may go into 2016, he said.
The speaker said the idea about the weight/distance fee came from a freshman senator, Paul Bailey, R-Sparta, who runs a trucking firm and told him several states "have some kind of a weight-based program" based on the size of the trucks.
"And it would affect more out of state truckers than it does the state of Tennessee," Ramsey added.
Bailey said in an interview that "when I first heard talk of a fuel tax increase, I took out figures from our company, and compared what we were paying in Tennessee versus other states."
He said he "noticed that not only was our state significantly lower, but that surrounding states had levies on weight/distance and fuel surcharges that we don't collect in Tennessee. So in effect, Tennessee trucking companies are paying extra fees in other states that out-of-state firms are not paying here."
Tennessee motor carriers "pay a tremendous amount of fuel taxes already," Bailey said, noting his own medium-sized firm pays about $300,000 per year.
"So, what this plan does is provide for the capture of a revenue stream from out-of-state trucking companies that enjoy our good highway infrastructure without adding a tax burden on the citizens of Tennessee," Bailey said.
Kentucky, New Mexico, New York and Oregon already have weight/distance fees, Bailey said. All truckers pay the fees, the senator noted, but home-based firms are able to deduct the fees from business taxes, leaving out-of-state truckers carrying the load.
Bailey said his proposal would do the same in the Volunteer State. Tennessee-based firms would be able to deduct the weight/distance fees from their state franchise and excise taxes under his plan, Bailey said.
"It will also provide additional revenue for city and county road departments," Bailey said.
Using rates identical to Kentucky's, Bailey estimates the weight/distance fee could raise $103.6 million. Tennessee-based companies could deduct about $25.34 million, leaving the state with a net gain of $78.2 million.
Meanwhile, three other states -- Kentucky, Virginia and Indiana -- utilize fuel charges impacting truckers. Again, in-state firms can deduct those from their business taxes in those states.
Implementing a 5-to-13-cent per gallon surcharge would net Tennessee an additional $23.76 million to $61.79 million annually with Tennessee-based firms' deductions taken into account, according to Bailey's estimates.
He estimated that about 60 percent of the nation's trucking traffic comes through Tennessee, which has the 400-mile-long Interstate 40, a major national east-west corridor, and Interstate 75, a major north-south artery in the eastern U.S. that runs through Chattanooga and Knoxville.
Other new taxes or fees under discussion by lawmakers would affect consumers. In addition to increases in gas and diesel fuel taxes -- now respectively at 21.4 cents and 18.4 cents per gallon -- the list includes fees on electric and natural gas-powered vehicles. The idea is that that's only fair since their owners aren't paying fuel taxes but are using state roads.
And with the last hike in the state's gas and diesel taxes occuring back in 1989, another idea involves indexing fuel taxes, which would allow them to rise or fall based on prices at the pump.
Tennessee is hardly alone with funding problems for transportation needs. Other states face the same dilemma.
But the rise of more fuel-efficient cars and trucks as well as alternative-fueled vehicles has resulted in fewer tax dollars coming in even as expansion and maintenance needs balloon.
"America's transportation infrastructure is at a crossroads," according to the National Conference of State Legislatures, a research institution and advocate for states at the federal level. "All states face a shortfall between existing transportation revenues and projected needs, with the cumulative nationwide shortfall estimated at $1 trillion through 2015.
"Unless there are innovations and new money, roads, bridges and public transportation systems will continue to decline," the group warns.
Tennessee has consistently been rated as having one of the nation's best road systems. Last year, CNBC ranked it as No. 2, behind only Texas.
Tennessee Gov. Bill Haslam told reporters earlier this month the state soon will face less money for new roads, interstate interchanges, bridges and the like because funding increasingly goes to maintaining the infrastructure it already has.
"There's no way the state can continue on the path we're on now," Haslam said. "The math just doesn't work. I'm not saying we're going to ask the Legislature to do it, or they're going to ask us. We're evaluating the needs, and is this the right time to do that or not ... we obviously don't want to do that until we have to."
Each penny of the state gas tax generates $30 million, with 60 percent, or about $18 million of it, going to the Tennessee Department of Transportation, while 38 percent goes to cities and counties. Two percent goes to the general fund to pay for fuel inspection fees. Each penny on the diesel tax generates about $12 million for the state.
Bailey said similar sharing should be done with his own proposal.
State transportation also gets more than $250 million from vehicle title and registration fees.
Contact staff writer Andy Sher at firstname.lastname@example.org or at 615-255-0550.