Haslam’s gas tax plan
Proposal: Hike gasoline and other vehicle-related taxes to raise $350 million a year
How much: 6 cents for gasoline, 10 cents for diesel, $5 increase in registration fees, offset by some $400 million in tax reductions elsewhere
What for: Backlog of nearly 1,000 bridge and highway improvements worth $6 billion plus funding for new projects
Sharing the wealth: The state share is about $245 million, with $70 million for counties, $35 million for cities
Source: Governor’s office
NASHVILLE — Gov. Bill Haslam's proposed road funding bill, up for final House floor consideration today, would affect dozens of Southeast Tennessee interstate, highway and bridge projects totaling some $1.34 billion, figures show.
An estimated $600 million of the projects are in Hamilton County, including a $171.5 million widening of Interstate 24 from the Georgia line near I-59 to U.S. 27 in downtown Chattanooga.
The House and Senate each passed the bill Wednesday, but the House needs to agree to a Senate amendment involving state-paid property tax relief for disabled veterans.
Haslam's IMPROVE Act raises fuel taxes for the state's dedicated highway fund for the first time since 1989. Gas would rise by 6 cents, to 27.4 cents per gallon, and diesel would rise 10 cents, to 28.4 cents, over the next three years.
The plan raises $350 million for roads and cuts $400 million in taxes for the general fund, which supports most nonhighway functions.
Sales taxes on food will be cut by 20 percent, from 5 percent to 4 percent, and there are changes to alter the calculation of franchise and excise taxes for manufacturers, including Volkswagen and McKee Foods.
The food sales tax reduction will cost $125 million. The state will lose another $113 million from the franchise and excise tax changes. The remainder comes from paying for the previously approved phase-out of the Hall tax on investment income over four years.
The property tax relief, which also affects some elderly and disabled Tennesseans, is estimated to cost $7 million.
House Speaker Beth Harwell, R-Nashville, said that given the bill's 60-37 House victory margin last week, she presumes proponents have the votes to concur with the Senate veterans provision.
Harwell worked unsuccessfully with other top GOP leaders to find an alternative to fuel tax increases. Some of those opponents aren't on board with Haslam's plan, saying the veterans relief provision should be in a stand-alone bill.
Haslam says the IMPROVE Act is needed to tackle an estimated 962 backlogged transportation projects worth $10.5 billion. Of those, Haslam says some $4.5 billion are decades away from actual construction.
Projects eligible for funding include $65 million for a long-envisioned major overhaul of the I-75 and I-24 interchange in East Ridge, and the $95 million widening of 8.8 miles of I-75 between Collegedale and exit 20 in Bradley County.
Cities and counties also would get a share of the new revenue. By Year 3, state estimates show Chattanooga's cut would be $1.64 million higher than now. Hamilton County's share would rise by $1.55 million.
Hamilton County Mayor Jim Coppinger said local officials have been monitoring the legislation.
"What we look forward to is money that would come from Nashville to help us with the resurfacing of our roads," Coppinger said, adding, "This money will be put to good use, although [raising] it is a state issue."
Chattanooga Mayor Andy Berke was unavailable for comment Friday.
The bill had unanimous support from Southeast Tennessee lawmakers, including Hamilton County's two senators and five representatives.
Part of the bill allows the state's largest cities and counties to raise six existing taxes to pay for mass transit projects. It puts a 20 percent lid on how much taxes such as local hotel/motel taxes can rise, and requires voters to approve any proposed new taxes.
In Nashville, where traffic has become a mini-nightmarish version of Atlanta, officials sought the provision in hopes pain over congestion will overcome aversion to higher local taxes.
As for Hamilton County trying to use the provision, Coppinger said, "I don't see that."
The bill also allows work to advance on the long-envisioned Ocoee River Gorge bypass, part of the Appalachian "Corridor K" project in Polk County. Two phases are involved. One is a 23-mile stretch costing an estimated $300 million; the other is a $200 million project involving just 2.1 miles through mountainous terrain.
As the bill cleared the House and Senate last week, Haslam touted the IMPROVE Act as "the largest tax cut in Tennessee history."
It "makes us more competitive as we're recruiting manufacturing jobs," said Haslam, highlighting the bill's change in state corporate franchise and excise taxes that could benefit as many as 518 companies.
The bill also "keeps our transportation network safe, reliable and debt-free for the next generation of Tennesseans," the governor said.
Not everyone's happy.
Andy Ogles, director of Americans for Prosperity-Tennessee, said many oppose the fuel tax increases, though efforts to divert some of the state's estimated $1 billion budget surplus for road projects went nowhere.
Proponents said the fuel tax is, in effect, a user fee and that out-of-state truckers will be paying an estimated 40 percent or more of the diesel increase.
"Despite this and our best efforts, the voices of hardworking Tennesseans and struggling families were silenced by political promises and wasteful pork projects," Ogles said.
Twenty-two states, including Alabama, are considering fuel tax hikes this year, according to the National Conference of State Legislatures. In 2015, eight states, including Georgia, moved to increase fuel taxes and raised a number of other fees.
Georgia's increases totaled an estimated $1 billion.
Contact Andy Sher at firstname.lastname@example.org or 615-255-0550. Follow on twitter @AndySher1.