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VOL. 130 | NO. 161 | Wednesday, August 19, 2015

Haslam Cites Mixed Signals on Gas Tax Hike For Roads


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Tennessee Gov. Bill Haslam two weeks ago kicked off his statewide tour in Memphis, pushing for a better method of funding state road projects.


Some in the audience of business and civic leaders at the Greater Memphis Chamber had talked with Haslam and Tennessee transportation commissioner John Schroer before about the state’s fuel tax and had urged state officials to raise the tax. And some wanted to talk about it again Aug. 5 as Haslam emphasized the state’s $6 billion backlog of transportation projects.

“We haven’t gone there yet,” Haslam said of a gas tax hike after it was brought up for the first time. “We didn’t want to start with x cents a gallon.”

When Democratic state Representative Larry Miller suggested a gas tax hike “just to catch up,” Haslam demurred again.

“I don’t know that we are prepared to answer,” he said. “What we’re doing now is not responsive.”

Two weeks later, Haslam says he’s heard a different message at his other stops across the state.

Haslam said Monday, Aug. 17, he sees widespread agreement about Tennessee’s need to spend more on transportation projects.

But there’s little consensus on what to do about it, added the Republican governor.

“Everybody talks about the needs they have, but then there’s a ‘I’m not really excited about a gas tax, what else can we do?’” Haslam said. “The reality is, there’s not a magic bullet out there.”

Haslam has said he wants to complete his 15-stop tour before deciding what sort of proposal to make to lawmakers when the Legislature convenes in January.

Tennessee is not alone in trying to find more money for road and transit programs. An Associated Press analysis has found that at least half of all states have passed transportation funding measures since 2013, including through higher fuel taxes, vehicle fees and bonds.

Officials in Tennessee pride themselves on a pay-as-you-go approach to road building and maintenance, meaning the state is unlikely to want to be taking on debt for future projects. That makes it unlikely that the state can significantly boost transportation without a tax increase – and that’s a subject that causes some fellow Republicans in the Legislature to recoil.

House Speaker Beth Harwell, R-Nashville, and Senate Majority Leader Mark Norris, R-Collierville, last week predicted that Haslam would not propose a gas tax hike next session. But Senate Speaker Ron Ramsey, R-Blountville, said that lawmakers need to keep an open mind about ways to meet funding needs.

Tennessee charges a 21.4-cent tax on each gallon of gasoline, and the levy brings in about $657 million per year. The tax was last increased in 1989, and the state’s haul is threatened by the improving fuel economy on the roads.

“Driving on roads is one thing where you can say compared with 30 years ago that you’re paying less,” Haslam said. “There’s not a lot of things you can say that about.”

Haslam said he often hears calls for the state to impose a fee on electric vehicles because they use state roads without paying taxes at the pump.

The governor said that some other states charge a $150 fee for electric vehicles, and that even if Tennessee charged $200 to the about 2,500 registered in the state it would only raise $500,000.

“My point would be that the issues are bigger than some of the ideas that have been floated,” he said.

Tennessee’s gas tax had been 7 cents on each gallon of gas since 1931 when state lawmakers voted to hike the tax to 9 cents in 1981. Two more increases were enacted in 1985 and 1986, before the most recent hike set the tax at its current rate of 21.4 cents.

Tennessee’s tax rate remains constant regardless of the price of gasoline, while other states like neighboring Kentucky index the tax to the sales price.

Haslam said one of the political challenges of enacting an increase in the gas tax is that it can take eight years for road projects to move from the planning stages to completion.

“You realize, well I’m not going to be cutting any ribbons – that’s eight years away,” Haslam said. “So you say, let someone else worry about it.

There’s a lot of voices that say let’s push this off,” he said. “But the need is not going to go away. We’re going to have to do something to address this.”

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Senior reporter Bill Dries contributed to this story.

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