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VOL. 132 | NO. 83 | Wednesday, April 26, 2017

Governor’s Supplemental Budget Includes More Transportation Funding

By Sam Stockard

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Senate Majority Leader Mark Norris calls the governor’s $125 million supplemental budget a “strong foundation” for completing work on the IMPROVE Act.

(Daily News File/Andrew J. Breig)

Amendments presented Tuesday, April 25, by Gov. Bill Haslam’s administration include $55 million for the transportation fund, which already is set to receive an infusion of funds in fiscal 2018 from fuel-tax increases and higher fees stemming from the governor’s transportation funding initiative.

“I hope it will go to repair the structurally deficient bridges and to jump-start some of the projects that have been identified in IMPROVE,” says Norris, a Collierville Republican who carries the governor’s budget bill through the Legislature. “It’ll just super-charge the jumpstart.”

The governor’s $37 billion budget plan also sends $128 million back to the transportation fund after it was taken out a decade ago to balance the budget. Legislators are expected to start debating the governor’s budget plan next week.

The governor’s gas tax/tax cut bill, which was sent to him for his signature Monday night, calls for phasing in 6-cent and 10-cent gas and diesel tax increases over three years, in addition to raising vehicle registration fees by $5 and placing a $100 fee on electric cars. It’s expected to bring in about $355 million once it takes effect and will be more than offset by a combination of decreases in the food tax, Hall tax on interest and dividends and franchise and excise taxes, which are expected to see a $500 million reduction once they take full effect, according to the governor’s office.

The legislation incorporates 962 road and bridge projects in all 95 Tennessee counties, an estimated $10.5 billion of backlogged jobs. But because the gas and diesel taxes will be raised incrementally, Norris says the governor could be considering the $55 million a way to offset the phase-in.

“It helps underscore the importance of accelerating the pace of repair,” Norris says.

House Majority Leader Glen Casada, who supported an alternative plan for funding transportation by using money from general fund surpluses of $2 billion, says the governor’s logic is to expedite transportation work because the gas-tax increases are staggered.

Casada, a Franklin Republican, points out the plan is a long-term approach and notes Tennesseans shouldn’t expect to see bulldozers moving dirt tomorrow. Still, he says the IMPROVE Act is designed to complete or start work on those 962 projects within 15 years, whereas they could have waited for decades previously.

“There could be 18 months and we in Tennessee don’t see any action. This jump-starts the action on the roads. It’s sorely needed,” Casada says.

Weak economic news

Talk of budget amendments was tempered somewhat Tuesday by a report from the Department of Finance and Administration showing state revenue fell short of budgeted estimates in March. Overall revenue was $993.6 million for March, which reflects February retail activity, $100.9 million less than the state collected last March and $70.1 million less than what was budgeted for the month.

“This is due in part to having one less day of retail activity this February compared to February 2016 and also growing over an extraordinarily high base from last year,” says Finance and Administration Commissioner Larry Martin.

The state also started using a new tax administration system in April and extended the sales tax filing deadline, according to Martin. As a result, the April report should “capture outstanding payments owed in March,” he says.

Lt. Gov. Randy McNally says the March revenue numbers should not “alarm” people, but he points out they show the importance of using conservative estimates and building up the state’s rainy day fund.

“We have been fortunate to have seven years of sustained growth in the economy, but downturns are inevitable,” McNally says. “I am grateful that our strong financial position gives us the ability to weather periodic slumps better than most.”

Haslam’s budget amendment also involves building up the rainy day fund to $800 million and the TennCare reserve to $219 million by June 30, 2018, the end of the next fiscal year.

Boost for library and archives

The governor’s supplemental budget gives the state’s plans to construct a new library and archives a major boost with $40 million in one-time funding.

Secretary of State Tre Hargett, a proponent of the project to replace the outdated and deteriorating building next to the State Capitol, is “delighted” with the governor’s funding plan.

“Many members of the General Assembly have indicated they understand the critical need and support building a new facility,” said Adam Ghassemi, spokesman for Hargett.

The total cost is expected to be $98 million and will include the governor’s proposed $40 million this year and $10 million from the Secretary of State’s office, enabling construction to start in fiscal 2018, with the balance of the funding coming in the 2019 budget, according to Ghassemi.

The building is to be constructed on the Bicentennial Mall between Jefferson Street and Jackson Street, bordered by Sixth Avenue North and Fifth Avenue North.

In addition, the supplemental budget includes:

• $15 million for the state’s Aeronautics Economic Development Fund for maintenance and economic development at small airports across Tennessee.

• $11 million for TennCare provider rate increases.

• $660,000 for priority schools grants. Memphis has 33 schools in that category of academic underperformance.

• $50,000 for a Memphis Research Consortium grant.

Sam Stockard is a Nashville-based reporter covering the Legislature for the Memphis Daily News. He can be reached at sstockard44@gmail.com.

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