TN House, Senate approve governor's gas tax bill - WSMV News 4

TN House, Senate approve governor's gas tax bill

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NASHVILLE, TN (WSMV) -

Tennessee lawmakers voted Wednesday to move forward with Gov. Bill Haslam’s IMPROVE Act, a plan to raise the state's gas tax to pay for road and infrastructure costs.

House lawmakers approved the bill with a 60-37 vote. It passed the Senate with a 25-6 vote.

The bill would increase the gas and diesel user fees. Gas taxes would increase 6 cents per gallon over a four-year period.

In the upcoming fiscal year, drivers would see a 4-cent increase in gas tax. The next year would bring a one-cent increase and another cent in the third year.

Diesel fuel will increase 10 cents per gallon. The upcoming year would bring a 4-cent increase, followed by 3-cent increases the following two years.

Registration fees for the common passenger vehicle will go up $5 per year. Electric car owners would have to pay a $100 annual fee.

Haslam has always stressed that the bill would also include tax cuts for the average family, in the form of a food tax cut.

Rep. Barry Doss, R-Leoma, told House lawmakers the bill would bring $428 million dollars in overall tax cuts.

“This year we will make an unprecedented 20-percent cut to the food tax,” Doss said.

“The U.S. Department of Agriculture says that the average family of four with two vehicles will pay 5.54 cents extra because of this gas tax. That same Department of Ag says that same family of four will save or spend 7.72 cents per month because of the food tax cut. Together families will save $2.18,” he explained, making an argument that the combined gas increase and food cut will lead to an overall savings for families.

The plan would bring in approximately $350 million for infrastructure statewide. Approximately $35 million would go to cities. Approximately $70 would go to counties, with about $245 million going to TDOT to catch up on a backlog of 962 transportation project, 562 of which are bridge repairs.

It would also reduce corporate taxes paid by manufacturers and tax on earnings from stocks and bonds by cutting the Franchise and Excise (F&E) taxes for manufacturers by $113 million, in offering a single payer option.

“I am convinced that will make us more competitive to create industry that will produce more jobs,” Doss told state lawmakers.

The IMPROVE Act would be the first gas tax increase in Tennessee since 1989.

Doss said the bill would cut taxes by $428 million but increase revenues by $320 million.

Critics of the proposal argue Tennessee should not increase its taxes when there is already a nearly $2 billion budget surplus.

Rep. David Hawk, R-Greeneville, had proposed his own amendment to the governor’s bill that would fund transportation projects without raising taxes.

He proposed redirecting sales tax funds from new and used vehicle sales in Tennessee and putting that money toward transportation funding. Hawk did not want to use money from the budget surplus.

“We are at the weakest point that I’ve ever seen the House of Representatives going into a conference committee,” Hawk said as he introduced his amendment. “Unfortunately, this bill has become more about strategy and cutting deals than it is about policy.”

Many lawmakers argued their constituents did not support the tax hike. Some said their residents could not afford the hikes.

“Hardworking people will foot the bill,” said Rep. Jerry Sexton, R-Bean Station. “I’m for cutting the Hall income tax. I’m for cutting the F&E tax. But I’m not for putting on the backs of hardworking people. I don’t know why we aren’t representing them. If the only way we can get this is on the backs of the hardworking people of Tennessee, I want to be their voice. I don’t hear any lobby speaking for the average taxpayer in Tennessee.”

Despite the lengthy debate, Hawk’s measure only received 38 votes. After a contentious House Republican Caucus meeting and several hours of debate on the House floor, the majority of lawmakers the House and Senate are moving forward with IMPROVE Act.

The bill heads back to the House to resolve a difference over property tax relief for veterans, which could delay completion of the legislation for another week. The Senate wants property tax relief for disabled veterans to increase up to $175,000 in property value.

Haslam issued the following statement concerning the legislation:

The IMPROVE Act is the largest tax cut in Tennessee history, makes us more competitive as we’re recruiting manufacturing jobs and keeps our transportation network safe, reliable and debt-free for the next generation of Tennesseans. While there remains action to be taken on this legislation, I want to thank both chambers for their votes today on the IMPROVE Act, particularly Senate Majority Leader Mark Norris (R-Collierville) and Reps. Barry Doss (R-Leoma) and Bill Dunn (R-Knoxville) for their work carrying the legislation.

Nashville Mayor Megan Barry also issued the following statement:

This is a momentous day in Tennessee, as the General Assembly has voted to move our state forward on building the transportation infrastructure we need to remain competitive economically and improve the quality of life of our residents. I want to thank the entire Davidson County delegation for voting in support of Governor Bill Haslam's IMPROVE Act, which contained the critical local option component that will let voters determine the future of transit in the Nashville area.

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