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Lawmakers, Haslam Sideline Talk of Gas Tax Increase

by Andrea Zelinski on November 17, 2011

Lawmakers have mulled for years whether to restructure gasoline taxes to make up for consumer shifts to fuel-efficient vehicles, but the House Transportation Committee chairman says there’s little desire to tackle that right now.

“There’s no political will for a gas tax increase when you’re dealing with gas over $3 a gallon,” said Chairman Phillip Johnson, R-Pegram, adding options could include charging drivers a tax based on their mileage.

“It’s just a matter of coming out with something that will have enough votes to pass. There just really hasn’t been any particular solution or idea we’ve come to agreement on,” he said.

Gas collections that fund state transportation will eventually stall out, Tennessee Department of Transportation officials warned earlier this month, although Gov. Bill Haslam has ruled out reconfiguring the gas tax for at least two years.

“We’re not close to proposing a change on that, but I think all of us can look and say logically there’s no way 10 years from now we’re doing it the same way we are now,” Haslam said last week.

“It will not be something we propose doing this year and probably not next,” he said.

At a budget hearing this month, TDOT officials said that the state will need to figure out how else to fund the department amid rising costs to fix roads as gas tax collections continue to stagnate as they did this past year.

Tennessee taxes gasoline at 21.4 cents a gallon, which ranks among some of the lowest rates in the nation. The feds tax gas at 18.4 cents per gallon, for a total rate in Tennessee of 39.8 cents.

Last year the state collected $606 million in gasoline taxes, slightly up from $601 million the year before. Back in 2008, just before the recession settled in, the state collected $622 million in gasoline taxes.

About 40 percent of those dollars are siphoned off for cities and counties or deposited into the state’s general fund. The remaining $255 million last year stayed with TDOT, although state officials said they didn’t know exactly how much is directed to road projects versus non-road or administrative costs, saying the dollars are used throughout the department.

TDOT officials are proposing an $800 million state budget for next year, an 8 percent decrease from last year.

Tennessee roads are consistently rated by truckers and industry experts as among the best in the nation, according to Overdrive Magazine and the Asphalt Pavement Alliance.

Although the governor says he’s not focused on addressing the gas tax now, any conversation down the road should include ensuring the user tax on gas is spent on roads instead of giving it away to non-road projects, according to one key interest group.

“The state fuel tax is a user fee. Meanwhile, we’re seeing the growth in that slow down. It’s the only mechanism we have,” said Kent Starwalt, executive vice president of the Tennessee Road Builders Association.

The association has supported efforts in the General Assembly to find a dedicated funding source for mass transit like light rail. But until that happens, the gas tax “is the only mechanism we have,” Starwalt said.

The declining use of gasoline is a “big, big issue” in Tennessee and the country, Transportation Commissioner John Schroer said during his department’s budget hearing.

Gas tax collections have been flat if not down slightly, said Schroer. Some of that is due to the recession, but it’s also indicative of drivers shifting to more fuel-efficient vehicles, he said.

“The trend for us is going the wrong direction as far as the amount of money we will see. We will, I think, in my opinion, continue to see less and less as we go along,” said Schroer, who said his office has spoken to legislative leaders on both the House and Senate transportation committees.

“The issue is it costs more and more to do what we’re doing, and we have more capacity, and we have an older, deteriorating infrastructure that gets more expensive to fix every single year,” he said. “It is an issue that not only we as a state are going to have to address but nationally we have to address it as well.”

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