By Rep. Bryan Terry, M.D.
Gov. Haslam has embarked on a tour of the state titled the “Governor’s Listening Tour” to talk about a gas tax hike. On August 20, Haslam stopped in Murfreesboro and I attended the event. When I met with Haslam for my “District 48 Debriefing,” we discussed his tour, transportation funding and concerns. On the tour, Haslam and TDOT presented their concerns.
It should be noted that neither a gas tax increase, nor any transportation funding restructuring plan, has been proposed at this time. At the meeting, TDOT discussed having $6 billion in unfunded projects. They did not present the priority levels of these projects, nor did they discuss the time frame with which they needed to complete the projects. However, I got the impression that they would like it to occur over eight to twelve years. In addition, I have asked for specifics on any “shortfall,” but the numbers have not yet been made available to me. Without any specifics, it is impossible to verify the premise behind the problem or identify any severity to the issue.
What is clear is that the federal government has created a problem with our transportation funding formula. By devaluing the dollar, while mandating more fuel efficient vehicles, the federal government has created a situation where we collect less in taxes per mile driven, as well as, decreased our purchasing power to build and maintain roads. An additional problem is that the money that the feds send to Tennessee has strings attached that mandate spending road dollars on items other than roads.
While the federal government has created a problem, Tennessee is not without blame. The Tennessee General Assembly had the opportunity to add $120 million to the road fund in our last budget. I was one of less than 30 representatives that voted for an amendment to support TDOT with that money. Instead, the money went towards the Tennessee state museum. Additionally, in previous years, $280 million was raided from the transportation budget and placed in the general budget. That $280 million has never been paid back. Although, there is now a proposed bill to do so. I will be supporting that legislation.
This fiscal year, the state of Tennessee has collected over $600 million in excess tax revenue than what was projected. Taken together with the $400 million that could have gone towards transportation, Tennessee has had roughly $1 billion in revenue that could go towards road funding. We will not know if revenues will remain at levels above projections until next year. However, it is clear that there has been and may continue to be significant revenues available to support TDOT’s needs. TDOT just hasn’t been high on government’s priority list.
A consequence of simply raising the gas tax is that the state will be removing discretionary income from families, as well as, small businesses. Depending on how much a family drives their vehicles, that amount could be fairly significant, which would disproportionately hurt rural Tennesseans that must commute more than their urban counterparts. Tennessee’s budget is dependent on sales tax, and sales tax collections are influenced by the amount of discretionary income that Tennesseans spend. Sales tax is, also, dependent on the rate with which Tennesseans spend which is known as the velocity of money. One could argue that the recent drop in gas prices has provided families with added discretionary income which in turn improved the velocity of money in Tennessee. This has led to an increase in our state revenues. Furthermore, our country never really bounced back from the last recession and we are due for another recession. If we simply raise a gas tax that decreases discretionary income and if another recession occurs, the $600 million in excess tax revenue could easily turn into a deficit.
I will continue to search for solutions with the District and taxpayers in mind, but knowing what I know now, I don’t see how a simple gas tax increase will be a successful proposal, especially in 2016.