Talk of Fuel Tax Filling Air in TN Prior to 2015 Legislative Session

Nationwide, gas prices are averaging some of the lowest prices in recent memory, with many Tennesseans seeing sub-$2 per gallon gas for the first time in at least five years.

So Republican politicians like Gov. Bill Haslam and Lt. Gov. Ron Ramsey are reasoning that there’s no time like the present to talk about raising the state’s per-gallon gas tax, which has been set at 21.4 cents a gallon since the late 1980s.

The governor has put out the word to lawmakers to start prepping their constituents for the prospect that he’s going to ask the GOP supermajority-controlled Tennessee General Assembly to approve some kind of tax hike to pay for state Department of Transportation road projects and agency operations.

At a Bradley County Chamber of Commerce meeting this month covered by the Cleveland Banner, freshman state Rep. Dan Howell, R-Georgetown, told those in attendance that he’s under the impression that Haslam’s proposal “will probably get to the floor” of the House.

Todd Gardenhire, a Republican senator from Chattanooga, said at the meeting that lower fuel prices could result in a temporary increase in the state’s gas tax collections themselves because people may drive more. However, he added if those prices don’t stay down and people cut back on how much they’re driving again, “then we’ve kicked the can down the road.”

The steady drop in fuel prices has been caused in part by the North American oil boom, as well as Saudi Arabia’s decision to not cut production in the face of already falling prices.

Following a budget hearing for the Tennessee Department of Transportation where Commissioner John Schroer worried about how the uncertainty of federal funds would affect the state’s $8 billion backlog in transportation projects, Haslam told reporters that a fuel tax increase seemed inevitable, though he couldn’t say when it would come. “There’s no way the state can continue on the path we’re on now. The math just doesn’t work,” he said.

Likewise, Lt. Gov. Ramsey earlier this month told reporters he also sees the need to raise the fuel tax so the state can “build good roads.” Ramsey said while he can’t be certain about when they may have that legislative discussion, now would be good time for it with fuel prices so low.

Additionally, the Tennessee Farm Bureau has recently removed opposition to a gas tax increase from its legislative priorities.

But increasing the state’s fuel tax seems like a harder sell among House Republican leadership.

“I would say that the advocates of a gas tax, the burden of proof falls on them to prove that we need one,” House Majority Leader Gerald McCormick told TNReport this week. He added the state’s infrastructure was generally a lot better than that of many other states. “I don’t want to dismiss it out of hand, but it will take some convincing to get me to support a gas tax,” he said.

Similarly, House GOP Caucus Chairman, Glen Casada said he thinks “we’ve got to explore every avenue before we increase taxes on the people of Tennessee.” The Franklin Republican questioned whether the state should take “more money from Tennesseans’ family budgets” in the tough economic times.

Both Casada and McCormick also agreed it would likely take a lot of convincing for the members of the GOP caucus to support raising the state’s gas tax.

Speaker Beth Harwell has not taken a public position on raising the tax, but has said the job of the Legislature will be to “give that plan a fair hearing, along with a thorough discussion and debate.”

The state fuel tax consists of a 20 cent gasoline tax and a 1.4 cent special petroleum fee. According to TDOT, it brings in $657.8 million a year, $242.1 million of which goes to local governments, $22.3 million to the state general fund and $393.4 million to TDOT. The last time the state gas tax was adjusted was in 1990. Tennessee has the 39th lowest gas tax. New York has the highest at 50.25 cents a gallon, and Alaska has the lowest at 12.4 cents.

Whether or not to increase the state’s gas tax rate has been an ongoing discussion among state-level government officials for years. An attempt to change how the tax is calculated failed in 2009, and discussion of raising the tax was sidelined in 2011 due to high fuel costs.

Many reasons have been cited for why the tax should be raised, including the increase in fuel efficient vehicles on the road, the rise in inflation and continued uncertainty in federal highway funds.

Schroer has in the past suggested moving away from a fuel tax system altogether, instead following a usage fee system based on miles driven and the weight of the vehicle.

And it isn’t just at the state level that Tennessee Republican politicians want to address uncertain highway funding with a tax increase.

In 2011, U.S. Sen. Lamar Alexander told several West Tennessee government officials federal transportation funds may become uncertain in the future and state and local governments will have to decide if they want to raise their gasoline taxes.

Additionally, this past summer, U.S. Sen. Bob Corker proposed increasing the federal fuel tax by 12 cents over the next two years. The current federal fuel tax rate is 18.4 cents a gallon and was last updated in 1993.

However, Corker’s proposal was met with lukewarm reception, and didn’t advance far.

Tennessee’s senior senator, Lamar Alexander, even side-stepped questions about whether he supported Corker’s plan, saying before he could support any tax increase he would have have to see a “road proposal.” He pointed out that’s what he did when he requested his 3 cent tax increase as governor in 1988.

Voices agitating in favor of a higher gas tax have been growing louder in tandem with gas prices getting lower. However, the prospect of paying more in taxes on fuel doesn’t appear to be as popular among the average consumer. Multiple polls consistently have found about two-thirds of Americans oppose raising the fuel tax.

And this November, 53 percent of Massachusetts residents voted to repeal the automatic gas tax increase passed the year before by the state’s Legislature.