OREA Study: Current TN Fuel Taxes Not Sufficient to Maintain Infrastructure

Press release from the office of the Tennessee Comptroller of the Treasury; January 20, 2015:

The Comptroller’s Offices of Research and Education Accountability (OREA) has completed a study focusing on the funding of Tennessee’s highways and bridges. The report, which was requested by the General Assembly’s Fiscal Review Committee, outlines challenges to the existing system, and reviews alternative funding methods.

The report is intended to provide objective analysis for state legislators to consider. It does not make recommendations, address the level of funding needed, or propose how funds should be spent.

The OREA study finds that Tennessee’s fuel taxes have stagnated and are not expected to be sufficient to maintain existing infrastructure and meet long-term transportation demands. Tennessee relies heavily on fuel taxes to fund its highways and does not use debt financing, tolls, or general fund revenues. Tennessee does not hold any highway debt. Tennessee’s gasoline tax rate (21.4 cents per gallon) was last raised in 1989; its diesel fuel tax rate (18.4 cents per gallon) was last raised in 1990.

Several transportation funding and financing options are examined in the report, including strengths and concerns for each option. Possible revenue options include:

  • Motor Fuel Tax Rates
  • Debt Financing
  • Variable Rate and Indexed Fuel Tax Rates
  • Alternative Fuel Vehicles
  • Vehicle Registration Fees
  • Local Funding Options
  • Weight-Distance Tax
  • Vehicle Miles Traveled (VMT) Tax
  • Tolls
  • Public-Private Partnerships
  • General Funds

Tennessee’s per capita revenue for highways in 2010 was the lowest of the 50 states; however, its roads are generally rated as being of good quality. Tennessee was 4th highest among 50 states in the percentage of roads in good condition and 13th lowest in percent of deficient bridges.

OREA is an agency within the Comptroller’s Office that is charged with providing accurate and objective policy research and analysis for the Tennessee General Assembly and the public.

To view the full report online, go to: http://www.comptroller.tn.gov/ OREA/