Gov. Bill Haslam’s gas tax legislation faces a crucial vote in the state House of Representatives on Wednesday, but his proposal will not have the support of state Rep. Sheila Butt, R-Columbia.
Columbia’s other state representative, Republican Michael Curcio, said Haslam’s plan, which would raise gas and diesel taxes for the first time since 1989, offers a historic opportunity to impact the state. The governor wants to use the money to fund 962 projects statewide at a cost of $10.5 billion.
“We’re confident, but we’re obviously still working,” Haslam told reporters Tuesday, speculating on whether there were enough votes to pass the road-funding plan for the Tennessee Department of Transportation, otherwise known as the IMPROVE Act.
Gas would increase by 6 cents and diesel by 10 cents per gallon. The money would go into the state’s highway fund. Haslam said his plan would reduce the sales tax on food, which goes into the state’s general fund, by 20 percent to offset the increase for taxpayers.
An alternative plan, presented by Rep. David Hawk, R-Nashville, has the support of some legislators, including Butt. Instead of a gas tax, it would redirect existing sales taxes from new and used vehicle sales to pay for infrastructure repairs.
“We can’t come this far and then not decide,” Haslam said. “And if we’re going to decide, it needs to be a plan that adequately addresses our budget as well as our road needs. And, at the end of the day does what ours does: Biggest tax cut ever, larger tax cut at the grocery store than the tax increase at the gas pump.”
Butt said Hawk’s version does not raise taxes. She also pointed to Tennessee’s $2 billion budget surplus as a reason to oppose an increase.
“The state of Tennessee has over collected almost $2 billion in taxes, and it would go against everything that we, as Republicans and conservatives, campaign on and pledge to our constituents to raise taxes at this time,” Butt told The Daily Herald.
Gas prices rose this week to their highest since September 2015. No gas stations in the southern Middle Tennessee region have prices below $2 a gallon after the increase.
“Gas is already projected to go up substantially this summer,” Butt said. “Although a gas tax increase would not hurt some families, there are families in which two parents are driving 40 miles in different directions every day to their jobs just to stay afloat.
“The gas tax is actually a stagnant tax, anyway, and will continue to be so with the advent of higher mileage vehicles, hybrid and even electric cars. The gas tax will continue to need to be raised in the future if that is the source of funding for TDOT. We need a more sustainable source for road funding.”
While concern over a tax increase will force Butt to withhold her support of the governor’s plan, she said it’s not the only factor.
“There are many other reasons I will support the Alternative Plan, including the fact that the IMPROVE Act has a ‘Christmas Tree’ of selective tax cuts, several of which will not necessarily be helpful to our working families,” she said. “The Veteran’s Tax Relief deserves to be a standalone bill, and we have already passed it in the House.”
Legislators cut the Hall Tax last year, reducing Tennessee’s tax on some dividend and interest income and eliminating it by 2022. Haslam’s IMPROVE ACT would cut the Hall Tax another 1.5 percent this year and next year, saving taxpayers an additional $130 million in 2017 and 2018.
“We have already committed as a General Assembly to reduce the Hall Tax, and it should not even be a part of this conversation,” Butt said. “It was a commitment that we made last year and we have basically lied to our constituents if we tie it to a gas tax increase.”
“The IMPROVE Act has been crafted to make legislators feel like they ‘have to vote for it’ because several of the selective inclusions could make them look bad on record. That is how Washington, D.C., may craft legislation, but I believe that Tennesseans expect more out of their Representatives than that,” she added.
Conservative leadership has allowed Tennessee to pay for roads without incurring debt, Curcio said. He said the state needs a “balanced approach” that avoids debut for future generations, balances any tax increase with another tax cut and provides a path to eliminate the TDOT backlog.
“It is important that we stay true to these conservative values while we embrace business growth and development in Tennessee,” Curcio told The Daily Herald.
When Curcio was running to replace retired state Rep. David Shepard, D-Dickson, in 2016, voters wondered about issues related to taxes and projects on the campaign trail.
“I was often asked, ‘What will you do for Maury County?’ My response to that question was always about improving access to the county for the purposes of business, family, and economic development,” Curcio said. “With a conservative plan to cut taxes while maintaining, building, and improving our roads and bridges, I have been given an historic opportunity to impact our county for generations to come.
“At full implementation, the IMPROVE Act would generate $1,562,711.51 for Maury County for much-needed local improvements, while cutting our food tax by 20 percent giving hard-working Maury County residents a much needed break in their monthly expenses.”
If the plan passes the House, it will go to the full Senate later Wednesday.
James Bennett is editor of The Daily Herald.