The following policy dive comes by way of Dentons 50 partner Adam Nickas.
Tennessee Governor Bill Haslam signed the ‘IMPROVE Act’ into law on Wednesday, April 26. The Tennessee Legislature’s amended version of the Governor’s plan includes a 6-cent increase on gas and 10-cent increase on diesel. This increase will be phased in over a 3-year period with the initial increase of 4 cents for each. Having not been raised since 1989, the gas tax goes from 21.4 cents per gallon to 27.4 cents per gallon and the diesel tax from 18.4 cents per gallon to 28.4 cents per gallon.
Additionally, there is a $5 increase on annual car registration fees, $10 increase for private and commercial vehicles and $100 for electric vehicle registration and renewal. In total, it is estimated to generate $350 million in revenue for the dedicated highway fund and for local infrastructure projects.
The gas tax increase was coupled with tax cuts, totaling over $400 million- 1% decrease to the grocery tax (5% to 4%), phasing out the “Hall Tax” on interest and dividend income, restoring local property tax relief for seniors and disabled veterans, and cuts to corporate taxes on manufacturers.
Proponents reiterated this proposal as “the largest tax cut in state history” and argued that the gas tax is a “user fee” that is paid by tourists and trucking companies traveling thru the state, not just Tennessee residents. They also cited an estimated $10.5 billion backlog in infrastructure projects around the state.
Also this week, Governor Haslam included $55 million in non-recurring funds for transportation projects in his amended budget.
