The House Transportation Committee today approved, 11-7, the same revised version of Gov. Bill Haslam’s tax package — including higher taxes on fuel and lower taxes on food – that was approved earlier in the Senate Transportation Committee. The panel has been viewed as the biggest obstacle to ultimate approval of the governor’s proposal, though several hurdles remain.
The vote came after about 90 minutes of debate and defeat or withdrawal of multiple amendments. A couple of amendments were adopted. Most notably, perhaps, one would reverse a current law that says that any cut in federal gas taxes would automatically trigger a corresponding increase in state gas taxes. The amendment says any increase in federal taxes would trigger a corresponding decrease in state fuel levies.
The most debated amendment was on a proposal by Rep. Dale Carr, R-Sevierville, that would have diverted money from sales taxes collected from the sale of vehicles to the highway fund without any fuel tax increase. It failed on an 8-10 vote.
The basic bill (HB534), as now approved by both the House and Senate Transportation Committees, raises the gas tax by six cents per gallon and the diesel fuel tax by 10 cents per gallon – both increases phased in over a three-year period. The governor’s original proposal was seven cents per gallon on gas and 12 cents on diesel, both taking full effect July 1.
The revised version also cut the state sales tax on groceries from 5 percent to 4 percent. Originally, Haslam proposed a reduction to just 4.5 percent. Administration officials say the grocery tax, for most average Tennesseans, would now more than offset the increased taxes they will pay for fuel.
Most other provisions of the governor’s original package remain in place — including a corporate tax break designed to benefit for manufacturers.
The revised bill also won approval today, as expected, in the Senate State and Local Government Committee. In the Senate, it now goes to the Finance Committee. In the House, it now goes to the Local Government Committee.
The committees overseeing local government legislation are involved because the bill also includes provisions allowing city and county governments to hold referendums on raising taxes for transportation spending.
Note: The House committee roll call vote is HERE.
The latest version of Gov. Bill Haslam’s transportation legislation has received a blessing from Grover Norquist, a national anti-tax activist, who says the package overall reduces more taxes than it increases. Haslam, who sought Norquist’s opinion, says that is “a really big deal,” reports the Times-Free Press.
Under the version of Haslam’s plan advancing in the Senate, the state would increase its tax on gas by 6 cents per gallon and diesel by 10 cents per gallon, but also cut other areas including the sales tax on groceries, the tax on earnings from stocks and bonds and corporate taxes owed by large manufacturers.
Norquist, founder of the group Americans for Tax Reform, said in a letter to state House and Senate members that the most recent version of the governor’s bill advancing in Senate represents a “net tax cut,” and does not violate lawmakers’ pledges to not raise taxes.
He also noted that the Senate had removed a proposal to link fuel taxes to inflation, “which means gas tax hikes will not be put on autopilot.”
The Haslam administration sought Norquist’s input on the Tennessee plan after seeing that Americans for Tax Reform supported gas tax increases in New Jersey and South Carolina when they were coupled with tax relief.
Norquist’s position on the Tennessee gas tax proposal contrasts with the strong opposition voiced by the state chapter of Americans For Prosperity, founded by billionaire industrialist brothers Charles and David Koch.
…Haslam told reporters he considers the announcement from Norquist to be “a really big deal.”
“This is somebody who’s kind of staked his whole thing on we should never have tax increases,” Haslam said. “Whether you agree or not, the fact that the founder of that movement — who had people sign no-new-tax pledges — says this is not a tax increase.”
(T)he fierce backlash from conservative opponents of the gas tax increase in Tennessee to the last minute attempt by supporters of the governor’s plan to bolster its chances by calling in a “celebrity ” who has never lived in the state and knows little of the intricacies of the bill or the state’s budget, spells more, rather than less, political trouble ahead for the governor and his allies.
The Tax Foundation today released its annual ratings of state taxes and finances, ranking Tennessee 47th in the nation in combined state and local tax burden as a percentage of income. In Tennessee, taxes totaled 7.3 percent of income. Alaska was 50th, South Dakota 49th and Wyoming 48th.
On gas taxes, of interest within the state lately, Tennessee is 41st with the current 21.4 cent per gallon levy. Highest gas tax is in Pennsylvania, 58.2 cents per gallon; lowest is Alaska at 12.25 cents per gallon.
If seven centers per gallon were added to the Tennessee rate, as Gov. Bill Haslam has proposed, the resulting 28.4 cents per gallon would be about the same as Minnesota (28.6), which ranks 26th.
Among neighboring states, North Carolina has the highest gas tax, 34.55 cents per gallon; Missouri the lowest, 17.3 cents per gallon, followed by Mississippi at 18.77 cents.
From a Tax Foundation news release:
Also, Tennessee currently ranks 13th on the Tax Foundation’s State Business Tax Climate Index, which measures how well each state’s tax code is structured. In addition, the report shows how much each state relies on different revenue sources for their total revenue collections.
Key rankings for Tennessee:
Federal aid as a percentage of state general revenue: 3rd (accounts for 39.9 percent of Tennessee’s budget, above the U.S. average of 30 percent)
State individual income tax collections per capita: 43rd ($46; national average: $967)
State corporate income tax collections per capita: 11th ($212; national average: $144)
Note: The full report is HERE.
The Senate Transportation Committee approved Monday a revised version of Gov. Bill Haslam’s transportation funding legislation. Instead of a July 1 increase of seven cents a gallon on gasoline, the new version – changed with the governor’s approval – calls for a six-cents-per-gallon increase phased in over three years. The diesel fuel tax would also be phased in, rising over three years by 10 cents per gallon rather than an July 1 increase of 13 cents as originally proposed.
Excerpt from The Tennessean’s account:
Senate Majority Leader Mark Norris, R-Collierville, said after conversations with Haslam in recent days, they had reached an agreement on the various changes to his bill.
… Among the changes included in Norris’ amendment were a portion that would provide tax relief to the elderly and disabled veterans, reduce the sales tax on groceries to 4 percent, and a tax hike on gas and diesel fuel of 6 cents and 10 cents per gallon, respectively. (Note: The deal cuts the grocery tax by 1 percent – it’s currently 5 percent – instead of half a percentage point as Haslam proposed.)
The gas and diesel tax increases would be phased in over three years. For the upcoming 2017-2018 fiscal year, the gas tax would be increased by 4 cents. In each subsequent fiscal year it would increase by 1 cent.
The diesel tax would be increased by 4 cents in the upcoming fiscal year and would be hiked in the following fiscal years before maxing out at 27 cents in fiscal year 2019-2020.
Unlike the phased-in approach on the gas and diesel taxes, the decrease in the state’s sales tax would be immediate. The cuts to the tax on groceries would result in a $120 million reduction in revenue for the state.
… Other significant changes included in Norris’ amendment is a portion that would would increase the amount of tax relief a service-connected disabled veteran could receive. Right now, eligible veterans can receive tax relief based only on the value of the first $100,000 of their home. The latest proposal would increase the amount to $135,100.
Gov. Bill Haslam’s fuel tax legislation was battered and bruised by the House Transportation Subcommittee on Wednesday, but nonetheless survived to face continued combat in the legislative arena.
The sub rejected two competing proposals. One (HB1012) by Rep. David Hawk, R-Greeneville, would have diverted money from the state’s general fund to highway projects without raising any taxes. It got just three yes votes versus five no votes. The other (HB53) by Rep. Jason Zachary, R-Knoxville, called for diverting 25 percent of any state revenue surplus in a given month to the highway fund, also eliminating any tax increases. The vote on that measure was a 4-4 tie, which means it failed under House rules.
The Haslam bill (HB534) was approved 5-4 with House Speaker Pro Tempore Curtis Johnson (R-Clarksville) stepping in, as authorized under House rules, to break a 4-4 tie. But that came only after the panel adopted amendments – one of them eliminating any fuel tax increases, the other scrapping an “indexing” provision that authorized future gas tax increases automatically to cover inflation. The bill thus bears little resemblance to the original Haslam proposal.
Still, the vote means the governor’s bill moves on in the legislative process, where it can be revised to eliminate the House sub amendments and restored to its original content – or not.
Excerpt from The Tennessean’s report:
In advance of the meeting, dozens of people wearing bright green and red Americans for Prosperity T-shirts packed the committee room. The group, led by Andy Ogles, the state chapter director, and former conservative talk radio show host Steve Gill, took pictures with a mascot dubbed “Gas Tax Man.”
Ogles estimated over 100 people against the gas tax were inside Legislative Plaza in advance of the committee’s action.
After the committee’s took up the transportation bills, he said the newly amended proposal is essentially “a Trojan horse” that will likely revert to Haslam’s plan.
“What it will reveal is that (House Speaker) Beth Harwell just helped the governor raise the gas tax,” said Ogles.
Kara Owen, a spokeswoman for Harwell, said the speaker has frequently said all transportation proposals would get a fair hearing, which is what occurred Wednesday. “There are still many more hurdles ahead, and we anticipate the bill will continue to change throughout the process. She looks forward to continuing the discussion regarding transportation and infrastructure funding,” Owen said.
The House Transportation Subcommittee voted to adjourn Wednesday rather than take a vote on a bill by Rep. David Hawk that was offered as an alternative to Gov. Bill Haslam’s gas tax plans. Abrupt approval of the adjournment motion, made by Democratic Rep. John Mark Windle of Livingston, leaves both the Hawk bill and the Haslam bill sitting in the sub for at least another week.
Haslam later told reporters he thinks it shows representatives remain undecided on how to address what he says is a $10.5 billion backlog of nearly 1,000 highway and bridge projects across Tennessee.
“We’ve said all along this was going to be a long path and it would involve a lot of discussion and the bill could take different forms at different times,” Haslam said. “But we’re not discouraged by this at all.”
… After hearing from trucking industry officials who favor Haslam’s plan, (Subcommittee Chair Rep. Terri Lynn) Weaver called up Hawk’s bill out of order from the calendar of measures to be considered.
“We’re going to go a little bit out of order here and keep you guys at the tip of your seats,” Weaver said.
(Windle then proposed an amendment to Hawk’s bill, which calls for diverting money from the state’s general fund to road construction without a tax increase, that would exempt baby formula from the state sales tax. Subcommittee Chair Rep. Terry Lynn Weaver ruled that motion out of order and Windle then made his adjournment motion, approved 5-3.)
…Windle was unapologetic.
…”Why should I apologize for representing people who get up and go to work every day? Why should it be people who are at the top of the food chain? Why shouldn’t somebody who actually has children going to work every day get a tax cut?”
…Weaver, who voted against the adjournment motion, later called Windle’s maneuver a “surprise.”
Asked why she’d called up Hawk’s bill out of order, Weaver said, “I do that a lot. Sometimes — I’m the chair, I can steer it anywhere I want to. I was looking for Jason Zachary, I couldn’t find him. He had a bill on there too.”
Zachary, R-Knoxville, had yet another road funding proposal.
House Transportation Committee Chairman Barry Doss, R-Lawrenceburg, who is carrying Haslam’s bill, said, “We were about to get the governor’s bill out today. But evidently there were some people who were uncomfortable, maybe, with the Hawk plan. And they weren’t ready to vote on the Hawk plan.”
Doss said he believes “there’s a lot of people uncomfortable” with Hawk’s bill. “We come back next week and I think more people are comfortable with the governor’s plan.“
Gov. Bill Haslam has expanded a provision in his gas tax package that would let local governments raise extra revenue for transportation with voter approval in their own jurisdictions, reports The Tennessean.
As part of his IMPROVE Act, Haslam had originally allowed an increase on local sales tax rates as the lone transit funding mechanism that could be decided via local public referendums.
But in an amendment to his transportation bill filed Tuesday, the governor has quietly proposed allowing referendums on surcharges to other existing local taxes as possibilities to pay for public transit projects. The new options are local property tax, business tax, motor vehicle tax, local rental car tax, tourist accommodation tax, residential development tax and local tourist development zone business tax.
The greater taxing authority would be extended to all county governments in Tennessee as well as the state’s four biggest cities: Nashville, Memphis, Chattanooga and Knoxville. All surcharges would need to be separate charges in addition to the existing taxes.
“After discussions with stakeholders over the past several weeks, this gives local governments more flexibility on how to fund public transit projects, if approved by local voters through referendum,” Haslam spokeswoman Jennifer Donnals said in an emailed statement.
Note: Rep. John Ray Clemmons, D-Nashville, says the governor has basically adopted part of a Democratic alternative plan. Press release below.
News release from Middle Tennessee State University
MURFREESBORO, Tenn. — About a third of Tennessee voters support Gov. Bill Haslam’s proposal to fund road projects through a plan that would increase fuel taxes while cutting grocery and other taxes, but fewer oppose it, and many remain undecided, according to the latest MTSU Poll.
“Support for the plan is fairly low among voters, but that’s not the whole story,” said Ken Blake, Ph.D., director of the poll at Middle Tennessee State University. “In a pattern reminiscent of attitudes toward the governor’s ‘Insure Tennessee’ plan two years ago, opposition is fairly low as well, many have read or heard little about the issue and simply have no opinion yet, and support for the plan rises markedly among those who have the most information about it.”
The latest MTSU Poll of 600 registered voters was conducted Feb. 12-16 with a margin of error of 4 percentage points.
In other findings, 57 percent approve of Haslam’s job performance, 50 percent approve of the job the Tennessee General Assembly is doing, and about half of state voters want another Republican to succeed Haslam. By comparison, more like a quarter would prefer a Democratic governor.
Support mixed for gas tax increase
When the current poll asked state voters about the governor’s “proposal to pay for road projects by raising taxes on gas and diesel fuel while cutting other taxes, including taxes on groceries”:
- 38 percent expressed support.
- 28 percent were opposed, a significantly smaller proportion.
- 33 percent said they weren’t sure.
- The remaining 1 percent declined to answer.
Tennessee gas station and convenience store operators are fighting a provision in Gov. Bill Haslam’s gas tax increase plan that would index future fuel-price hikes every two years to the rate of inflation, reports the Times-Free Press.
In a letter sent last month to legislators, Emily LeRoy, executive director of the Tennessee Fuel and Convenience Store Association (TFCA), called the indexing provision a “blank check” for state government.
“We believe our customers will oppose an automatic tax increase, which is anti-consumer and contrary to Tennessee’s reputation as a fiscally conservative state,” the letter states. “We want to support this legislation, but cannot be supportive” if that’s included.
LeRoy told the Times Free Press via email last week the association is not fighting Haslam’s plan to hike fuel taxes by 7 cents per gallon for gasoline and 12 cents per gallon for diesel, just the indexing proposal.
…”It is our strong belief that tax increases should be publicly debated, with opportunity for voters to agree or disagree with the associated spending and that legislators should vote on every increase,” she said.
… The governor and his immediate family are majority owners of Pilot Flying J, a chain of travel centers across Tennessee and the U.S.
While Pilot is a member of the TFCA, a source with direct knowledge of the company’s position said the Knoxville-based chain isn’t involved in TFCA’s fight against the indexing provision.
… Haslam’s press secretary, Jennifer Donnals, defended the index provision, saying the governor “proposed the IMPROVE Act to build and sustain the state’s economic growth and competitiveness, and indexing is an important piece to make sure we can provide a safe and reliable network for the next generation of Tennesseans.”
As for Pilot, Donnals said, “We speak for the governor, not Pilot, and we look forward to Wednesday’s discussion about providing Tennessee with a safe and reliable transportation network in a fiscally responsible way.”
Mike Williams, executive director of the Tennessee Petroleum Council, a trade association for energy companies doing business in Tennessee, said the group would “prefer not to have indexing but that’s a decision the General Assembly is going to have to make about whether they want automatic tax increases or that tax increases should be voted on one at a time.”
In promoting Gov. Bill Haslam’s gas tax plan to IMPROVE Tennessee roads, the Department of Transportation’s website has a new feature – an interactive map of all projects that could be funded with more money. And, of course, it has a new acronym: SPOT (Statewide Project Overview Tracker).
It’s HERE. The welcoming message reads;
Welcome to the SPOT website. This website is designed to provide you with an interactive tool to navigate priority transportation projects across the State of Tennessee. This application is a project overview tracker of county, TDOT region, and legislative districts for you to view basic details for transportation infrastructure, safety and economic development in locations that are important to you.
The projects are also categorized by their program type describing the primary benefit they offer the public of the State of Tennessee.
Note: ICYMI, IMPROVE stands for Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy. TDOT is the Tennessee Department of Transportation (pronounced tee-dot).