AASHTO Journal

Tennessee Governor Signs Measure That Hikes Vehicle Fuel Taxes, Cuts Other Taxes

The Tennessee General Assembly finished work April 24 on a transportation funding package that will raise taxes on motor fuels and generate an extra $350 million a year for targeted state and local project needs, and Gov. Bill Haslam signed it into law April 26.

As previously reported, the House and Senate approved slightly different versions of the bill on April 19 by large margins. On April 24, after agreeing to the Senate's version that included an increase in property tax relief for disabled veterans, the House sent the measure to Haslam for his signature.

dollarpump.jpgHaslam, who in January had asked lawmakers to approve such a package of fuel tax and fee increases that he called the Improve Act, called the final legislation "a conservative plan that directly addresses how we fund our roads and bridges for the first time in 30 years."

The governor emphasized that while it raises taxes and fees on direct users of the transportation system, the bill also cuts grocery sales taxes and business taxes on manufacturers to be a net tax cut for Tennessee residents.  

"Nearly 1,000 road and bridge projects across all 95 counties will be delivered through a conservative, responsible and user-based approach of raising the gas tax by 6 cents and diesel tax by 10 cents, each over the next three years," Haslam's statement said.

"It also increases the user fee for electric vehicle owners and allows local voters, through a referendum, in the state's largest counties and its four largest cities to impose a surcharge on taxes they already collect to be dedicated to transit projects."

The next day, Haslam followed up by offering an amendment to his budget proposal for the fiscal year that starts July 1. His amendment would include both an initial round of the Improve Act's tax cuts and $55 million for transportation projects as its revenue provisions phase in.

Questions regarding this article may be directed to editor@aashtojournal.org.

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