ROAD TAX TRAFFIC JAM
Gasoline tax bill advances amid confusion over competing plan
NASHVILLE — Republican Gov. Bill Haslam’s proposed gas tax increases for roads won approval from the House Finance Committee on Tuesday after the issue was tied up for several hours by a rival plan — offered up by GOP House Speaker Beth Harwell and her allies — that sought to substitute an alternative solution featuring no tax increase.
But in the end, Assistant Majority Leader David Hawk, R-Greeneville, withdrew his and Harwell’s amendment, which attempted to use existing sales tax revenue from sales of new and used vehicles to pay for the governor’s IMPROVE Act.
Hawk, however, warned the same amendment will be offered and discussed when the bill hits the House floor, possibly next week.
Finance Committee members approved the bill on a voice vote with support from Budget Subcommittee Chairman Gerald McCormick, R-Chattanooga; Rep. Mike Carter, R-Ooltewah, and Rep. Patsy Hazelwood, R-Signal Mountain.
All three lawmakers note several of the 962 projects benefit Chattanooga, as do cuts to three taxes that support the state’s general fund. Unlike the highway fund, the general fund is running a $1 billion surplus.
Earlier in the Finance Committee, there was confusion over whether Harwell had been working on yet a second alternative, which the speaker’s office later stated was not the case. The reserved speaker, who plans to run for the 2018 GOP gubernatorial nomination to succeed Haslam, only recently was outed publicly by Hawk as the prime mover in the effort
to oppose Haslam’s gas tax increase.
Harwell spokeswoman Kara Owen did not respond to a request for Harwell’s comment on the bill’s progress and the speaker’s nowopen opposition.
Haslam’s plan, as amended by the Republican-controlled House and Senate versions, seeks to raise gas taxes by 6 cents per gallon and diesel by 10 cents over a three-year period, while also increasing vehicle registration fees and several other fees.
It seeks to raise an estimated $350 million Haslam says is needed to begin tackling a $10.5 billion backlog of interstate, highway and bridge projects. The bill also provides new funds for cities and counties.
A key feature of the plan is cutting several general fund taxes. The IMPROVE Act cuts the state’s sales tax on food by $125 million, makes a $113 million change in state corporate tax provisions to help manufacturers and cuts the Hall Income Tax — which lawmakers approved phasing out last year — by a percentage point at a cost of $55 million.
Still, that hasn’t been enough to mollify critics.
The gas and diesel tax increases, which would be the first instituted since 1989, have generated considerable political problems for Harwell, who hopes to have a record in which Republicans only cut and did not raise taxes.
Haslam’s path to passage on the House floor, however, appears to remain in doubt, some argue. The 73-member GOP Caucus split in a Monday straw poll on the issue with 37 members saying no, 30 yes, two declining to say and four simply walking off with the Popsicle sticks used to cast ballots.
The governor likely will have to rely on the support of some of the 25-member House Democratic Caucus, a number of whom haven’t committed to vote for the bill on the floor.
Minority Leader Craig Fitzhugh, D-Ripley, said Democrats have helped support the bill in some subcommittees and full committees and again Tuesday by not backing the Hawk/ Harwell amendment.
“I think he [Haslam] thinks he can pull our people off one by one,” Fitzhugh said. “But that’s not happening.”
Unless the governor is willing to deal on a couple of issues Democrats want, Fitzhugh added. One is supporting a Democratic effort to resurrect the governor’s failed Insure Tennessee plan to expand Medicaid and/or another idea to set aside $250 million in a standalone fund and use the interest it generates to boost K-12 education in various ways.
There’s plenty of money from an estimated $1 billion budget surplus to do that, Fitzhugh said.
Haslam’s amended bill is on far sounder ground in the Senate. There, Senate Speaker Randy McNally, R-Oak Ridge, and Majority Leader Mark Norris, R-Collierville, sought to make the gas tax more palatable by including the various tax cuts.
The amended IMPROVE Act now goes to the House’s Calendar and Rules Committee, its last stopping place. It could hit the House floor next week if supporters think they have the votes.
Senate Finance Committee members might take up the bill today.