By Cameron McWhirter
Tennessee Gov. Bill Haslam is putting his fellow Republican
lawmakers to the test, with a plan to raise the state's gas taxes
for the first time in nearly three decades.
He joins a string of governors who have pushed through similar
increases. "We need to do something," Mr. Haslam said in a recent
interview, asserting that a gas tax is the most equitable revenue
stream to use to fix roads. He said his plan would raise about $278
million a year for road and infrastructure improvements.
Nearly 20 states, with both Republican and Democratic governors,
have raised gas taxes or recalculated gas-tax formulas in recent
years to generate funds for upgrades to aging roads and bridges.
This legislative season, at least a dozen more are considering such
measures, said Kevin Pula, a transportation policy specialist at
the National Conference of State Legislatures.
Pushing states to this point are, on one side, rising
construction costs, and on the other lower tax receipts from
declining pump sales, which are themselves the result of more
fuel-efficient vehicles and a slow economic recovery. Washington
hasn't raised the federal gas tax since 1993, and the Republican
party platform explicitly opposes any further increases to it.
Even with President Donald Trump's pledge to invest as much as
$1 trillion in national infrastructure, states are realizing they
can't rely on federal funding to repair overburdened roads and
bridges.
"East, west, north, south, Republican, Democrat -- states across
the country are stepping up to the plate to deal with this issue,"
Mr. Pula said.
In Alaska, Republican Gov. Bill Walker proposed tripling the
state's gas tax to 24 cents a gallon by 2018. The state has the
lowest gas tax in the country and hasn't raised it since 1970. In
his recent state of the state address, Mr. Walker said he is trying
to deal with a $3 billion fiscal gap, after state revenues
collapsed by more than 80% from four years ago due in large part to
the drop in oil and natural-gas prices.
New Jersey's Republican Gov. Chris Christie raised the state's
gasoline tax last year by 23 cents a gallon, his first tax hike in
two terms as governor, which he offset with some other tax
reductions.
On Thursday, the Republican-dominated Indiana House voted 61 to
36 in favor of increasing the state gas tax from 18 cents a gallon
to 28 cents with annual adjustment increases possible through 2024.
The bill now goes to the state Senate.
"The success of states to raise their gas taxes and the limited
backlash have probably emboldened others," said Jared Walczak, a
policy analyst at Tax Foundation, a Washington, D.C.,-based,
pro-business group that advocates for lower state and federal
taxes.
Tennessee's Gov. Haslam, who has cut state taxes multiple times
since he took office in 2011, floated the idea of raising the gas
tax before last year's legislative session. It was met with so much
criticism that he didn't bring forth a bill.
This year, he submitted a plan that proposes to add seven cents
to the state's 21-cents-a-gallon tax for regular gas, and another
12 cents to the 18-cents-a-gallon diesel tax. He argued that
Tennessee, a state of 6.5 million people, needs more than $10
billion over the next 10 to 12 years to fund road and bridge
repairs. The current proposal allows the state to adjust the tax
for inflation every two years.
The plan mitigates the bite of the proposed tax hike with a
reduction in the state sales tax on food and ingredients, as well
as tax cuts for manufacturers, an attempt to lure more businesses
to the state. The proposal would steer tens of millions of dollars
to county and local governments for infrastructure, winning broad
support from local leaders.
Mr. Haslam is in a position to understand the impact of such a
tax hike. For years, the 58-year-old helped run his family's
Knoxville-based business, Pilot Corp., which operates Pilot Flying
J, the nation's biggest truck-stop chain with more than 750 outlets
in North America. Mr. Haslam said it would have been easier to
ignore the problem of unfixed roads, but "I decided it was
important to do the right thing."
Leaders in the state General Assembly, where both houses are
controlled by Republican supermajorities, aren't convinced that a
higher gas tax is the way to go.
Republican state Rep. David Hawk, the House assistant majority
leader, has a competing proposal that would channel a quarter of a
percent of the existing state sales tax to transportation needs,
rather than into the state's general fund. Mr. Hawk estimates his
plan would raise about $291 million annually for road and
infrastructure improvements.
Mr. Hawk's plan is gathering support, including from the
Republican House majority leader, Glen Casada. "The only option
that I see passing is David Hawk's," Mr. Casada said.
Michael Foster, city manager of Rocky Top, a small town in East
Tennessee that gets more than 11,000 vehicles a day, said the
additional funds for road repair will help the city keep property
taxes down, while also gleaning revenue from out-of-state
drivers.
"No one wants to see a gas tax, but you've got to get the money
from somewhere," Mr. Foster said.
Write to Cameron McWhirter at cameron.mcwhirter@wsj.com
(END) Dow Jones Newswires
February 21, 2017 05:44 ET (10:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.