Gov. Bill Haslam proposed the plan earlier this year with the goal of creating more revenue for the Tennessee Department of Transportation.
The IMPROVE Act would increase the road user fee or gas tax by 7 cents for a gallon of gas and 12 cents for a gallon of diesel, and increases car registration fees by $5 for the average passenger vehicle, which is expected to bring in $278 million in new money for backlogged transportation projects.
Along with the increases are proposed significant tax cuts on food and manufacturing. According to Lynn, it could possibly include introducing an open container law into the state, which would take away a significant penalty that has to be paid by the state for not having such a law, thus opening up more funds to be distributed in different ways.
Lynn met with more than a dozen constituents and discussed the necessity of some version of the IMPROVE Act and the history of the gas tax in the state.
Lynn said state’s gas tax was last increased in 1989. Since then, the cost to repair and maintain roads has doubled, while the tax is about to do about half of what it could then.
“The idea is to collect less in the general fund and collect more in the highway fund. It’s that simple. How do we get there? How do we divert our over collecting into the highway fund? That’s what the big debate is about,” Lynn said.
Nearly all of the people in attendance said they favored a piece of legislation similar to Haslam’s that is revenue neutral, rather than one similar to Rep. David Hawk, R-Greeneville, proposed.
Hawk’s plan would redirect a quarter of one percent of sales tax directly to the transportation fund, which should create about $291 million of reoccurring money every single year.
Lynn said Hawk’s plan is simple, but would go against two of the state’s main principles when it comes to roads – build roads with cash and fund roads through user pay principles.
“In other words, those who use the roads pay for the roads and that way, what each person pays is proportion with their usage,” she said.
Haslam and Lynn spoke in Lebanon last week regarding the IMPROVE Act.
Under the IMPROVE Act, a total of 962 projects throughout the state would start within the next eight years, including 10 Wilson County road projects.
House Transportation subcommittee chair Rep. Terri Lynn Weaver, R-Lancaster, spoke about the plan last week during a Mt. Juliet town hall meeting and said Haslam or a representative will present the plan Wednesday at noon, while Art Laffer will offer a rebuttal and other options.
Laffer, member of former President Ronald Reagan’s Economic Policy Advisory Board, is known for his Laffer Curve economic theory.