Transportation fund increase could have $709 million impact

Staff Reports • Updated Feb 18, 2017 at 8:00 PM

A $278 million annual increase in Tennessee’s transportation fund would have a $709.3 million economic impact, according to a study released by the Washington, D.C.-based American Road and Transportation Builders Association.

The $278 million is the amount of new revenue that would come to the state should Gov. Bill Haslam’s proposed IMPROVE Act pass the state legislature. 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.

The annual increase in highway and bridge construction investment in Tennessee would have an immediate impact on all sectors of the state economy, yielding the following annual benefits:

• An additional $709.3 million in economic output as businesses throughout the economy sell more goods and services to both other businesses and consumers

• 363 million in value added, which contributes to Tennessee’s GSP

• 6,217 jobs created or supported across all sectors of the economy. These workers would earn over $210 million in wages. Over half of these jobs are outside of the construction sector.

• $25.6 million in additional federal and state revenues, including:

• $16.1 million in federal payroll taxes 

• $8.8 million in state sales taxes

“This study shows the many positive economic benefits of the governor’s IMPROVE Act,” said Bill Moore, chairman of the Tennessee Infrastructure Alliance and former chief engineer for Tennessee Department of Transportation. “By creating jobs and helping to drive up wages, our economy will continue its exceptional growth, to say nothing of the obvious benefits of driving on safer roads.”

In addition to the benefits of the construction activity, the study found that Tennessee businesses and drivers would also see economic gains. Targeted investments would improve roadway safety, reduce operating costs for local businesses and increase mobility for all system users. These longer-run benefits and improved efficiency would help drive productivity growth.

The study reflects an increase in Tennessee Department of Transportation funding and does account for any new spending by cities or counties, nor any related to a local option for mass transit.

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