Increase Gas Tax? Not this Year!

August 2015 - Senator Mark Green

There is an impending problem with road funding that’s compounded by the failure of the President and Congress to address the federal funding mechanism. As innovation has driven more fuel efficiency, the dollars collected per mile driven in Tennessee fell while the costs of road construction increased. And, it seems the revenue lines and the expenditure lines are about to cross in the negative. 

Something has to be done. However it’s still too early for the panic button and way too early for a gas tax increase. With a $33.8 billion dollar budget, Tennesseans pay enough in taxes – remember, state revenue comes from taxes. As legislators, we must pursue alternatives and owe it to every taxpayer to exhaust all other options before even breathing the words “tax increase.”

Funds from the TN Department of Transportation (TDOT) that came from your gas taxes were routed to the General Fund ranging from $30 to $65 million annually from fiscal years 2001-02 through 2006-07 to cover state budget shortfalls resulting from TennCare overruns.

In total, $280,200,000 were transferred from TDOT to pay for another state program, TennCare. From 2006-08, just over $17 million were repaid to TDOT leaving the General Fund in debt to our road fund by more than $260 million. An amendment is being written for the next legislative session to have that money returned to TDOT with interest. In Tennessee, we cannot resort to DC budget practices like we’ve seen with the non-existent “Social Security Lockbox” that takes from one designated fund to support other programs. Let’s start addressing the road fund problem by making the accounts whole and regain the trust of Tennesseans through good stewardship.

Add to the million-dollar debt owed to the road fund a $300 million budget surplus and Tennesseans have a second reason to believe that an increase in the gas tax increase is premature and wrong. Only the most spend-crazy Washington Politicians would suggest increasing taxes with an existing budget surplus. The projections of the new budget year continue to be favorable with up to a half a billion dollars expected in surplus. Tennesseans are finally enjoying lower fuel prices, in effect stimulating the economy with their spending elsewhere. Slapping them with a gas tax increase, while the general fund’s surplus potentially exceeds the total that Tennessee spends on new road projects in a year, is ethically wrong and will slow Tennessee’s economy.

Finally, many vehicles drive the roads of Tennessee without paying any tax. The 2,000 electric cars in Tennessee use zero fuel and pay zero gas tax. Adding a registration fee surcharge for electric vehicles that would essentially equate to the gas tax for the average miles driven is one simple solution to bring these drivers into the cost-sharing of our roads.

A tax increase in fuel will impact every Tennessean. Yet, businesses have the ability to pass the increased cost on to consumers with average Tennesseans stuck carrying the heaviest burden. Removing another $500 million yearly from Tennessee’s economy for government spending is unwise.

We must first use the budget surplus, return dollars from the general fund to pay the TDOT debt, and level the tax-paying field by assigning fees to electric cars currently driving tax-free. Then, we’ll see good roads plus job creation in the construction industry without the negative impact on the rest of Tennessee’s economy.

In the end, it may be innovative solutions that replace the gas tax completely for assessments by numbers of miles-driven. But, no solution should be taken that increases the costs to Tennesseans until all others are exhausted.