Gov. Bill Haslam’s signature IMPROVE Act, enacting Tennessee’s first fuel tax in nearly three decades, emerged triumphant from the House and Senate floors after a combined five-plus hours of discussion and debate.
The legislation seeks to raise the gas tax by 6 cents and the diesel tax by 10 cents over a three-year period. The extra revenue will be used to whittle away at the state’s $10 billion backlog of transportation projects. Also attached to the bill is a tax cut on grocery purchases and an alteration to the state’s corporate tax policy.
The bill won in the House by a 60-37 vote and the Senate by a 25-6 vote.
Although the legislation cleared a major hurdle, the Senate and House bills differ on a provision that provides tax relief for eligible veterans and elderly Tennesseans.
Lt. Gov. Randy McNally told The Tennessean he is hopeful the House can add the provision to the bill so the General Assembly can officially send it to the governor.
Tri-Cities legislators were split on the bill, not by party, but mainly by the upper and lower chambers they serve.
Reps. Matthew Hill, Timothy Hill, Bud Hulsey and Micah Van Huss all voted against the measure. Elizabethton Rep. Jon Holsclaw joined Sens. Rusty Crowe and Jon Lundberg in voting for the IMPROVE Act.
After gathering feedback from his constituents, Matthew Hill, R-Jonesborough, was adamant Northeast Tennesseans did not want any new taxes and subsequently voted against the proposal.
Matthew Hill backed Greeneville Rep. David Hawk’s alternative plan to fund road projects by extracting money from the tax generated from vehicle sales. Hawk’s measure ultimately failed by a 58-38 House vote.
“I supported state Rep. David Hawk’s amendment that would have funded our roads and bridges — both in Washington County and our state — without raising taxes on my constituents. I am disappointed that the plan presented by my colleague and additional members of leadership failed on the House floor,” Hill said in a statement.
“While I agree that we need to address our state's infrastructure, I also could not vote for a plan that would increase taxes on my constituents for a third consecutive year. In 2015, Johnson City residents saw a 25-cent increase in their property taxes. Last year, Washington County residents experienced a 40-cent increase in their property taxes.”
Rep. Timothy Hill also supported Hawk’s proposal while opposing Haslam’s gas tax.
“(Hawk’s) plan was fiscally responsible and would have solved the transportation funding puzzle, all while living within our means as a state — just like every Tennessee family has to do,” Rep. Timothy Hill said in a statment.
Van Huss, R-Jonesborough, shared a similar, yet more direct sentiment, saying, “Our Republican supermajority can’t pass a heartbeat bill or un-infringe our 2nd Amendment rights, but they sure can raise taxes. I am honored to stand for my constituents and keep my word in voting no on the gas tax.”
In justifying his vote, Crowe admitted voting for the gas tax was a difficult decision.
“As the third-most conservative senator on the floor of the Tennessee Senate this past year, as determined by the American Conservative Union, and as the senator responsible many years ago for having kept Tennesseans from having a state income tax, deciding how to vote on this very important piece of legislation was certainly one of the more difficult decisions I have had to make in my 28 years on this senate floor,” Crowe said in a statement.
Crowe said almost 60 percent of his constituents who contacted his office were surprisingly in favor of the bill. He said the estimated $428 million dollars in cuts also guided his vote.
“I did decide to support the governor’s IMPROVE Act; as although it increased the road budget by $350 million dollars it, however, cut $428 million dollars, reducing our sales tax on food, business taxes; and especially dear to my heart, provided for property tax relief for our disabled veterans, low-income seniors and disabled citizens,” Crowe said.
In a lengthy Facebook post, Lundberg also defended his “aye” vote by saying he opposed pulling money from the state’s general fund, which has a $2 billion surplus.
“From my conservative point of view, I opposed taking money from the general fund for several reasons: First, that's how Washington funds roads and look where they are. Washington now borrows almost 40 cents of every dollar they spend,” Lundberg wrote.
“Tennessee is one of only five states in the nation without any road or bridge debt, and I firmly believe it's because we've stuck to using a dedicated tax to fund roads as opposed to raiding the general fund. When the economy turns, and for those of us who have been alive a few decades know it will turn at some point, roads would have been the first place we would have looked to cut when the general fund goes down.”
Lundberg also supported the reduction on franchise and excise taxes for local manufacturers.
“I know that many of you are like me. I will be paying a little more in the gas increase than I will receive in cuts from the grocery tax and this is the only decrease that will affect me and my family. That's true in one respect, but not true as well. What helps us all (is) a growing economy, more jobs (and) increased wages,” Lundberg wrote.
“The (franchise and excise) tax cut will make Tennessee a much more desirable place for businesses to come to. I know of at least four manufacturer prospects that our state has lost because our business taxes are higher than our surrounding states.”
Lundberg continued by saying that had money been pulled from the general fund, Tennesseans would have carried the bulk of the costs. The gas tax, on the other hand, will draw taxes from non-Tennesseans.
“Between 40 and 50 percent of diesel tax is paid by out-of-state drivers, and approximately 20 percent of gas tax is paid by out-of-state drivers. It seems much better to me to allow non-Tennesseans to help pay for our roads,” he added.
Receiving hundreds of emails over the issue, Lundberg said he does not “wet his finger and stick it in the air to see which way the wind is blowing” before he votes.
“I vote for what I think is right and best for our state,” Lundberg said.
Email Zach Vance at firstname.lastname@example.org. Follow Zach Vance on Twitter at @ZachVanceJCP. Like him on Facebook at Facebook.com/ZachVanceJCP.