Politicians don’t often mention raising taxes when running for office, but Democratic gubernatorial nominee Karl Dean took that gamble this week when he pitched the possibility of a local option gas tax to fund infrastructure needs in specific locales.
Much as counties and cities have the option of adding local sales tax — up to a maximum — through referendums, Dean’s idea would allow counties to add to the state’s gas tax for local revenue, which could be used to build and repair roads and bridges.
Such a scheme might absolve the Legislature and and Tennessee’s next governor from having to bite the bullet to find the revenue to solve the considerable infrastructure concerns across the state. Even elected officials at the local level could get off the hook via referendums.
Such a proposal hinges on just how willing people would be willing to tax themselves for better roads and bridges, especially given that the state already imposed a gas tax hike in 2017.
Current Gov. Bill Haslam successfully pushed through the IMPROVE Act, a fuel tax increase that was coupled with reductions in the sales tax on food, changes in franchise and excise taxes, and the phasing out of the Hall Income Tax on interest from dividends and bonds. Phased in over a three-year period, the law raises gasoline taxes 6 cents per gallon and diesel taxes 10 cents per gallon. It’s expected to yield an additional $350 million per year, roughly $105 million of which would be shared with local governments. The state estimates the fiscal impact in Johnson City at nearly $1.48 million over the first three years.
But in February the Tennessee Advisory Commission on Intergovernmental Relations released a report estimating a need for more than $24 billion in public transportation and utilities improvements across Tennessee by 2021.
That’s a lot of pavement, girders and concrete, and without a clear way to pay for them, roads and bridges will continue to crumble.
The predicament is another example of how Tennessee’s taxation model limits itself from easily generating revenue toward improving such key areas as education and roads. With the constitutional ban on state income taxes, the state often turns to consumption taxes, which by nature disproportionately affect lower- and middle-income residents.
Pundits always argue that the local effects of consumption taxes are mitigated by visitors who shop and buy gas, too. That doesn’t change the fact that a person on a fixed income sees a greater loss in net spending power than more affluent residents.
Still, the quandary is no less real. Tennessee has to find a way to fix its infrastructure woes, and that means billions in revenue.
So should Tennessee move to a local option gas tax? Here’s your chance to sound off. Send your comments to [email protected] Please include your name, telephone number and address for verification. Letters may be no longer than 300 words and could be edited for grammar, style and length.