Tennessee state legislators are proposing alternative ways to increase revenue for the state’s highway construction and maintenance fund, rather than relying on increasing gas taxes.
In January, Gov. Bill Haslam (R) announced he was backing away from an earlier proposal that would have increased the state’s gas tax to pay for $6.1 billion in proposed transportation infrastructure projects.
Since Haslam’s announcement, several alternative proposals have been offered to help for the infrastructure improvements. In January, state Sen. Mark Green (R-Clarksville) proposed increasing registration fees for electric and hybrid vehicles. Another proposal, sponsored by state Rep. Mark Pody (R-Lebanon) would divert revenue collected from sales taxes on car tires from the state’s general revenue fund to the highway fund.
Baruch Feigenbaum, a transportation policy analyst with the Reason Foundation, says lawmakers considering transportation funding should plan for the long term, not just immediate needs.
“If the state legitimately needs more transportation funding—and I am not convinced that they do—they should take short- and long-term steps,” Feigenbaum said. “The best short-term step is indexing the fuel tax to inflation, to the [Corporate Average Fuel Economy] standards, or both. Due to inflation and increasing fuel-efficiency standards, less revenue is being collected.
“However, since it costs motorists more, action should only be taken if it is needed, and I mean needed, not wanted,” Feigenbaum said.
Feigenbaum says lawmakers should phase-out old ideas, such as excise taxes on fuel.
“The best long-term step is to enact mileage-based user fees,” Feigenbaum said. “Tennessee should consider a test program that allows drivers who choose the option to pay mileage-based user fees instead of gas taxes or electric vehicle fees. Once a mileage-based user fee is viable statewide, all gas taxes, tire fees, electric vehicle fees, etc. should be eliminated.”
By Any Other Name
Patrick Gleason, director of state affairs for Americans for Tax Reform, says “registration fee” is just another way to say “tax.”
“States typically assess vehicle registration fees, which are car taxes by another name,” Gleason said. “Lawmakers in some states have sought to raise fees on hybrid vehicles to make up for the fact that hybrid vehicle usage reduces gas tax collections through increased fuel efficiency and reduced gas usage.”
Gleason says lawmakers should be honest with taxpayers and not try to hide transportation revenue hikes behind budget tricks.
“If expanding and maintaining transportation infrastructure is a priority, then lawmakers should treat it as such by making it a priority in the budget process,” Gleason said.
Dustin Siggins ([email protected]) writes from Washington, DC.