Senate Majority Leader Mark Norris pushed a revised fuel-tax bill through the Transportation Committee today, making a sharper cut in the grocery tax to offset phased-in increases at the gas pump.

Citing the late Sen. Douglas Henry who favored funding transportation projects with fuel taxes along with keeping the governor’s budget plan moving forward, Norris persuaded the committee to send an amended IMPROVE Act to the Senate State & Local Government Committee for consideration. Only one senator voted in opposition.

The plan began “to crystalize,” Norris told the committee, when he saw Gov. Bill Haslam at funeral services for the longtime Democratic senator over the weekend.

Reflecting on the Legislature’s lack of progress on Haslam’s signature legislation for the 2017 session, Norris said they decided a move had to be made to draw more widespread public support from Tennesseans.

“There’s $10 billion worth of projects that will be beneficial to them, and they save more at the store than they pay at the pump,” said Norris, a Collierville Republican. “Plus, the increase is incremental over three years.”

Norris’ plan calls for reducing the 5 percent sales tax on groceries to 4 percent, a 20 percent reduction, and raising the gas tax by four cents in fiscal 2018. It would add another penny in 2019 and one more cent in 2020 while adding four cents to the diesel tax next year, three more cents the following year and another three cents in the third year. The governor’s initial plan was to push the 21.4-cent gas tax up seven cents and the 18.4-cent diesel tax up by 12 cents immediately.

The proposal would eliminate a fee increase on rental vehicles along with the plan to tie future increases to the Consumer Price Index. But a $5 increase in the vehicle registration fee and $100 fee on electric cars would remain.

Another part of Norris’ amendment calls for renewing property tax breaks for veterans and disabled and elderly veterans.

Sen. Jim Tracy, a Bedford County Republican and speaker pro tem, pointed out Tennessee is in good economic shape, in part, because it holds no debt on its road construction and requires funding to come from fuel taxes.

“We know where we are,” Tracy said. “There’s more tax cuts in this bill than in the governor’s bill.”

Stephen Smith, the governor’s senior policy advisor, said Haslam and Norris have had several conversations on the matter.

“The governor’s had three principles, comprehensive, fiscally responsible and sustainable, something where we can get these projects done in a reasonable amount of time and we think this plan will do that,” Smith said.

After three years, the Norris plan would bring in $355 million for the state transportation fund, as well as city and county governments, for road and bridge work. The idea is to chip away at 962 projects statewide over the next 12 years.

It also would contain franchise and excuse tax breaks for businesses and the Hall tax phase-out on interest and dividends.

Republican Sen. Mae Beavers, of Mt. Juliet, asked for a one-week delay in consideration, along with Republican Sen. Janice Bowling of Tullahoma. Beavers voted against the measure, saying she needed more time to think about it, but Bowling finally voted to send it on after Norris said it was a crucial part of enabling the governor’s office to wrap up his $37 billion budget plan.

“It’s almost the Ides of March and we need direction on where our overall budget is going to go,” Norris said.

House contrast

The House version of Haslam’s bill is at a much different place, containing an increase in the sales tax along with cuts in business and Hall taxes and a .5 percent break in the grocery tax.

“I think the House will have its own plan,” said House Majority Leader Ryan Williams, a Cookeville Republican. “I think that’s part of the problem that we foresee, that the House and the Senate may not agree to a conference committee.”

A conference committee would be needed to reconcile differences between bills produced in each chamber.

Williams said he had not seen the Norris amendment but noted it sounded as if Gov. Haslam supports it, based on conversations he had with Norris over the weekend.

The House Transportation Committee would not be able to act on the Senate proposal when it meets Tuesday because it doesn’t have the amendment and the filing deadline for those changes has passed, Williams said.

“I expect the Transportation Committee will be extremely thorough in what they’re doing, if not tomorrow, then sometime,” Williams said.

While many House Republicans are loathe to support fuel-tax increases, Lt. Gov. Randy McNally called the Norris proposal a “strong, fiscally-responsible road funding plan” that protects the state’s user fee and preserves the general fund.

“The plan keeps our road fund sustainable while ensuring our continued fiscal stability and the maintenance of our Triple-A bond rating. The bill as amended is now beyond revenue-neutral. It is a clear and undisputed tax cut for Tennesseans. It has my unequivocal support,” McNally said.

Democrats in the House and Senate have not stood up in favor of the governor’s fuel-tax increases, saying they believe more needs to be done to trim taxes for the working class.

“I do think it, while certainly not perfect, is a big improvement on what was originally presented,” said Sen. Jeff Yarbro, a Nashville Democrat. He pointed out the measure goes much further toward offsetting tax increases at the pump.

Sam Stockard is a Nashville-based reporter covering the Legislature for the Memphis Daily News. He can be reached at [email protected].