Rep. Barbara Coopers says she is inviting Gov. Bill Haslam to “sell” his proposal to raise gas taxes and reduce business taxes to her Memphis constituents.
“His explanation and all seemed somewhat reasonable. Other than that, it will be another regressive tax on the poor and the middle class,” says Cooper, a Memphis Democrat.
Cooper, who met with Haslam Tuesday morning, says the governor agreed to visit Memphis to discuss the IMPROVE Act, a combination of gas and diesel tax increases along with higher registration fees coupled with business and Hall tax reductions and a half-percent cut in the grocery tax.
“If, in the event, that legislation passes, at least the people have had some input. He’ll hear from them and hopefully their concerns will be included in the legislation,” Cooper says.
House Democrats haven’t signed on to the governor’s plan, which would bring in about $400 million annually for state, county and municipal governments to attack $10.5 billion in backlogged road and bridge projects.
But they say they are willing to work with the governor for a “progressive” plan that won’t put the onus on working-class Tennesseans. They favor, for example, a bigger break in the 5 percent grocery tax than a half percent, especially in light of much bigger reductions in business taxes and the Hall tax.
State Rep. Antonio Parkinson says he believes an opportunity exists for passenger rail across the state. Part of the governor’s plan involves enabling local governments to hold referendums for alternatives revenues sources to fund mass transit.
Parkinson acknowledges he hasn’t heard any of his constituents support an increase in the gas tax. The governor is pushing a seven-cent increase per gallon on gas, 12 cents more on diesel and a $5 increase in registration along with fees on electric and alternative vehicles.
“But the key for us is we work for the people, and our goal is and will be to ensure that the burden of whatever plan is the final plan will not be borne on the backs of the middle class and those that are struggling to get to work every day and the working people,” Parkinson says.
Reached for comment later, Haslam says he would be glad to “walk through” his plan with interested Memphis residents.
Asked whether he considers his proposal regressive, in that people making less money spend a greater percentage of their income on sales taxes, Haslam points out Tennessee is not going to have an income tax.
“So there’s not going to be any form of taxation in Tennessee that’s not going to, by some people’s definition, meet that standard. So the question is do we want to fund roads out of the general fund or do we want to fund them out of the people who use them? And I’m betting most of (Cooper’s) constituents will come out way ahead if we fund them the way we always have, out of transportation.
GOP proposal
A Republican House member is pushing an alternative to the governor’s fuel-tax increase for transportation, one that would tap the general fund, a dramatic move away from fuel taxes for road work.
Rep. David Hawk of Greeneville is sponsoring legislation to direct a fourth of 1 percent from the state sales tax toward transportation, bringing in an estimated $194 million for the Department of Transportation, $65 million for counties and $32.5 million for cities.
The proposal nets about $74 million less than Haslam’s combination of gas and diesel tax increases combined with fee hikes on vehicle registration and new fees on electric cars and other alternative forms of transportation.
“I’m trying to get as close as I can to the governor’s spending without raising taxes,” says Hawk, part of the House Republican Caucus leadership. “I think over the next three months, as we digest the budget, I think we can come up with a plan that will effectively address both our state and local transportation needs long term.”
House Majority Leader Glen Casada is backing Hawk’s proposal but says he has no idea whether it has enough votes to pass in the lower chamber.
“It’s my first choice. We’ve got to build more roads. We’ve got to find a steady, predictable source,” says Casada, a Thompson Station Republican.
Casada, though, says he will support whatever plan emerges from the House Transportation Committee, even if it means backing the governor’s proposed combination of fuel-tax and fee increases combined with some $270 million in reductions on franchise and excise taxes, the Hall tax and grocery tax.
Democrats call the Republican alternative irresponsible because it would let out-of-state motorists escape paying higher taxes while driving through Tennessee while requiring single parents, for instance, to fund it while buying groceries.
They also accuse House Republicans, once again, of undermining the governor’s main initiative, just two years after they killed his Insure Tennessee plan.
Historically, the Legislature has funded transportation needs through its gas tax, without borrowing money, instead of tapping the general fund.
“If there’s ever been a worse tax plan proposed in the state of Tennessee at any time in our history, I’d love to know what it was,” says state Rep. Mike Stewart, chairman of the House Democratic Caucus.
Tap the surplus
On the heels of Hawk’s Wednesday announcement, Americans for Prosperity unveiled Thursday what it is calling the Road 2 Prosperity Plan, asking the Legislature to redirect $200 million annually over the next decade from the general fund to transportation.
It also seeks $2 billion in tax cuts over the next 10 years in franchise and excise taxes for all businesses, in addition to a two-point reduction in the Hall tax. Grocery tax cuts aren’t part of the plan.
Americans for Prosperity Executive Director Andrew Ogles points out the state budget is projected to grow to $37 billion this year from $28 billion seven years ago. It is expected to contain $1.1 billion in one-time surplus money, in addition to nearly $1 billion in recurring money, which the governor has targeted primarily for education, TennCare and the rainy day fund.
The Americans for Prosperity plan says Hawk's proposal is one potential option along with using automotive-related sales tax over the next five years and reviewing it to decide if it should be ended.
“We have a surplus over past year’s budget, so instead of increasing spending in other areas, we divert this money. We’re being told there’s a priority here of roads. Actions speak louder than words. If it is a priority we should make it a priority,” Ogles says.
Americans for Prosperity has been fighting Haslam’s plans for a fuel-tax increase for two years, and Ogles notes while TDOT claims Tennessee has the second-best roads in the nation another report shows the state has the 18th most efficient method for road spending.
Ogles contends the same people who told legislative leaders Tennessee needed to adopt an income tax 15 years ago are the same ones saying the state needs to raise fuel taxes now.
“We have a billion-dollar surplus in recurring revenue being paid by hardworking families. You don’t raise taxes. That is nonsensical, it is disingenuous, and quite frankly I would call it theft,” Ogles says.
Sam Stockard is a Nashville-based reporter covering the Legislature for the Memphis Daily News. He can be reached at [email protected].