From the Inbox, a release from the Comptroller's office:
The Comptroller’s Offices of Research and Education Accountability (OREA) has completed a study focusing on the funding of Tennessee’s highways and bridges. The report, which was requested by the General Assembly’s Fiscal Review Committee, outlines challenges to the existing system, and reviews alternative funding methods.
The report is intended to provide objective analysis for state legislators to consider. It does not make recommendations, address the level of funding needed, or propose how funds should be spent.
The OREA study finds that Tennessee’s fuel taxes have stagnated and are not expected to be sufficient to maintain existing infrastructure and meet long-term transportation demands. Tennessee relies heavily on fuel taxes to fund its highways and does not use debt financing, tolls, or general fund revenues. Tennessee does not hold any highway debt. Tennessee’s gasoline tax rate (21.4 cents per gallon) was last raised in 1989; its diesel fuel tax rate (18.4 cents per gallon) was last raised in 1990.
Several transportation funding and financing options are examined in the report, including strengths and concerns for each option. Possible revenue options include:
● Motor Fuel Tax Rates
● Debt Financing
● Variable Rate and Indexed Fuel Tax Rates
● Alternative Fuel Vehicles
● Vehicle Registration Fees
● Local Funding Options
● Weight-Distance Tax
● Vehicle Miles Traveled (VMT) Tax
● Public-Private Partnerships
● General Funds
Tennessee’s per capita revenue for highways in 2010 was the lowest of the 50 states; however, its roads are generally rated as being of good quality. Tennessee was 4th highest among 50 states in the percentage of roads in good condition and 13th lowest in percent of deficient bridges.
OREA is an agency within the Comptroller’s Office that is charged with providing accurate and objective policy research and analysis for the Tennessee General Assembly and the public.
After a first term avoiding talk about politically sensitive issues like whether he would push to expand pre-K or restructure the gas tax, Gov. Bill Haslam said those decisions could begin in another year.
Haslam is running for re-election in November against a little-known Democratic nominee, largely escaping from this election season without being pressed by a competitor to make campaign promises or charting out how he would address issues politically unpopular among the legislature's majority of Republicans.
But the governor told reporters Friday afternoon he expects to evaluate transportation funding in the next year after telling Colorado Gov. John Hickenlooper and Denver Chamber of Commerce leaders that states will have to work on transportation funding issues while waiting for the federal government to make a move.
“I think Tennessee is going to have to — sometime in the next I-don’t-know-how-many-years — sometime next year look at highway funding. We have some serious challenges facing us,” Haslam told reporters.
Haslam said he would also consider whether to expand the state's pre-K program ahead of his original timeline tied to the conclusion of a Vanderbilt University study on the effectiveness of the state’s current pre-K program. Haslam said he may be ready to confront that issue about a year from now at the earliest, saying he wouldn’t build an expansion into this year’s budget.
Vanderbilt’s study was originally scheduled to conclude in 2015, but was extended to 2019.
“It’s fair to say that’s too long. We’re not going to wait until 2019 to make a decision on that,” said Haslam. “For us, I think it’s driven not so much when it will be completely finished but this: When do we think we’ll know enough to make a priority decision?
“The issue with pre-K is like everything else. It’s like, should we do pre-K? Might be a good idea. Should we pay teachers more? Might be a good idea. I can keep going with that list. It’s more a question of, given the reality of a limited budget, which we have and are always going to have, should that be a priority for funding?”
Foreshadowing a tight budget year, Haslam is asking all state agencies to prepare 7 percent budget cuts for the 2015-16 fiscal year. Some Republican legislators have balked at the idea of expanding pre-K, questioning its effectiveness and use of state dollars to pay for it. Lawmakers have also worked to reduce a variety of taxes collected by the state, which could make restructuring taxes on motor fuel a challenging sell in the legislature.
“Gov. Bredesen and Chairman Sasser have endorsed a candidate who believes Americans don’t need a tax break at the gas pump and who believes the best way to deal with a troubled economy is a massive tax hike,” Hobbs said. “They have endorsed a candidate who knows the price of arugula at Whole Foods Market but criticizes rural Americans for ‘clinging’ to God and their Second Amendment rights. They have endorsed for president a candidate who is willing to meet unconditionally with the terrorist leader of Iran but refuses to meet with Gen. David Petreaus, the leader of America’s troops in Iraq, and who believes the best way to defeat our enemy is to run from them.What party members and the public to imply about the TNGOP's feelings for Senator Bob Corker after reading this? Senator Corker, you will remember, vehemently opposes the idea of a gas tax holiday just as Obama does. McCain, for his part, fired back at Corker for his declaration that the plan was pandering during an appearance at the Ryman on Monday. Is it not odd that the state party would implicitly back the nominee's play on a position so publicly in conflict with a member of the Tennessee Republican Congressional delegation? What is the TNGOP position on the gas tax, pro or con? Could this be a bit of veiled payback, a covert GOP civil war of words, for calling out the TNGOP on the Michelle Obama video? Or was the line perhaps designed to get back in the good graces of a nominee who no longer wishes to play referee as he did earlier this year over certain press releases the state party was putting out?
[I]f the federal government reduces or eliminates any or all taxes imposed by title 26 of the United States Code and allocated by chapter 98 of that title of the federal highway trust fund, the existing state tax imposed on the sale and/or use of such products shall be adjusted so as to maintain the amount of funding for the Tennessee department of transportation generated by the federal tax. The adjustment in the state tax shall become effective simultaneously with the reduction in the federal tax. The department of revenue is directed to collect such taxes and allocate such taxes in their entirety, less the appropriate cost of administration, to the state highway trust fund for use by the department of transportation. If the federal goverment elects to increase any or all taxes imposed by title 26 of the United States Code and allocated by chapter 98 of that title to the federal highway trust fund after it has reduced or eliminated such taxes, the state tax on the sale and/or use of such products is reduced equal to the amount of the increase by the federal government. No amounts of revenue received pursuant to the provisions of this section shall be pledged specifically to the payment of debt service on any state bond or note.
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