Haslam's Gas Tax Plan Approved By House, Senate

Posted at 7:46 AM, Apr 19, 2017
and last updated 2017-04-19 23:44:51-04

Months of debate, discussion, and closed door deal-making delivered a major legislative victory for Governor Bill Haslam on Wednesday as House and Senate members voted to approve his plan to raise the gas tax in order to increase transportation funding.

The House voted to pass the bill in a 60-37 vote. The senate's vote was 25-6.

The House vote exposed deep divisions within the Republican party as a plan to scrap Governor Haslam's signature piece of legislation was introduced on the House floor but ultimately failed to receive the votes it needed.

The governor released the following statement Wednesday afternoon:

“The IMPROVE Act is the largest tax cut in Tennessee history, makes us more competitive as we’re recruiting manufacturing jobs and keeps our transportation network safe, reliable and debt-free for the next generation of Tennesseans. While there remains action to be taken on this legislation, I want to thank both chambers for their votes today on the IMPROVE Act, particularly Senate Majority Leader Mark Norris (R-Collierville) and Reps. Barry Doss (R-Leoma) and Bill Dunn (R-Knoxville) for their work carrying the legislation.”

Governor Haslam chose Representative Barry Doss to sponsor the "IMPROVE Act," and Doss spent the better part of six hours in the House fielding questions and concerns from fellow lawmakers as tensions, at times, were heated.

"This does far more than just raise the gas tax," Doss said.

A number of his fellow Republicans though balked at the proposal, instead choosing to support Representative David Hawk's alternative plan which would have raised transportation funding by pulling money from the sales tax on vehicles instead of raising the gas tax by six cents for regular gasoline and ten cents for diesel gasoline.

"I can not support the IMPROVE Act. We have an alternative that does not burden the common man more," Representative Rick Tillis said.



Democrats largely fell in line with the Governor's IMPROVE Act but still took time during the hours-long debate on Wednesday to voice their disapproval with the bill which looks to raise $378 million a year for transportation projects state wide.

"Let's not tell the average Tennessean they’re getting a tax cut because it’s not true," Democrat Bo Mitchell said referring to a portion of the plan which would cut a portion of the grocery tax.

Since January, Governor Haslam has been working to grapple with the intricacies of introducing a plan to raise the gas tax while at the same time trying to keep the support of Republicans who are largely reluctant to raise any kind of tax.

"I think it’s wrong, and I think it’s dishonest," Representative Terri Lynn Weaver said.

Wednesday afternoon, Lieutenant Goveror Randy McNally released the following statement:

"The plans passed by the House and Senate today represent a clear and undisputed tax cut for the people of Tennessee -- the largest such tax cut in Tennessee history. It is a remarkable achievement. Both plans protect our user fee, ensure our continued fiscal stability and maintain of our Triple-A bond rating. It is a victory on all fronts -- for taxpayers, for economic development and for the continued mobility and safety of our citizens. Good roads and solid infrastructure lead to economic expansion and job growth. Tax cuts result in more money in the pockets of our citizens and more entrepreneurism in our state. I am hopeful that the House can add property tax relief for veterans and the elderly to the bill so the General Assembly can officially send the governor the largest tax cut in Tennessee history for his signature."

Mayor Megan Barry also released the following statement:

“This is a momentous day in Tennessee, as the General Assembly has voted to move our state forward on building the transportation infrastructure we need to remain competitive economically and improve the quality of life of our residents. I want to thank the entire Davidson County delegation for voting in support of Governor Bill Haslam’s IMPROVE Act, which contained the critical local option component that will let voters determine the future of transit in the Nashville area.

I want to especially thank Governor Haslam, House Transportation Chairman Barry Doss, Senate Republican Leader Mark Norris, House Democratic Leader Craig Fitzhugh, the Middle Tennessee Mayors’ Caucus, and the many other groups and individuals who worked hard to pass this bill. While there is still work to be done to reconcile the legislation, I am confident that Governor Haslam will have the opportunity to sign this bill into law.”

Jason Spain, Executive Director of the Tennessee Public Transportation Association, also applauded the votes:

“The Tennessee Transit Coalition applauds today’s votes in the House and Senate in support of Gov. Bill Haslam’s comprehensive infrastructure proposal known as the IMPROVE Act. We support the IMPROVE Act because it offers a long-term, sustainable funding solution for our future infrastructure needs, including transit, in a fiscally responsible way. It also allows for some cities and counties to raise dedicated funds for future transit projects through a local public referendum. Today’s votes are an important step forward. We’re hopeful that the members of the House and Senate are able to reconcile the small differences in the bills and deliver a final piece of legislation to Gov. Haslam that responsibly funds our infrastructure needs.”

The bill was different in the House and Senate, so it will now return to the House.

If the bill becomes law, the tax reductions (grocery tax, F&E tax, Hall Tax) will take place on July 1, 2017.

Also on that date, the gas and diesel taxes would both increase by four cents each. 

A year later on July 1, 2018, the gas tax would go up one cent with the tax on diesel rising by three cents, and on July 1, 2019, the gas tax would go up again by one cent and the diesel tax by three cents.

That would leave the total increase at six cents for the gas tax and ten cents for the diesel tax by July 1, 2019.