Tennessee just increased their gas tax – and that state is sharing its additional transportation revenue with its counties. Last week, Governor Bill Haslam signed the Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act – which is estimated to provide $250 million to the State Department of Transportation, $35 million to cities, and $70 million to counties.
The Act also grants the state’s most populated counties the authority to approve additional tax increases for local transportation projects, if approved by referendum. According to The Tennessean:
Twelve of the state’s most populous counties will be allowed to hold a referendum to ask their residents if they would approve additional tax increases to help pay for transportation projects, including mass transit. If voters approved the referendum, the taxes that local governments could raise are: sales tax, business tax, car rental tax, hotel/motel tax, residential development tax and wheel tax.
Additional surcharges enacted would be capped at 20 percent of the current rate.
Any proposed projects funded by the additional surcharges would be subject to an audit by the state’s comptroller, who would need to sign off on the plan in advance.
Overall, the IMPROVE Act increases the state’s gas tax from 21.4 cents per gallon by six cents per gallon over three years. Diesel taxes increase by 10 cents over three years. The IMPROVE Act also increases some vehicle registration fees and offsets the impact on its residents’ wallets by decreasing other taxes.
Haslam and others have argued every area in the state will see their projects funded through the bill, and the measure will prevent local governments from using alternative means, such as increasing property taxes, to pay for needed improvements.
Tennessee counties own 64 percent of the State’s public road miles and receive 20 percent of the state’s transportation funding, according to data from 2014 provided by the National Association of Counties. In comparison, Maryland’s counties (excluding Baltimore City) own 69 percent of the public roads, and receive 1.4 percent of highway user revenues. When the Maryland General Assembly increased the gas tax five years ago via the Transportation Infrastructure Investment Act of 2013, none of those new revenues funded local roads and bridges – all of that money funds the Maryland Department of Transportation.