Lawmakers falter on state gas tax

KnoxNews.com
May 15, 2006

NASHVILLE — High gas prices have Tennessee lawmakers concerned, but most appear unwilling to part with the state's 21.4 cent-per-gallon gas tax.

Governors have floated ideas to trim or suspend state gas taxes in Maryland, South Carolina and Connecticut. State legislators are pushing similar measures in Georgia, New York and Nevada. The proposals are winning vocal support from Republicans and Democrats alike, though none have yet become law.

While Tennessee Gov. Phil Bredesen is discussing how to bring down the gas prices with other Democratic governors, his spokeswoman said "the governor has no plans to act independently" in Tennessee.

The average price for a gallon regular gasoline in Tennessee was $2.76 on Monday, up from the year-ago average of $2.08, according to AAA's Daily Fuel Gauge Report. The combined state and federal taxes on gas come to about 40 cents per gallon.

Senate Transportation Committee Chairman Mark Norris called cutting gas taxes a "two-edged sword."

Norris, a Collierville Republican who has butted heads with Bredesen over taking some of the gas tax for the state general fund instead of putting it all in the highway fund, said the state's infrastructure needs should take precedence.

"In Tennessee, it's not a good idea at this time because of the deficit we have in funding infrastructure needs," Norris said.

The state collected about $608 million in gas taxes in the last budget year.

Senate Republicans have been clamoring for Bredesen to return the entire $65 million of road fund money he removed at the beginning of his term to help balance the state budget.

Bredesen's current budget proposal would restore about half the highway fund, with the remainder slated to follow next year.

State Comptroller John Morgan last week told lawmakers that "it's awful hard at the state level to influence gas prices."

Because Tennessee charges its tax on each gallon sold regardless of the price, "we don't see growth in tax collection as the price goes up," he said.

"Trying to address it through some sort of tax strategy simply means you've got to trade off between what modest effect you can have on the price and the inability to build roads and highways," Morgan said.

It's also unclear whether an attempt by Democrats in the U.S. Senate to impose a 60-day tax holiday for the federal levy on gas would help Tennesseans. The federal government collects 18.4 cents for each gallon.

A 1997 state law requires Tennessee to offset any decrease in federal gas taxes with an increase in state gas taxes to maintain funding for the state Department of Transportation.

House Transportation Chairman Phillip Pinion, D-Union City, said he is torn about the offset law and about any tax moratorium.

"If we cut our gas tax back, we would basically have to stop the (roads) projects or slow them way, way down," he said.