Anti-tax group green-lights Haslam's road funding plan

Friday, March 17, 2017, Vol. 41, No. 11
By Sam Stockard

One of the nation’s most conservative anti-tax groups is supporting a plan by Sen. Mark Norris to offset fuel-tax increases with a reduction in the state’s grocery tax and nix a proposal to tie rates to the Consumer Price Index.

“This is a big deal,” said Norris, a Collierville Republican and Senate Majority leader.

Americans for Tax Reform President Grover Norquist sent a letter to General Assembly members Monday stating, “If a gas tax increase is offset with an equal or greater tax cut elsewhere in the same bill, ATR does not score a vote for such a deal as a tax increase of Taxpayer Protection Pledge violation.”

The amended version of Senate Bill 1221, which Norris proposed last week after discussing the matter with the governor, complies with those types of taxpayer pledges, Norquist’s letter says.

“The recent amendments made by the Senate, and supported by Gov. (Bill) Haslam, have improved the bill to the extent that the bill is now a next tax decrease, and thus not a violation of the Taxpayer Protection Pledge. The bill no longer indexes the gas tax to inflation, which means gas tax hikes will not be put on autopilot,” Norquist’s letters states.

Norquist points toward similar examples in New Jersey by Gov. Chris Christie, which combined a gas-tax increase with a phase-out of the inheritance tax, sales tax reduction and increase in the earned income tax credit, and by former South Carolina Nikki Haley who called for a gas tax increase and insisted it be offset with tax relief such as an income tax break.

Norris said the Norquist letter is important “because one of the most conservative tax reform organizations in the country, if not the world, agrees that I’m reallocating revenue to maximize return to the taxpayer.

“This is not an increase that would violate a Taxpayer Protection Pledge. It’s a cut, and they support it, which means others can support our efforts to reallocate revenue and reinvest in the future of Tennessee.”

Norris’ plan calls for reducing the 5 percent sales tax on groceries to 4 percent, a 20 percent reduction, and raising the gas tax by four cents in fiscal 2018. It would add another penny in 2019 and one more cent in 2020 while adding four cents to the diesel tax next year, three more cents the following year and another three cents in the third year. The governor’s initial plan was to push the 21.4-cent gas tax up seven cents and the 18.4-cent diesel tax up by 12 cents immediately.

The proposal would eliminate a fee increase on rental vehicles along with the plan to tie future increases to the Consumer Price Index. But a $5 increase in the vehicle registration fee and $100 fee on electric cars would remain.

Another part of Norris’ amendment calls for renewing property tax breaks for veterans and disabled and elderly veterans.

After three years, the Norris plan would bring in $355 million for the state transportation fund, as well as city and county governments, for road and bridge work. The idea is to chip away at 962 projects statewide over the next 12 years.

It also would contain franchise and excuse tax breaks for businesses and the Hall tax phase-out on interest and dividends.

Norris said it was a crucial part of enabling the governor’s office to wrap up his $37 billion budget plan.

The House version of Haslam’s bill is at a much different place, containing an increase in the sales tax along with cuts in business and Hall taxes and a .5 percent break in the grocery tax.

Meanwhile, Rep. Dale Carr, a Sevierville Republican, is pushing a measure to take a percentage of the money from car sales that goes to the state’s general fund and shift it to the transportation fund.

“It’s already a user fee,” Carr said during a wide-ranging discussion by the House Transportation Committee Monday afternoon.

The committee is scheduled to meet Tuesday to consider the matter and took no action Monday. The Norquist letter didn’t receive much discussion, and very few lawmakers showed support for increasing fuel taxes even with offsets in other areas.

“We’re not going to do $10.5 billion worth of road projects and cut taxes. The citizens of our state are smarter than that,” said Democratic Rep. Bo Mitchell of Nashville.

Mitchell said he would rather raise the tobacco tax to the national average and eliminate the sales tax or simply increase the gas and diesel taxes and not cut the business tax or phase out the Hall tax “for the wealthy.”

Rep. Terri Lynn Weaver, a Lancaster Republican who opposes raising fuel taxes, complained that the governor’s IMPROVE Act is taking priority over House alternatives.

“I would like to see the ideas we’ve brought forth be given a chance,” she said.

But Rep. Barry Doss, chairman of the House Transportation Committee, said he believes it makes sense to lower taxes in other areas to bolster the economy and pour more money into road and bridge work.

“We’ve cut the tax rate every single year and hopefully that results in more money so we can do more great things for our state,” Doss said.

He predicted no other bill will move out of the House Transportation Committee than the governor’s IMPROVE Act legislation, in spite of the complaints of other House members.

And, he added, “It’s very possibly the House could amend the IMPROVE Act just like the Senate did but in a different manner. That’s very possible.”

Sam Stockard can be reached at sstockard44@gmail.com.