House Speaker Beth Harwell last week popped Gov. Bill Haslam’s gas tax trial balloon before he could even get it aloft.
The governor, you may recall, has announced an intent to travel the state later this year with a call to “do something” to help the state’s road construction and maintenance program, troubled by rising expenses and stagnant revenue from state fuel taxes that haven’t been changed since 1989. He’s given no specifics, but it’s widely understood that means raising taxes, an abhorrent notion to most members of the Legislature’s Republican supermajority. Democrats aren’t too keen on the idea either.
Enter Harwell with her proposition for doing something: Take money from Tennessee state government’s fattening surplus fund and use it on road construction.
The Harwellian proposal, made in a statement distributed statewide, came just after reports that the “over-collection” in state revenue has reached $551 million. That’s for 11 months of the state fiscal year that ended June 30. With the final month’s receipts are tallied, it’s possible the surplus of tax collections over state expenses will be $600 million or more.
The speaker proposes using $400 million of the surplus “to make significant progress on the backlog” of planned but unfunded road construction projects statewide. The initial response from the administration was, basically: Well, that’s something to think about.
Actually, the governor may be thinking about just giving up on any revenue enhancement for next year’s legislative session, perhaps even this year’s traveling road show. The very idea of a gas tax increase is already under widespread attack. Conservative activists seem almost eager to see Haslam push such a proposal, just so they can fire folks up and shoot it down.
But Harwell, once upon a pre-Insure Tennessee time a dependable Haslam political ally, has in all likelihood beaten the activists to the punch. As a matter of practical politics, few Republican legislators are going to back any sort of tax increase — oh, maybe applying a new fee to electric vehicles that pay no tax now while getting state-approved rebates — with such a prominent person offering the alternative of kicking the can down the road until at least 2017.
Maybe then the state budget overall will be in dire straits, making a tax increase for a specific purpose more politically plausible. If not, well, maybe after the 2018 gubernatorial election, at which time Harwell is likely to be a candidate. If elected, she can perhaps put the matter on the 2019 agenda.
Of course, spending the surplus on roads it not guaranteed. Historically, much more fighting occurs in the Legislature over how to spend extra money than over how to make cuts in lean times. And someone may point out that the present surplus is built on some conditions that don’t apply in the future. For example, the state inheritance tax provided a chunk of that surplus, but will be fully repealed on Jan. 1, 2016.
There may be other ideas. That $400 million would be about enough to repeal the state sales tax on groceries for a year, a proposition likely to be floated by some legislator. But there are no lobbyists for such a move; there are lobbyists for spending on roads and they’re likely to back Harwell’s idea for doing something over doing nothing.
By apparent coincidence, the speaker’s proposal came on the same day the U.S. House voted to put $8 billion into the federal government’s Highway Trust Fund. As approved by the House, with lots of politicking and posturing to ensue in the Senate (where Tennessee Sen. Bob Corker has proposed a straightforward tax increase), the proposal kicks the federal road money problem down the road for five months, providing funding until Dec. 18.
The Harwell proposal, which just might get mentioned in a gubernatorial campaign, would set a precedent in Tennessee — using tax money that didn’t come from the earmarked “user fees,” otherwise known as fuel taxes, to pay for roads. Congress has been doing that for some time in its can-kicking exercises.
So we’ll move Tennessee state government another little step down the road toward imitating Washington. And in this case, it’s at least possible that Congress will act more rapidly than the state Legislature.
Note: In an email, Corker Press Secretary Micah Johnson says the senator’s “highway funding proposal would have created a long-term stable funding mechanism for the Highway Trust Fund and enacted tax relief for American families and businesses, thus we’d argue it was not a “straightforward tax increase.”
The bipartisan proposal would have increased the gas user fee to make our road program whole again while also lowering other taxes by at least the equivalent amount, which would help create more certainty and economic growth.
I don’t disagree with the elaboration on the column’s cryptic reference to a somewhat tangential topic.