Well, our two-week break didn't last long. We're back because Gov. Haslam made a HUGE announcement last week. The governor introduced the IMPROVE Act, “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy." The Act is the first piece of Haslam’s "NextTennessee" legislative plan aimed at building and sustaining economic growth and the state’s competitiveness for the next generation of Tennesseans. And, as anticipated, it included the much expected "road user fee" proposal and the tax swaps we mentioned in the last update. Here is a breakdown of the IMPROVE Act:
PROPOSED TAX CUTS:
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Cut the sales tax on groceries by 50 cents to 4.5%
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Allow for a single sales factor on the franchise and excise tax for manufacturers
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Cut the Hall Income Tax by 1.5% in 2017 and 1.5% in 2018
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The Hall Income Tax is set to be eliminated by 2022
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Cut taxes by $207 million annually
PROPOSED TAX & FEE INCREASES:
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Road User Fee:
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Add 7 cents per gallon for gas (currently 21.4 cents + 7 cents = 28.4 cents)
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Add 12 cents per gallon for diesel (18.4 cents + 12 cents = 30.4 cents)
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Increase car registration fees by $5 for the average passenger vehicle
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Add $100 annual road user fee on electric vehicles
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Add 15 cents as an incremental charge on vehicles using alternative fuels
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Add 3% as an incremental charge on rental cars
TRANSPORTATION PLAN DETAILS:
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All new funds will go toward transportation
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Fuel taxes will be indexed to the Consumer Price Index with a cap and adjusted every two years
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The current Tennessee open container law will be changed to give TDOT access to $18 million in existing federal transportation funds
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The plan includes 962 projects in all 95 counties (52% urban; 48% rural)
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94% of all backlog projects are to be under construction within 6 years
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56% of interstate projects are to be under construction within 6 years
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45 projects will be put in place to improve interstates
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89 projects will be put in place to improve access to rural communities
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51 projects will be aimed at creating economic development
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162 bridges will be replaced on state highways, and 526 bridges will be replaced on county roads
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The plan covers 22 projects in Hamilton County (est. $600 million investment)
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Projects are expected to bring an estimated $1.7 million in additional revenue for Hamilton County cities
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The plan allows local referendums to impose a surcharge on sales tax rates to be solely dedicated to transportation
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The plan creates an additional $39 million in revenue for Tennessee cities
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The plan creates an additional $78 million in revenue for Tennessee counties
THE BIG QUESTIONS:
Are there enough votes in either house of the Tennessee General Assembly for the plan to pass? The jury's still out. And, what kind of transportation policy changes will President Trump introduce? This is just the beginning, folks. Get ready for some wheelin' and dealin'.
