Legislature passes IMPROVE Act including fuel tax increase

Published 8:16 am Friday, April 21, 2017

Members of the Tennessee Legislature overwhelmingly approved Governor Bill Haslam’s Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act.

According to the Governor, the purpose of the legislation is to rebuild a safe and reliable transportation network, while reallocating revenues to maximize the return on that investment to the taxpayers.

One of the most controversial portions of the bill centered around increasing the state’s tax rate on gasoline and diesel fuels but proponents of the legislation said while taxes on fuel will increase, those hikes are countered by cuts in other areas to create an overall tax reduction. The legislation will reportedly cut $428 Million in taxes through various means, creating the largest tax cut in the state’s history.

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Tax cuts included in the legislation are:

• A 20 percent reduction in the sales tax on food sold at retail from 5 to 4 percent;

• Hall Income Tax relief from 5 percent to four percent with language to reduce it by one percent until it is gone;

• A move to the single sales factor for Franchise and Excise (F & E) for manufacturers; and,

• Tax relief for veterans, elderly and disabled by raising the home value threshold from $100,000 to $175,000 for veterans and from $23,500 to $27,000 for the elderly and disabled.

The IMPROVE Act received support from the majority of Carter County’s legislative members. Sen. Rusty Crowe, Sen. Jon Lundberg, and Rep. John Holsclaw Jr., all voted for the IMPROVE Act. Rep. Timothy Hill voted against the legislation.

“Deciding how to vote on this very important piece of legislation was certainly one of the more difficult decisions I have had to make in my 28 years on this Senate floor,” Crowe said. “Although almost 60 percent of those touching base with my office regarding this legislation were in favor, I struggled with whether or not to pay for our roads with existing sales tax or whether to attach a tax or user fee to the gallons purchased.”

“After much thought and discussion with the people I represent; listening to both sides of the issue and analyzing the potential effect of both approaches, as well as studying our transportation needs, from not only a safety perspective but looking at our infrastructure, our economy and my district’s need for jobs, I did decide to support the governor’s IMPROVE Act; as although it increased the road budget by $350 million dollars it, however, cut $428 million dollars, reducing our sales tax on food, business taxes; and especially dear to my heart, provided for property tax relief for our disabled veterans, low-income seniors, and disabled citizens,” Crowe added.

The legislation will also result in the Tennessee Department of Transportation highway fund paying for 100 percent of the cost of the state road and bridge projects planned across the state, including several in Carter County, according to Crowe, as well as provide increased funding to counties and cities to help pay for local transportation needs.

On the fuel tax side of the legislation beginning on July 1, the tax on gasoline will increase by 6 cents per gallon over three years, with the largest hike occurring in the first year when the rate will go from 20 cents to 24 cents per gallon. The tax rate on diesel will follow a similar structure, phasing in an overall 10 cent increase over three years. The tax on liquefied and compressed natural gas will increase by 8 cents over the next three years.

Following the Legislature’s approval of the IMPROVE Act, Haslam released a statement celebrating the passage.

“The IMPROVE Act is the largest tax cut in Tennessee history, makes us more competitive as we’re recruiting manufacturing jobs and keeps our transportation network safe, reliable and debt-free for the next generation of Tennesseans,” Haslam said. “While there remains action to be taken on this legislation, I want to thank both chambers for their votes (Wednesday) on the IMPROVE Act, particularly Senate Majority Leader Mark Norris (R-Collierville) and Reps. Barry Doss (R-Leoma) and Bill Dunn (R-Knoxville) for their work carrying the legislation.”

Specific projects designated for completing in the IMPROVE Act’s legislative package include the following projects in Carter County:

• Smalling Road bridge over Watauga River

• Governor Alfred Taylor Road bridge over Buffalo Creek

• Cove Creek Road bridge over Doe River

• Southside Road bridge over Gap Creek

• Big Sandy Road bridge over Stoney Creek

• Reeser Road bridge over Buffalo Creek

• Hillside Drive bridge over Doe River

• Paul Blevins Road bridge over Tiger Creek

• Railroad Grade Road bridge over Bear Gage Road/Doe River

• Crabtree Road bridge over George Creek

• Sugar Hollow Road bridge over Doe River

• Stevens Road bridge over Little Doe River

• Old SR-67 bridge over Laurel Fork Creek

• Stout Hollow Road bridge over Laurel Fork Creek

• Dennis Cove Road bridge over Laurel Fork Creek

• Crow Road bridge over Laurel Fork Creek

• Earl Williams Road bridge over Stoney Creek

• Danner Subdivision Road bridge over Stoney Creek

• Ensor Graveyard Road bridge over Stoney Creek

• Blevins Hollow Road bridge over Stoney Creek

• Estep Hollow Road bridge over Stoney Creek

• Estep Loop bridge over Stoney Creek

• Big Sandy Road bridge over Stoney Creek

• Honeycutt Street bridge over Doe River

• Powell Road bridge over Hampton Creek

• Hopson Road bridge over Little Doe Creek

• Gap Creek Road bridge over Gap Creek

• Road Work Project — US-321 (SR-91), (W. Elk Avenue) from SR-67 (US-321) to SR-37 (US-19E)