NASHVILLE, Tenn. (WKRN) — A Tennessee bill that would reroute car and tire sales tax revenue to road and bridge projects passed the House Transportation Committee Tuesday after TN Dept. of Transportation (TDOT) officials told lawmakers the agency is in desperate need of additional funding.
The bill would help generate an additional $1+ billion for TDOT, whose current revenue stream, which comes from the state’s gas tax, has remained stagnant for years, partly thanks to an increase in fuel-efficient cars.
“That gas tax in the 60’s and 70’s and 80’s was growing at a rate that not only allowed us to keep up with maintaining the infrastructure assets we have, but also allowed us to increase capacity as needed,” TDOT Commissioner Butch Eley said. “Unfortunately, it’s beginning to not be the case anymore.”
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With a $38 billion backlog in road projects across the state, skyrocketing project costs due to inflation, and aging infrastructure, TDOT officials say they need an additional revenue stream to keep up.
Some believe redirecting the revenue generated from the state’s sales tax on cars and tires, which currently goes to the General Fund, could be a solution.
“We have $30 billion of outstanding needs in transportation, and we need to do something to create a recurring fund to help our transportation needs across the state. This is one way to get there,” Rep. David Hawk (R-Greeneville) said.
Gov. Bill Lee’s proposed budget includes redirecting $1 billion from the state’s car and tire sales tax to TDOT for one year. Now, lawmakers are considering a bill that would shift all the car and tire sales tax revenue to TDOT permanently.
“The governor’s proposed budget this year has $1 billion of those dollars that are typically General Fund dollars; it would go toward transportation anyway. What we are doing with this piece of legislation would make that a recurring source of funding for transportation,” Rep. Hawk, the bill’s sponsor said.
The bill passed the House Transportation Committee unanimously Tuesday.
However, there are still questions about whether or how the state would replace the money the General Fund would lose if the bill passed. According to the bill’s fiscal memorandum, the General Fund would decrease by around $1.14 billion per year, and local government revenues would decrease by around $54.2 million.
The bill would also require TDOT to conduct a study to determine infrastructure needs and funding sources for 2027, 2050, and 2075, and report the findings and recommendations to certain legislative committees by Jan. 2027.
The proposed legislation will move on to the House Finance, Ways, and Means Committee.
