One of the principles asserted by Governor Haslam in support of his IMPROVE Act and its proposed increase of 7 cents per gallon in the gas tax is that “users” of roads should pay for road construction.
The gas tax is proper, he argues, because people who purchase gas to fuel their cars are the users of roads, and the gas tax is the best mechanism to charge them for that usage.
For at least a decade, however, revenue sources originally designed to fund highway construction have been intermingled, and that “user” fee principle has not strictly been applied to the funding of road construction. The IMPROVE Act does not fully address the co-mingling of funds.
The Highway Fund receives road construction “user fee” revenues from gasoline tax, motor fuel tax, gasoline inspection tax, motor vehicle registration tax and the motor vehicle title fees. At least 25 percent of those road construction “user fees” go to the General Fund, Education and Debt Service.
Though the majority of these “user fee” revenues have been allocated to the Highway Fund, between 25 percent and 29 percent of those fees -ranging from $177 million to $196 million annually– have been diverted away from the Highway Fund between FY 2011-12 and FY 2017-18, as Table 1 below illustrates.
Highway Fund ‘User Fees’ Allocated to Funds Other than the Highway Fund
FY 2011-12 to FY 2017-18
|Highway Fund”User Fees ” Directed to General Fund, Education & Debt Svc.||As % of Highway Fund||Total Sales &
Use Tax Revenues
|Sales Tax $ to Highway Fund||% Sales Tax to Highway Fund||Data Source (Link to Document)||Page of Data Source|
|2017-18||$187,100,000||26.2%||$8,861,100,000||$22,600,000||0.26%||Estimated||99 of 558|
|2016-17||$195,200,000||26.5%||$8,564,100,000||$22,600,000||0.26%||Revised Est.||98 of 558|
|2015-16||$189,572,000||26.2%||$8,267,224,400||$22,625,400||0.27%||Actual||97 of 558|
|2014-15||$177,611,900||25.1%||$7,706,018,700||$38,165,000||0.50%||Actual||97 of 550|
|2013-14||$196,234,300||28.9%||$7,286,164,500||$53,797,600||0.74%||Actual||97 of 542|
|2012-13||$194,365,000||28.4%||$7,012,028,700||$60,902,800||0.87%||Actual||97 of 545|
|2011-12||$193,243,800||28.2%||$6,899,944,000||$64,574,000||0.94%||Actual||111 of 656|
The state of Tennessee budget documents detail the revenue sources and the basis of apportionment for those revenues. For every one of the “user fee” revenues, the Tennessee Code Annotated that directs funds away from the Highway Fund is cited.
There are also allocations to the Highway Fund, such as Gross Receipts Tax-Other and Beer Tax, that would otherwise be considered General Fund revenues, as the majority of those revenues are allocated to the General Fund. However, the increase of 25 to 29 percent to the Highway Fund is net the General Fund dollars.
In the upcoming 2017-18 budget year, the redistribution of “user fees” strictly to the Highway Fund would increase the Highway Fund by $187 million, and combined with the past six years would have added a total of $1.3 billion to the Highway Fund, all without a gas tax increase.
The co-mingling of funds goes both ways.
“Sales and Use Tax” revenues have been and continue to be allocated to the Highway Fund.
During Gov. Haslam’s administration, the percentage of state sales tax revenues allocated to the Highway Fund ranged between 0.26 and 0.94 percent. Essentially, the alternate “Hawk Plan,” named for Rep. David Hawk of Greenville, which allocates 0.25 percent of the sales tax revenues to the Highway Fund has been in effect for years to an even greater extent.