Carr Amendment Funds Highways Through ‘User Fees’ Without A Gas Tax Increase

The House Transportation Committee convenes on Tuesday to vote on Gov. Haslam’s IMPROVE Act.

The big question is whether Committee Chairman State Rep. Barry Doss (R-Leoma) will allow a vote on an amendment proposed by State Rep. Dale Carr (R-Sevierville), a member of the committee, that would change the funding source of  from a gas and diesel tax increase, as proposed by the governor, to a re-allocation of 33.5 percent of taxes collected from the sale of new or used motor vehicles for highway funding.

Proponents of Gov. Haslam’s gas tax increase proposal have argued that road construction must be funded by users through “user fees.” Carr’s amendment addresses those concerns, since taxes on the sale of new or used motor vehicles are clearly paid by users of the state’s highways.

Rep. Carr tells The Tennessee Star that he hand delivered the amendment to Chairman Doss  on Tuesday of last week, and intends to present it for consideration when the House Transportation Committee begins deliberations on Tuesday.

He notes that the amendment was “written in consultation with leadership.”

“A lot of people don’t want the [gas] tax and they are having a hard time moving it through committee,” he tells The Star in an exclusive interview.

“This will give TDOT the money they need and keep us from having to vote on a gas tax.  That’s what the people of Tennessee are expressing right now,” Carr says.

“We know we need to get funding for highways,” he adds.

The proposed amendment to Senate Bill No. 1221 and House Bill 534, states:

Notwithstanding this section to the contrary, beginning in fiscal year 2018-2019 and in each subsequent fiscal year, an amount equal to the thirty-three and one-half percent (33.5%) of taxes collected under this chapter from the sale of new or used motor vehicles that would otherwise be allocated to the general fund shall instead be allocated as follows:

(1) Sixty-four percent (64%) shall be paid into the highway fund;

(2) Twenty-four percent (24%) shall be paid to the various counties of the state on the basis set out in 54-4-103, for the purposes set out in SS 54-4-101; and

(3) Twelve percent (12%) shall be paid to the various municipalities, as defined by SS 54-4-201, on the basis set out at SS 54-4-203, for the purposes set out in SS 54-4-204.

This act shall take effect July 1, 2017, the public welfare requiring it.

“The amendment was written in consultation with leadership.  Some have seen it and like it.  Over the weekend, leadership has been working on getting the percentage right.  The House Finance Ways and Means Committee Chairman has been going over the figures,” Rep. Carr tells The Star.

“This amendment is a straight substitute for the gas tax.  There are no other increases or decreases,” Carr adds.

One member of the Tennessee General Assembly tells The Star that this is a shadow amendment by Speaker Beth Harwell (R-Nashville), and that is a “really good idea.”

The Tennessee General Assembly member “doesn’t understand why she doesn’t come clean on it, that she (Harwell) should be taking credit for it and everyone should be singing her praises.”

The amendment “gets the money where it needs to be and it doesn’t include the five tax increases that the IMPROVE Act does:  Gas, diesel, local option, increased tag fees and 3 percent on rental cars,” the Tennessee General Assembly member says, adding that the re-allocated sales tax “is considered a user fee, because if you buy a car, you are most likely going to be driving it.”

The Tennessee General Assembly member said estimates are that the Carr Amendment would “get the Highway Fund anywhere between $300 and $400 million.”

In fiscal year 2015-16, the most recent year for which actual figures are available, the sales tax revenue from the “Auto Dealers and Service Stations” category was $1.124 billion, up 10.9 percent or $110 million over fiscal year 2014-15 (See page 17).

The Carr Amendment’s 33.5 percent allocation to the Highway Fund on 2016 “Auto Dealers and Service Stations” sales tax dollars would net $376 million in total, with $240 million going to the state Highway Fund (64 percent), $90 million to counties (24 percent) and $45 million to cities (12 percent).

The IMPROVE Act calls for the allocation of additional projected revenues as follows: $278 million to the state Highway Fund, $78 million to counties and $39 million to cities.

The Star’s research of 15 years of budget documents shows that the practice of allocating a percentage of sales tax revenue to the Highway Fund began under Gov. Bredesen in FY 2007-08, when slightly more than 1 percent of sales tax revenue was allocated to the Highway Fund.

Under Gov. Haslam, that percentage has steadily diminished to 0.27 percent (actual) and FY 2015-16, and 0.26 percent (estimated) in FY 2017-18, as Table 1 below illustrates.

                                                      Table 1

    Percentage of Sales Tax Revenue Allocated to the Highway Fund

                   State of Tennessee, FY 2003-2004 to FY 2017-2018

Fiscal Year	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	$ 8,861,100,000	$ 22,600,000	0.26%	Estimated	99 of 558
2016-17	$ 8,564,100,000	$ 22,600,000	0.26%	Revised Est.	98 of 558
2015-16	$ 8,267,224,400	$ 22,625,400	0.27%	Actual	97 of 558
2014-15	$ 7,706,018,700	$ 38,165,000	0.50%	Actual	97 of 550
2013-14	$ 7,286,164,500	$ 53,797,600	0.74%	Actual	97 of 542
2012-13	$ 7,012,028,700	$ 60,902,800	0.87%	Actual	97 of 545
2011-12	$ 6,899,944,000	$ 64,574,000	0.94%	Actual	111 of 656
2010-11	$ 6,493,952,000	$ 66,983,600	1.03%	Actual	111 of 668
2009-10	$ 6,158,131,500	$ 37,203,300	0.60%	Actual	107 of 667
2008-09	$ 6,320,798,300	$ 51,328,700	0.81%	Actual	107 of 674
2007-08	$ 6,851,184,800	$ 71,379,900	1.04%	Actual	91 of 626
2006-07	$ 6,815,407,300	$ 0	0.00%	Actual	75 of 609
2005-06	$ 6,515,643,000	$ 0	0.00%	Actual	111 of 613
2004-05	$ 6,091,545,800	$ 0	0.00%	Actual	72 of 491
2003-04	$ 5,810,784,300	$ 0	0.00%	Actual	63 of 463