AASHTO Journal, 23 January 2015
A new report from the Tennessee state comptroller’s office warns that “Tennessee’s fuel taxes are not expected to be sufficient to maintain existing infrastructure and meet long-term transportation demands.”
That report, which was requested last year by the Fiscal Review Committee of the state General Assembly, lays out a range of funding options but does not endorse any. Those include hiking current fuel taxes, indexing them to inflation, imposing an additional sales tax on fuel and drawing from general state funds to help pay for road and bridge maintenance or capacity expansion.
Tennessee is a “pay as you go state,” so it does not use debt to pay for transportation projects. Nor does it charge tolls for highway use.
But the report lays out what is a familiar dilemma across the nation, of fuel taxes last adjusted decades ago while roadway usage grows and average fuel consumption falls to tighten the revenue flow.
It notes that Tennessee last raised its gasoline tax to a fixed, per-gallon fee of 21.4 cents in 1989, and in 1990 set the tax on diesel fuel at 18.4 cents a gallon.
“Fixed rate fuel taxes tie transportation revenue to the level of fuel consumption,” it says. However, “fuel consumption in 2012 remained below its peak in 2007 and is expected to continue to decline as a result of several factors” such as increased vehicle fuel efficiency and demographic changes that have slowed growth in vehicle miles traveled.
The full, 75-page report compares Tennessee’s transportation revenue structure to other states, cites Oregon’s upcoming pilot study of a VMT tax and lists Tennessee as one of just four states that do not use debt bonds to help finance transportation infrastructure.
It notes that while alternative fuel vehicles are not expected to be a large part of the market, their drivers pay less in fuel taxes and some states are assessing them with annual fees.
It also refers to the periodic uncertainty of funds flowing out of the federal Highway Trust Fund, and notes that in 2014 that led the state Department of Transportation to suspend spending on engineering for all projects. Last October, Tennessee Transportation Commission John Schroer also announced he was delaying bids on $400 million of potential 2015 projects due to uncertainty around the latest short-term HTF extension.