Haslam expands options for local governments raising transportation revenue

Gov. Bill Haslam has expanded a provision in his gas tax package that would let local governments raise extra revenue for transportation with voter approval in their own jurisdictions, reports The Tennessean.

As part of his IMPROVE Act, Haslam had originally allowed an increase on local sales tax rates as the lone transit funding mechanism that could be decided via local public referendums.

But in an amendment to his transportation bill filed Tuesday, the governor has quietly proposed allowing referendums on surcharges to other existing local taxes as possibilities to pay for public transit projects. The new options are local property tax, business tax, motor vehicle tax, local rental car tax, tourist accommodation tax, residential development tax and local tourist development zone business tax.

The greater taxing authority would be extended to all county governments in Tennessee as well as the state’s four biggest cities: Nashville, Memphis, Chattanooga and Knoxville. All surcharges would need to be separate charges in addition to the existing taxes.

“After discussions with stakeholders over the past several weeks, this gives local governments more flexibility on how to fund public transit projects, if approved by local voters through referendum,” Haslam spokeswoman Jennifer Donnals said in an emailed statement.

Note: Rep. John Ray Clemmons, D-Nashville, says the governor has basically adopted part of a Democratic alternative plan. Press release below.

News release from Rep. John Ray Clemmons

NASHVILLE, TN – Governor Bill Haslam has amended the original enabling language in his IMPROVE Act to expand local options.  The governor’s amended bill adopts a component of an alternative funding proposal recently introduced by state Representative John Ray Clemmons (Nashville) and state Senator Sara Kyle (Memphis).  Today, discussion on the governor’s bill in the House Transportation Subcommittee was delayed at least one week.

The Clemmons/Kyle plan, TNForward, differs from the governor’s IMPROVE Act in a few ways, one of which would provide local governments more options to create new revenue for transportation projects.

“One of the chief goals of our plan is to empower local governments and give them more discretion to choose the funding tool or tools that work best for their county or city,” said State Representative John Ray Clemmons.  “Our local governments, both rural and urban, must be able to create revenue in an acceptable manner that fits their respective needs.  Senator Kyle and I feel very strongly that increasing sales taxes and adding a heavier burden on working families should not be the only option for local governments.  Governor Haslam’s amended language is a significant win for local governments, and we appreciate the inclusion of this component of our plan in his funding proposal.  We’ll continue to push for inclusion of our other ideas, including allowing counties to benefit from their own economic growth and reinvest surplus revenues into transportation infrastructure for the purpose of facilitating continued growth.”

“Representative Clemmons and I introduced our funding bill to put some new, creative ideas on the table as a way of moving this important policy discussion forward,” said state Senator Sara Kyle.  “While we still have objections to certain components of the governor’s funding plan, this certainly makes it much more attractive.”

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