NASHVILLE, Tenn. — A Tennessee legislative panel on Monday changed Gov. Bill Haslam's transportation funding bill before passing it, which Senate Majority Leader Mark Norris said would ensure people save more in food tax cuts than they'd pay in a gas tax hike.
Norris, a Collierville Republican, called the bill a compromise with Haslam as the Senate Transportation and Safety Committee passed it 7-1. The House would need to budge on the change, since a House committee has previously removed fuel tax hikes to rely on sales taxes for road projects.
Phased in over three years, the gas tax would increase by 6 cents a gallon and the diesel tax would jump by 10 cents a gallon in the amended bill, Norris said. Tennessee's gas tax is now 21.4 cents per gallon and its diesel tax is 18.4 cents per gallon.
Under Haslam's original bill, the state would increase the gas tax by 7 cents per gallon and hike the diesel tax by 12 cents per gallon, while decreasing a variety of taxes.
Norris noted that the newly changed bill would largely focus on cutting the food tax to 4 percent from 5 percent under current law. The food tax savings would continue to exceed the extra money people would pay in fuel taxes, Norris said.
Additionally, the legislation would drop a proposal to link future gas tax increases to inflation. It would also eliminate a proposed tax hike on rental vehicles, while giving a property tax adjustment to the elderly, veterans and the disabled.
The bill drew strong backing from Senate Speaker Randy McNally, R-Oak Ridge.
"The bill as amended is now beyond revenue-neutral," McNally said in a statement. "It is a clear and undisputed tax cut for Tennesseans. It has my unequivocal support."