The Tennessee General Assembly approved Gov. Bill Haslam’s plan to raise the tax on gas and diesel to help fund a $10 billion backlog in needed transportation projects.
The approval of Haslam’s signature piece of legislation for the year moves the state one step closer to increasing the gas tax for the first time in nearly 30 years.
The House approved the measure 60-37. The Senate passed the measure in a 25-6 vote.
Haslam’s proposal, known as the IMPROVE Act, will raise the tax on gasoline and diesel fuel by 6 cents and 10 cents, respectively, over a three-year period while also providing numerous tax cuts.
The governor has stressed the need for the legislation, which includes 962 projects in all 95 counties in the state, in part to help fix the state’s roads and bridges.
Haslam’s plan includes slashes to the state’s tax on groceries, reductions to the franchise and excise tax, starting the phase-out of the Hall Income Tax on certain investments, and offering property tax relief for eligible disabled veterans and the elderly.
Opponents argued that the state should use its budget surplus instead of raising the gas tax to pay for infrastructure improvements.
Differences between the bills passed by the upper and lower chambers remain, specifically, the Senate’s version of the legislation contains a provision that provides tax relief for eligible veterans and elderly Tennesseans, which the Senate further amended to include more tax relief for veterans than initially expected.
The House’s version contains no such provision, but officials indicated Wednesday that it would likely end up in the final version of the bill they send to the governor’s desk for his signature.