Senate Finance Committee Approves Legislation To Maintain Tennessee's Dedicated Road Fund
APRIL 24, 2009
Tennessee’s road needs were debated on Capitol Hill this week in two key committees of the State Senate. The Senate Transportation Committee voted to send Governor Bredesen’s budget plan to incur $350 million in general obligation bond debt to the Finance Committee without recommendation for passage and with a request the Finance Committee look at other avenues for funding bridge repair needs. In the meantime, the Senate Finance Committee approved a bill that maintains Tennessee’s dedicated road fund by prohibiting the diversion of gas tax money through the state’s budget or appropriations bill.
The bill approved by the Finance Committee, SB 1309, would require authorization through separate legislation to divert gas tax revenues that are dedicated for road funds. The measure would put Tennessee back in the position it was prior to 2004 and restore the appropriate checks and balances to ensure that any diversion of the funds are fully meted out through the normal legislative process. Currently, the dedicated road fund can be diverted through a line in the appropriations bill, which is a much easier route to raid the funds.
The Department of Transportation only spends the funds that are available through its dedicated revenues, gas taxes and highway user fees, and federal funding. Called “dedicated funding,” since users pay for the roads through gas taxes and fees, a portion of the gasoline tax also goes to cities and counties in Tennessee to fund local roads. This dedicated revenue system was put into place when the gas tax was raised to fund the road program. Over the last several years, however, $280 million in road funds have been funneled from the gas tax to meet other state government expenditures.
Governor Bredesen’s budget calls for the state to incur $350 million in general obligation bond debt to repair structurally deficient bridges, a major departure from Tennessee’s current “pay-as-you go” system for building roads. The last road debt payment was paid in 1987 after Governor Lamar Alexander retired a mounting transportation debt and embarked on an aggressive road-building program. Tennessee has continued to build roads on a debt-free basis since that time.
Complicating the issue has been a shaky Federal Highway Trust Fund that has caused grave concerns about the state’s ability to keep up with transportation needs. According to Transportation Commissioner Gerald Nicely, the federal government has reneged on the amount of money promised to Tennessee over the past four years.
Many legislators are also concerned about the ability to contract with qualified builders for the road and bridge repairs due to influx of projects as a result of the stimulus funds. In fact, the Finance Committee signed off on an expansion request plans to contract the stimulus money coming into the state as a result of the American Recovery and Reinvestment Act which will be let on May 8th and June 12th.
The state receives $600 million each year in revenues from the gas tax. The request for $350 million in general obligation bonds is in addition to the $572 million the state will receive over the next two years in federal stimulus funds.
