NASHVILLE (AP) — Republican Gov. Bill Haslam on Monday outlined a $37 billion annual spending proposal that would include the state’s first gas tax hike in nearly three decades, extend his signature Tennessee Promise free community college tuition program to adults and boost salaries for state employees, teachers and college workers.
Haslam in his annual State of the State address urged lawmakers to approve his plan to boost annual transportation revenues by $280 million, largely by raising the tax on gasoline by 7 cents per gallon and by 12 cents for diesel.
The governor acknowledged it may be tough to persuade fellow Republicans to “hit the green button” to vote for a tax increase, especially while the state enjoys a projected surplus of more than $1 billion and revenue growth approaching that same amount.
“I would rather not address this either,” Haslam said. “I would rather be known as the governor who worked with the General Assembly to cut $500 million in taxes, brought our debt to record low levels and introduced the Tennessee Promise.”
“But imagine what kind of Tennessee we would be if two different governors and two different General Assemblies did not have the foresight to address our infrastructure needs back in the 1980s,” he said. “Without them, many of the roads we now take for granted and hundreds of thousands of jobs wouldn’t be here.”
The governor said the new revenue is needed to tackle a more than $10 billion backlog of road and bridge projects across the state, and warned failure to approve the program could result in local governments being forced to raise property taxes.
To balance against that tax increase, Haslam wants to cut the sales tax on groceries, the tax on income from stocks and bonds, and corporate taxes for manufacturers. That package of cuts would total about $280 million, which Haslam said is four times more than the state’s largest previous tax cut.
House Minority Leader Craig Fitzhugh, D-Ripley, said he was disappointed the governor only wants to cut half a percentage point from the state’s 5 percent sales tax on groceries.
“I don’t think that’s enough for the consumer that’s going to have to pay that gas tax right off the bat,” Fitzhugh said. “We can do better than that.”
Haslam’s Tennessee Reconnect proposal to cover the community college tuition for adults received one of the largest ovations of the night. The governor said the plan would be the first of its kind in the country. It would be open to any adult Tennessean who has lived in the state for at least a year and does not have an associate’s or bachelor’s degree.
“No caps. No first come, first served,” he said. “All.”
Haslam said the program is key toward his goal of increasing the percentage of people with higher education degrees to 55 percent by the year 2025. The current rate is about 39 percent. About 900,000 adults in Tennessee have attended some college but have no degree.