How a state Democratic lawmaker plans to pave the way for transportation funding in Nashville

Nashville Business Journal, Dec. 20, 2016

By: Meg Garner

When local officials endorsed the most expansive and aggressive plan for transit overhaul this year, the question that immediately began circulating was how Middle Tennessee would pay the $6 billion price tag.

In November, Moving Forward, a Nashville Area Chamber of Commerce-funded coalition, laid out seven potential funding mechanisms, helping fill in some of those gaps. But for local officials to follow through on the coalition's suggestions, they need the state Legislature to pass enabling legislation so local governments can enact their own taxes to support mass transit. The General Assembly, meanwhile, has historically not been Greater Nashville's closest friend.

But Middle Tennessee has at least one ally in the Legislature, Rep. John Ray Clemmons, and he thinks he has crafted the "most reasonable plan possible" to secure dedicated funding for the region's transit overhaul.

Clemmons, who represents much of West Nashville, said he aims to propose his bill at the start of next year's legislative session. He said his bill is structured in part off similar bills passed in Texas, North Carolina and Georgia.

"These types of bills can get passed in politically conservative states," Clemmons said recently in his Legislative Plaza office.

To be sure, the bill that Clemmons envisions could be quite different than the bill he proposes in January. For now, though, the sophomore representative thinks he has crafted a solution that would keep transportation funding from becoming too partisan a fight.

"Until [my fellow legislators] can prove me wrong, they have to give it their due diligence," Clemmons said.

Clemmons' bill calls for a dual-pronged funding mechanism: separating the state's existing pay-as-you-go system while creating a new fund dedicated solely to funding mass-transit projects statewide. He said the two funds would never overlap.

Currently, the state funds transportation project through two funding sources: a gas tax and a diesel tax. The state of Tennessee currently taxes 21.4 cents per gallon on regular gasoline, while there is a 18.4 cents per gallon tax on diesel fuel. Both these numbers exclude federal taxes on regular and diesel fuel.

Gov. Bill Haslam is expected to ask the General Assembly to increase the state's gas tax, but Clemmons said raising the gas tax alone is not enough to cover the state's $8 billion backlog in transportation funding. For this reason, Clemmons suggests the state increase both the gas and diesel tax.

While the numbers are still up for debate, Clemmons' bill would see the state's gas tax increase anywhere from nine to 13 cents per gallon and the diesel tax increase to 23.95 cents per gallon, which he said is the average of Tennessee's seven contiguous states. If the diesel tax increase passes, then the increase in the state's gas tax would not need to be as much, according to Clemmons.

On a more contentious note, Clemmons said he would suggest indexing this portion of bill, meaning the rates charged would be tied to the state's population and inflation. North Carolina, for instance, has its gas tax indexed. Indexing taxes is often a controversial because some think that would allow the tax to increase wildly without any monitoring. However, tying the gas tax to the state's inflation could also cause the tax to decrease if rates were to drop, according to Clemmons.

The next portion of Clemmons' plan would call for a new stream of dedicated mass-transit funding.

In order to fund this new revenue stream, Clemmons suggests two primary measures, both of which were approved in a 2015 public referendum in Texas called Proposition 7.

The first would be to create a threshold on sales tax revenue, meaning any revenue above that level would go into this funding stream. Clemmons said there would be a ceiling on how much above the threshold could actually go into the new fund, but added he had not set those restrictions yet.

The second funding mechanism would also include a revenue threshold, but this threshold would be on vehicle sales tax revenue. Clemmons said once a threshold was hit then a certain number of cents per dollar would go to transportation, but again, those numbers are not finalized.

Clemmons said he would suggest sunsetting both these funding mechanisms after 12 years, meaning these thresholds would no longer exist.

It is in this new funding stream that Clemmons would also include enabling legislation for local officials to collect their own transit funding. Clemmons said he has not figured out how to structure that legislation yet, saying he would let those directly working on crafting that piece of legislation, such as the Nashville Area Chamber of Commerce or Mayor Megan Barry's office, to latch onto his original bill.

Clemmons said including enabling legislation is critical because cities need to "have their own skin in the game." He also is open to allowing cities to request state bonds from the new funding stream as long as they could prove their own revenue streams.

As far as his own chances of pushing through a Democrat-backed piece of legislation in a General Assembly controlled by a Republican supermajority, Clemmons said he was "fully aware of the environment he's in," adding he was willing to let a Republican lawmaker take over the bill if he or she was interested.

"I'll roll it out and get as much support as I can, but if the governor or another representative member wants to steal it, then I'd be happy to pass it over," Clemmons said. "The goal here is to solve the problem, not get the credit."

To be sure, Clemmons' bill might never pass in the General Assembly, but if it did, then it would give local officials a funding lifeline, especially since they were not planning on having any assistance from the state. Moving Forward's estimates, for instance, were built on the assumption that $3 billion would have to come from local sources with another $3 billion coming from federal matching dollars.