Tennessee governor signs into law $3.3 billion transportation plan

Tennessee Gov. Bill Lee has signed into law a $3.3 billion bill that is touted to tackle transportation funding needs throughout the state. Fuel tax rates will remain unchanged.

The governor’s administration has said the state needs $26 billion to address traffic congestion by 2040. The amount includes nearly $14 billion in the four major urban areas of Chattanooga, Knoxville, Memphis and Nashville.

Fresh off his re-election last fall, Lee announced his Build With Us plan, which is designed to ensure the state can meet current and future transportation challenges in rural and urban locations.

Lee’s administration says state growth in rural and urban communities and truck traffic is far outpacing roadway capacity investments.

“Tennessee is facing a critical juncture when it comes to mobility, and our new transportation strategy will prepare TDOT to build and maintain roads across rural and urban communities,” Tennessee Department of Transportation Commission Butch Eley said in prepared remarks.

Transportation Modernization Act

The Legislature acted earlier this month to approve the governor’s transportation funding plan. On Monday, April 17, Lee put pen to paper enacting the Transportation Modernization Act. The new law includes authorization for TDOT to pursue public-private partnerships.

Lee said the “landmark bill” is just what the state needs.

“Tennessee needs a transportation strategy fit for the fastest-growing state in the nation, and our plan will prepare rural and urban communities for continued growth and economic opportunity, all without new taxes or debt.”

Additionally, each of the state DOT’s four regions will receive $750 million to address infrastructure needs.

I signed the Transportation Modernization Act, an historic bill that will prepare rural & urban communities across TN for continued growth, without new taxes or debt. https://t.co/Jmjfs5U1qJ

— Gov. Bill Lee (@GovBillLee) April 17, 2023

Public-private partnerships

The governor has said he wants to pursue public-private partnerships to design, build, finance, operate and maintain express toll lanes, or choice lanes.

His administration says choice lanes “give car and truck drivers the option to pay a user fee to access an additional lane with more reliable trip times, while keeping the option to use traditional highway lanes.”

Eley has stated that any express toll lanes would be constructed. No existing lanes in the state would be converted to express lanes.

Electric and hybrid vehicles

TDOT points out that the state’s revenue stream for transportation relies heavily on fuel taxes, which is described as being eroded through factors that include increased fuel economy and the emergence of hybrid and electric vehicles.

Additionally, because the state’s fuel tax rates are not indexed, TDOT’s purchasing power is further diminished by rising construction costs and inflation.

One solution touted by the road agency has been to raise fees on owners of all-electric vehicles.

Affected vehicle owners now pay $100 yearly.

The new law raises the annual rate to $200 until 2027. At that time, the rate will increase to $274. The state will index the rate to inflation thereafter.

Hybrid vehicle rates will be set at $100 through 2027. Starting in 2028, the rate will be indexed.

The state highway fund will receive 63.4% of the additional fees from alternative fuel vehicles. Municipalities will divvy up 11.8%, and counties will share another 22%. The general fund will receive 2.8%. LL

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