House GOP urges suspension of gas tax

By Andy Sher Nashville Bureau, Times Free Press
September 7, 2005

NASHVILLE — A group of House Republicans on Tuesday urged Gov. Phil Bredesen to suspend Tennessee’s 20 cent gasoline tax temporarily because of soaring gas prices, but the governor dismissed it as a "bad idea." "If you took the whole thing (the tax) off, you’d deprive the state of $600 million in revenue, and you’d take gas prices down to $3.30," Gov. Bredesen said, noting prices are as high as $3.50 per gallon now.

"It’s almost like somebody has this reflex that the answer to anything is to cut taxes," he said. "I don’t think it particularly helps."

Earlier in the day, state Reps. Chris Clem, R-Lookout Mountain ; Gerald McCormick, R-Chattanooga ; Bo Watson, R-Hixson ; and a dozen colleagues released a letter calling for suspension of the tax in light of the "undue burden" that rising prices have placed on families and businesses.

"This action on your part will save the residents of this state 20 cents per gallon at the pump and will show Tennesseans that, in challenging financial times, the burden of tightening the financial belt will fall on the shoulders of the state, not the residents," the letter said.

Rep. McCormick said he believes the state "could handle it. Our revenues have come in better than expected."

He said rising prices have "killed people in the middle class" and have been particularly difficult on lower-income families.

Skyrocketing gasoline prices are prompting politicians across the nation to consider ways to relieve the burden on voters. Georgia Gov. Sonny Perdue, for example, has called the General Assembly into special session to ratify his month-long suspension of the state’s 7.5 cent-per-gallon gas tax and 4 percent sales tax on gas purchases.

Nationwide, the retail price of unleaded gasoline rose by 45.9 cents to a new record last week in Hurricane Katrina’s wake, averaging $3.069 nationwide, The Associated Press quoted Energy Department officials as saying Tuesday. That puts pump prices $1.219 a gallon above last year, records show.

Meanwhile, Tennessee Attorney General Paul Summers, who has taken an aggressive stance against gasoline price-gouging by service stations, on Tuesday filed a lawsuit in Warren County alleging station operator Jess Whitlock was charging $7 per gallon of gas. A similar suit was filed last week against a Chattanooga operator who allegedly charged $5 per gallon.

In their letter to Gov. Bredesen, the Tennessee Republicans stated there are reserve funds the state could use to offset the revenue loss. They also noted that other states have taken steps to relieve pressure on consumers. The group did not cite a specific time frame for suspending the tax.

Gov. Bredesen, a Democrat, warned that a long-term suspension of the gasoline tax could cause problems with the state’s road program. And in the short term, he said, "I don’t think it brings much relief." The governor said he favors the management approach taken by President Bush, a Republican, who has authorized the withdrawal of millions of barrels of oil from the nation’s strategic oil reserve in an effort to drive oil prices down.

According to the state revenue department, Tennessee received $607.5 million from the gasoline tax in the last fiscal year. An average month produces about $50.6 million in revenue, and about 38 percent of the money goes to city and county governments, the department estimates.

Not all Tennessee Republicans are backing the House GOP plan.

Sen. Mark Norris, R-Collierville, chairman of the Senate Transportation Committee, said Gov. Bredesen already has "borrowed pretty heavily" from the transportation fund. He said it "would not be appropriate" to suspend the gasoline tax.

He said a recent study shows Tennessee falling behind in transportation infrastructure needs with some $8.1 billion in cumulative needs going unmet.

"It may be tempting to consider things like (lifting the gas tax), but you’d be robbing Peter to pay Paul, and that would not be good at this time," Sen. Norris said.

Kent Starwalt with the Tennessee Road Builders Association said there is "no assurance that the retailers would lower the price of gasoline by 20 cents, and you don’t solve whatever energy crisis or oil crisis we have by decreasing the tax."

But suspending the 18.4 cent-per-galloncent - per - gallon centper-gallon federal gas tax is drawing support from one Democratic member of Tennessee’s congressional delegation.

"The pinch at the pump for Tennesseans is too high," U.S. Rep. Harold Ford Jr., D-Tenn., said in a statement. "This week, I will ask the Republican leadership in Congress to bring to the floor a bill to suspend the 18.4 cent-per-gallon gasoline tax for 30 days."