- Associated Press - Monday, March 20, 2017

NASHVILLE, Tenn. (AP) - RepublicanGov. Bill Haslam’s transportation proposal, which includes Tennessee’s first gas tax increase since 1989, on Monday received the blessing of conservative activist and tax-hike opponent Grover Norquist.

Under the version of Haslam’s plan advancing in the Senate, the state would increase its tax on gas by 6 cents per gallon and diesel by 10 cents per gallon, but also cut other areas including the sales tax on groceries, the tax on earnings from stocks and bonds and corporate taxes owed by large manufacturers.

Norquist, founder of the group Americans for Tax Reform, said in a letter to state House and Senate members that the most recent version of the governor’s bill advancing in Senate represents a “net tax cut,” and does not violate lawmakers’ pledges to not raise taxes.

He also noted that the Senate had removed a proposal to link fuel taxes to inflation, “which means gas tax hikes will not be put on autopilot.”

The Haslam administration sought Norquist’s input on the Tennessee plan after seeing that Americans for Tax Reform supported gas tax increases in New Jersey and South Carolina when they were coupled with tax relief.

Norquist’s position on the Tennessee gas tax proposal contrasts with the strong opposition voiced by the state chapter of Americans For Prosperity, founded by billionaire industrialist brothers Charles and David Koch.

Americans for Prosperity made a big push against Haslam’s proposal earlier this month in a House subcommittee, bringing in dozens of opponents wearing bright T-shirts, a former radio talk show host to pump up the crowd in the committee room and a mascot dressed up a gas can. But despite the opposition, the measure was advanced to the full committee, where it awaits a key vote scheduled for Tuesday.

Senate changes to Haslam’s original proposal included doing away with a special tax on rental cards and phasing in the increases in the gas and diesel taxes over three years. The measure was also adjusted to double the proposed cut in the sales tax on food for a full percentage point.

Tennessee’s gas tax is now 21.4 cents per gallon and its diesel tax is 18.4 cents per gallon.

Haslam told reporters he considers the announcement from Norquist to be “a really big deal.”

“This is somebody who’s kind of staked his whole thing on we should never have tax increases,” Haslam said. “Whether you agree or not, the fact that the founder of that movement - who had people sign no-new-tax pledges - says this is not a tax increase.”

Senate Majority Leader Mark Norris, a Collierville Republican who negotiated the changes to the transportation funding proposal, said letter confirms that the measure would “reallocate revenue to maximize the return to the Tennessee taxpayer and reinvest in our future.”

Norris said he is hopeful that the Norquist letter will help boost support in the House.

“If it doesn’t, they’ll have only themselves to blame,” he said.

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