For Faculty
The Future of Roadway Funding in Tennessee
Mark L. Burton, David L. Greene, Matthew N. Murray, November 24, 2015
Introduction
On a per-capita or per-vehicle-mile-traveled (VMT) basis, Tennessee spends less than almost any other state on its highways and roads. Fuel tax rates are among the lowest in the nation and transportation-related debt is nonexistent. Compared to other states, roadway dollars have been far less plentiful. Nonetheless, in spite of this austerity, Tennessee has planned, built, and continues to maintain a roadway network that has better pavement, better bridges, and less congestion than most other comparable state systems. However, concerns are mounting that these outcomes are at risk due to a funding outlook that continues to deteriorate.
In 2013, considering all revenue from all sources (both federal and state), TDOT (Tennessee Department of Transportation) had roughly $312 per person to spend on highway planning, construction, maintenance, and operations, placing the state third lowest in the nation by that measure. This equates to slightly less than three cents per VMT. Of the roughly $2 billion in total available revenues in 2013, 47 percent came from federal sources, while the remainder was comprised of state funds. The gasoline and motor fuel (diesel) taxes are most important, together accounting for nearly 60 percent of state highway fund revenues. Additional revenues come from motor vehicle registration fees, and the gross receipts, beer and sales taxes. Currently, Tennessee’s combined gasoline tax of 21.4 cents per gallon ranks 12th lowest in the U.S., while its combined motor fuels tax rate of 18.4 cents is the sixth lowest. Finally, Tennessee is one of only five states that are free of highway-related debt.
