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Upcoming: A Defining Week for the 'Transportation Modernization Act' of 2023

By: TCHOA Director Brett Howell

March 17, 2023

After a successful week in two committees, the Transportation Modernization Act (SB273/HB321, Massey, Howell) now moves to the Senate Floor Monday, March 20, for its biggest test yet. The Senate Finance Committee recommended the bill for passage this week on a 10-1 vote, while House Finance Subcommittee approved it on a unanimous voice vote. Both committees adopted identical amendments that added a prohibition on supplanting local funding with the $300 million in State Aid Road grants and altered the schedule for adopting registration fees on electric and hybrid vehicles, including plug-in hybrids.


Legislators have been talking for weeks about adding a maintenance of effort requirement out of fear that counties would redirect local revenues away from their highway department. Senators also expressed some concern about the ability of some more distressed counties to afford the required 2-percent match in the program shared 98-2 with the state. TCHOA was asked to testify to address the concerns, allowing the chance to explain that counties will not be on the hook to immediately match the entire 2 percent on their entire share of these new funds. That match would come over time, as projects are contracted over a multi-year timeframe, a point reiterated by TDOT Commissioner Butch Eley.


The statewide average match for counties is about $69,000, which would be paid over a number of years. In-kind matches are also allowable under the program, just as they are under the current program.


Registration fees on all electric and hybrids vehicles will be charged at the time of renewal, rather than when purchased, beginning January 1, 2024. Those revenues will be distributed on the same basis as other gasoline and motor fuel taxes, which are already shared with local governments. The new fees are intended to displace loses in fuel taxes as electric vehicles become a greater part of the total vehicles registered in Tennessee. Fuel efficiencies, inflation and other factors are also lessening those revenues.


The existing $100/year fee on EVs will continue to be charged through the end of this calendar year and, like today, will not be shared with local governments. The sharing begins January 1, 2024.


Leadership in both houses have said they hope to have this legislation passed and on the governor’s desk by the end of March.


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