Tennessee Department of Transportation Commissioner John Schroer said Wednesday the IMPROVE Act gas tax increase is already generating strong revenues for state construction projects since going into effect July 1.
Schroer and staff gave an update on the Haslam-sponsored law at the department’s budget hearing at the Capitol Wednesday.
Schroer said the department has started work on 288 of 962 projects named in the governor’s transportation plan, including 32 interstate projects, 105 state route projects, 65 highway bridge projects and 84 locally-owned bridge projects.
But perhaps the biggest development from the act thus far is a record-setting bid-letting scheduled for Dec. 8, where the department will take bids on $324 million in projects-the largest in the department’s history.
With about eight bid lettings a year, plus a mowing letting and a design build contract, the department will take bids on a little over a $1 billion in contracts this year.
“This just shows the impact of the IMPROVE Act,” Schroer said. “This letting is because of the IMPROVE Act. There’s work being done to Interstate 440, Lamar Avenue in Memphis, Interstate 24 and Interstate 75. People are going to be tired of seeing the orange cones.”
The state's tax on gasoline was 21.4 cents per gallon, and increased an additional 4 cents per gallon on gasoline starting July 1, with additional 1 cent increases scheduled for 2018 and 2019.
Diesel taxes increased from 18.4 cents per gallon to 22.4 cents per gallon beginning July 1, with 3-cent increases scheduled for both 2018 and 2019.
Deputy Commissioner Paul Degges said revenues are tracking slightly above expectations and the projections for $150 million this year and over $200 million next year will come to fruition.
“The Improve Act has generated a lot of extra work for the department,” Degges said. “The additional funds allowed us to expand even more in our three-year work program… It’s a mixture of work, environmental and design on the front end, right-of-way acquisition."
Also, Degges said about two thirds of the act's construction dollars come from federal funding, which started flowing in at the start of the federal fiscal year on Oct. 1.
Both Schroer and Degges told the governor the department is well-prepared to handle the $1 billion in bids that are upcoming.
Reporter Jordan Buie can be reached at 615-726-5970 or at jbuie@tennessean.com. Follow him on Twitter @jordanbuie.