NASHVILLE, Tenn. (WOKI / WVLT) — A new report approved by the Tennessee Advisory Commission on Intergovernmental Relations warns that Tennessee’s long-standing approach to funding transportation projects may not be enough to meet the state’s future needs.
The commission found that while Tennessee’s transportation system continues to perform well overall, rapid population growth, record tourism, increasing commercial traffic and rising construction costs are placing greater demands on roads, bridges and infrastructure across the state.
According to the report, Tennessee has traditionally relied on fuel taxes and vehicle registration fees to fund transportation projects. However, those revenue sources are not growing fast enough to keep up with future demands as vehicles become more fuel-efficient and electric vehicles account for a larger share of traffic. At the same time, transportation construction costs have increased substantially.
$1 Billion Gap Projected
The commission estimates Tennessee will require approximately $3.6 billion during fiscal year 2027-28 to maintain existing roads and bridges while continuing planned capacity and improvement projects.
Current recurring revenue sources are projected to generate only about $2.6 billion, leaving an estimated $1 billion funding shortfall.
Officials say the gap highlights the need to identify sustainable, long-term funding options to support the state’s transportation system.
Potential Funding Options
The report does not recommend a single solution but outlines several possibilities lawmakers could consider, including:
- Increasing fuel taxes or indexing them to inflation.
- Raising vehicle registration fees.
- Implementing weight-based registration fees.
- Creating mileage-based fees for heavy trucks.
- Expanding toll roads or choice lanes.
- Establishing new dedicated revenue sources.
- Utilizing borrowing to finance major transportation projects.
The commission noted that no single funding mechanism is likely to solve the entire problem and suggested lawmakers consider a combination of approaches to spread the costs among different users of the transportation system.
Impact on Growing Tennessee
Transportation planners say the issue is becoming increasingly important as Tennessee continues to experience strong population growth and tourism-related traffic, particularly in rapidly expanding areas such as Middle Tennessee and East Tennessee.
The report also recommends that any future transportation funding package include support for local road projects, which many communities rely on to address growth and maintenance needs.
Additionally, the commission suggested the state could benefit from strategically using debt financing on major projects that are not suitable for public-private partnerships.
With Tennessee continuing to attract residents, visitors and businesses, transportation funding is expected to remain a major policy issue for lawmakers in the years ahead.
