Amends TCA Title 9, Chapter 3, Part 4; Title 9, Chapter 4; Title 67, Chapter 6, Part 1; Title 67, Chapter 3, Part 2 and Title 67, Chapter 3, Part 9.

This bill reduces the tax on gasoline and diesel to the rates that were in effect prior to the 2017 Improve Act, and reallocates a percentage of state sales and use tax revenues to supplement the state highway fund and local government road programs, as discussed below. TAX RATES Under present law, the tax on gasoline is 26 cents per gallon, and the tax on diesel is 27 cents per gallon. This bill reduces the tax to 20 cents per gallon for gasoline and 17 cents per gallon for diesel. REALLOCATION OF TAX REVENUE Under present law, the 29.0141 percent of all moneys received from state sales and use taxes are earmarked and allocated exclusively to the general fund. This bill reduces the percent earmarked and allocated exclusively to the general fund from 29.0141 percent to 26.0141 percent and earmarks and allocates the 3 percent difference as follows: (1) 2 percent will be earmarked and allocated exclusively to the highway fund; (2) 0.67 percent will be earmarked and allocated to the various counties and must be used for road purposes. The funds will be allocated on the basis set forth under the present law provisions governing county aid funds, which provides that funds must be divided and distributed to the various counties of the state as follows: 50 percent of the fund must be distributed equally among the 95 counties of the state and of the other 50 percent, half of that must be distributed among the 95 counties on the basis of area and the other half on basis of population, as of the most recent federal census or by special census; and (3) 0.33 percent will be earmarked and allocated to the various municipalities of the state and must be used for road purposes. The funds will be allocated on the basis set forth in the present law governing municipal aid funds, which provide that funds be distributed to eligible municipalities within the state monthly by the commissioner of finance and administration in proportion to the population each municipality bears to the aggregate population of all municipalities.