Tennessee candidates for governor weigh pay-as-you-go infrastructure model

What This Story Is About

• Tennessee faces roughly $83 billion in future infrastructure costs, and the state is one of five nationwide that funds most projects on a pay-as-you-go basis rather than through loans or bonds. Four candidates for governor were asked whether that approach can still meet the state’s needs.

Why It Matters

• Tennessee’s growth has left billions of dollars in transportation, education and other infrastructure needs unfunded. How the next governor handles financing will shape how quickly those projects move forward.

What Happens Next

• Voters will decide this fall among candidates who differ on whether to keep the pay-as-you-go model, rework the budget or pursue new financing. Their approaches range from a 25-year planning process to bonded contracts and low-interest loans.

For Context

• Pay-as-you-go means Tennessee budgets for infrastructure in cash year to year instead of taking on debt, historically relying in part on the gas tax. All four candidates were asked the same questions about the model’s sustainability and whether they’d support a gas tax increase or transportation bonds.

NASHVILLE, Tenn. (WSMV) - Tennessee is facing tens of billions of dollars in future infrastructure costs, including nearly $43 billion for transportation and utility projects, nearly $20 billion for education and around $20 billion more for other infrastructure needs.

The state currently pays for most of that work in cash, budgeting projects year by year without large loans or transportation bonds. Tennessee is one of five states nationwide that follows a pay-as-you-go model.

Hatley calls for a 25-year infrastructure plan

Independent candidate David Hatley said he is generally not in favor of taking on new debt, citing his experience building his company without loans, but said current financial conditions make borrowing practical.

“I don’t think so. And I’ll tell you, you know, a reason why. I hate debt. I grew my whole entire company from the ground up without a single loan, you know, to where it’s at today. So, I’m not a fan of debt. I love the pay-as-you-go. But I’m also practical,” Hatley said.

Hatley said inflation currently outpacing interest rates makes borrowing cost-effective.

“You know, right now, inflation is outgrowing interest. So, if we were financing, we would actually save money right now. So, there are times where it makes sense to borrow money. You know, we need to be building roads that last 60 years,” Hatley said.

Hatley compared Tennessee’s road maintenance schedule to South Carolina’s.

“You know, I’ve come through South Carolina. They got all nice concrete roads that they don’t maintain for 15 years. We come through Tennessee, we’re working on them every five or six years. Orange barrels everywhere. That’s disrupting our lives. So, we need an infrastructure plan,” Hatley said.

Hatley said the state has population growth projections by county but has not mapped out a corresponding infrastructure plan, pointing to Nashville traffic as an example.

“I mean, we don’t have... we don’t know... we know exactly how many people are coming here in the next 25 years. We can look and see our population growth by county, projections. But we haven’t mapped out what our infrastructure looks like. And that’s a problem,” Hatley said.

“I’m leaving Nashville Sunday and there’s so much traffic coming into Nashville. When I left the Titans game, coming into Nashville on a Sunday afternoon. And no one has a plan right now. No one has a plan for that to get better. No one has a plan... we got Choice Lanes we’re talking about doing. But what’s the real plan for our future here?” Hatley said.

Hatley said the state needs a committee of engineers and a 25-year plan before deciding what to finance.

“I think we need a committee of engineers that are professionals again in this field. And we need a 25-year plan. And then we can sit down and say, do we need to finance some of this? Does this make sense? Or do we continue to pay as we go? I think we do whatever makes sense and saves the taxpayers money,” Hatley said.

Asked whether he would consider floating transportation bonds, Hatley said he would if it made financial sense, pointing to the length of the current economic expansion and the state’s rainy day fund.

“Again, if it makes financial sense, yes. I would consider whatever makes sense for Tennessee. I mean, we have to be smart about how we’re spending our money. Times are good right now economically. They’re not always going to be like that. It’s been 18 years since we’ve had a recession. When we go through that, we better know where our money’s going and we better be prepared,” Hatley said.

“Sure, we have a little rainy day fund. That rainy day fund’s a couple months right now if you look at our budget. So it can go pretty quick. So we need to be prepared for all things and be responsible,” Hatley said.

Asked about the Pot for Potholes Act, which would legalize marijuana to help fund highway projects, Hatley said legalization should go to a vote rather than be decided by the governor, though he supports legalizing medical cannabis.

“You know, I’m governor. I don’t think I should make a decision on where marijuana is legal. I think that should be a vote like many other states do. I do think medical cannabis should be legalized, you know, and that would bring in some revenue,” Hatley said.

Hatley said he opposes opioids and sees potential benefits of medical cannabis for veterans.

“I’m not a fan of opioids. I see what it’s done to the state. I see what it’s done to my hometown. I see what it can do for veterans on the medical side of cannabis. So I’d be a fan of that. But, you know, that should be my decision to legalize marijuana. I shouldn’t have that power,” Hatley said.

Blackburn points to waste, out-of-the-box thinking

Republican Sen. Marsha Blackburn said addressing the state’s transportation needs starts with removing waste, fraud and abuse from the budget.

“Well, there again, let’s start with getting the waste, fraud and abuse out of our budget. I like to say, I’ve got a big red marker and we’re going to go to work and then see how we’re best going to need to meet those needs,” Blackburn said.

Blackburn said she has reviewed a Tennessee Department of Transportation report and spoken with committee chairmen and legislators about new approaches, including building new roads instead of adding lanes.

“I’ve talked with some of the legislators to say, this is time for us to think out of the box. And maybe you need to build a new road rather than just adding a new lane. But working together as a team is how we’re going to be able to solve that,” Blackburn said.

Blackburn said a previous governor moved between $260 million and $280 million out of road projects to address other state needs.

“What we do know is you go back a few governors and there was a governor that took a lot of New START projects off the books and moved, I think it’s about $260, $280 million out of road projects in order to handle other needs of the state,” Blackburn said.

Blackburn said the state’s infrastructure backlog is tied to population growth rather than leadership.

“Governor Haslam tried to catch up on road projects. Governor Lee tried to catch up on road projects. And we still are behind because we’re the state where everybody wants to move,” Blackburn said.

Blackburn said the state needs to address traffic congestion, expand high-speed internet fiber access, and make greater use of its ports and railroads.

“So, it means we’ve got to solve this congestion problem. We’ve got to make certain that we’ve got fiber out for high-speed internet. It means we’ve got to use our ports,” Blackburn said, naming the Port of Memphis, Cates Landing in Lake County and the port in Clarksville in Montgomery County.

Blackburn also pointed to the state’s rail access, including Memphis’ five Class I railroads and short line railroads, as part of the state’s transportation options.

“Memphis has all five class one railroads. We’ve got short line railroads. How are we going to use this to get around the state most efficiently?” Blackburn said.

Asked whether she would consider raising the gas tax or floating transportation bonds, Blackburn said a gas tax increase would not pass in Tennessee.

“Gas tax is not going to pass in Tennessee,” Blackburn said.

Blackburn said the answer is to rework the existing budget rather than pursue new revenue sources. Some legislators have floated legalizing marijuana and taxing it — an idea referred to in one proposal as “Pot for Potholes” — to help fund road projects, which Blackburn rejected.

“You’re not going to see me support legalizing marijuana. I think that there are areas where we can be good, wise stewards and look at long-term fixes and respect the Tennessee taxpayer,” Blackburn said.

Blackburn pointed to her past opposition to a state income tax as an example of fiscal stewardship.

“You know, when I led that fight against the state income tax and our state, when we defeated that and the people of this state stood up and defeated that tax,” Blackburn said. “And then our state had to go through a repositioning. And they had to say, okay, how do we get our fiscal house in order? And we did this. We became an economic powerhouse.”

Blackburn said Tennessee has the lowest per capita tax burden in the country and is a right-to-work state with no state income tax.

“We are the lowest per capita tax burden in the country. We are always one of the best states. People are wanting to come here because no state income tax, right-to-work state. We are a well-led, well-governed state,” Blackburn said.

Blackburn said the state should focus on sustainable, long-term planning.

“So let’s be smart about how we do this and let’s look at things that are going to be sustainable to make certain for the next 20 or 30 years. We are the number one state in the country with the lowest tax burden, with the best recruitment, with the best opportunity for Tennessee-grown businesses that are going to be able to grow and prosper, pay higher wages. And that’s what we should focus on. Addressing infrastructure is a part of that,” Blackburn said.

Green calls for rail, public transit investment

Blackburn’s Democratic challenger, Jerri Green, was asked about the Pot for Potholes Act, which she said has been proposed to the legislature multiple times by State Rep. Aftyn Behn. Green said the state needs to invest in both roads and public transportation to address congestion.

“So, not only do we need to reinvest in our infrastructure and in our roads, we also need to invest in public transportation. Reliable public transportation,” Green said.

Green said she has met with operators of rail lines running north and south through the state, from Chicago to Memphis to New Orleans, and asked whether those freight lines could also carry passengers.

“I said, so there are also lanes that go across the state, right? From Memphis to Nashville, go down to Chattanooga, up to Knoxville, right? Are there ways that we could do that with passenger? They said, absolutely,” Green said.

Green said public transportation and light rail would reduce the number of cars on the road, calling the approach environmentally friendly and a source of union jobs.

“So, there are ways to get less cars on the road. But you have to actually be forward-thinking. And the great news about public transportation and light rail is it is environmentally friendly. It is shovel-ready jobs or union jobs that can lead to careers where people can actually retire comfortably,” Green said.

Green pointed to Memphis as an example of what she described as new approaches to public transit, including free bus service, an expanded bus fleet, investment in repair shops and counselors placed on buses to connect riders with services.

“We made buses free before Mamdani. And we have just increased our fleet and bought 56 new buses with investments from grants,” Green said.

“We’ve invested in our repair shops. And we’ve put counselors on the buses to see if there’s people in need to be able to connect them with services,” Green said.

Green said whether Tennessee can continue a pay-as-you-go funding model depends on whether the legislature passes measures to fund further development. She said the state currently avoids taking on debt in a way that is unusual compared with companies or other governments.

“But there’s not a company out there, there’s not a government out there that hoards their wealth and refuses to take on debt for CIP projects the way Tennessee does. And there’s really no reasoning behind it,” Green said.

Green said changes to funding priorities — including ending what she called a voucher scheme, accepting Medicaid expansion money, and eliminating a corporate rebate and a PILOT agreement involving Starbucks — could free up money for roads.

“And again, some of the things, if we are better investing in our schools by defunding the voucher scheme, if we are better investing in our hospitals by taking the Medicaid expansion money, it frees up other money. If we’re not giving corporations a $1.5 billion rebate, if we are not giving Starbucks a pilot that may or may not be repaid, all of those things can help us put back into our roads,” Green said.

Green said budgets reflect priorities.

“So, it depends on how you budget. I believe budgets are moral documents. You show me yours, I’ll show you what you care about. I care about people. That includes people on the roads. It includes people that are struggling to make ends meet. That’s where my focus will be,” Green said.

Green said the state is “morally bankrupt” on certain measures despite being financially sound.

“And so, you know, while they are continuing to try to say we are financially sound, we are morally bankrupt at this point. When one in five kids goes to bed hungry every night, when we are leading the nation in maternal mortality, we are morally bankrupt for not reinvesting in the people of our state,” Green said.

Asked how she would advance road funding given the Republican supermajority in the General Assembly, Green said she would consider any option to improve the state but would prioritize existing funds over new debt or taxes.

“I will consider anything that we need to do to make our state work better for the people who live in it,” Green said. “But again, I go back to I think we can do it without raising taxes, without going into debt. There are too many spaces and places where we have funds that we are hoarding and not using for people.”

Green pointed to Kentucky’s Democratic governor as a model for working with a Republican-controlled legislature.

“You know, Mitch McConnell, Rand Pauls, Ruby Red, Solid Red, MAGA, state of Kentucky, has a Democratic governor. And I use him as a model. I just spoke with him recently. And when there are things that we can work on together, like jobs, like roads, like funding our public schools, they work together. And when there are spaces and places where you feel like you’re stepping on somebody’s rights, he vetoes it,” Green said.

Green pointed to her past work on gun legislation passed by Cameron Sexton and a funded Black midwife program following the Dobbs decision as examples of finding bipartisan solutions.

“I mean, I’ve worked on gun legislation that Cameron Sexton then passed. I have worked on making sure that women, after the Dobbs decision, can have healthy births. And funded a Black midwife program. I find creative solutions without having to change the laws. And I bring on Republicans, even on the most controversial issues. So I think we can figure out roads,” Green said.

Pinkston calls for bonded contracts

Independent candidate Lauren Pinkston said Tennessee cannot address its infrastructure backlog without pursuing bonded contracts.

“There’s no way that Tennessee can continue in addressing this backlog if we don’t work towards some bonded contracts. We’ve done this before. Many states do this. Many countries do this in order to get ahead. And we’re in that place because these issues have not been addressed,” Pinkston said.

Pinkston said the current pay-as-you-go approach is already affecting families.

“The reality is that for Tennessee and specifically, we are suffering, and people’s bills are going up because of the state of the roads,” Pinkston said. She said the condition of roads is driving up costs for drivers through vehicle damage and repairs.

Asked whether she would consider raising the gas tax or floating transportation bonds, Pinkston said she would not support new taxes.

“I’m not willing to raise any taxes in this moment. Absolutely not. Not with the state of the economy and not with the pressure that families are feeling across the state,” Pinkston said.

Pinkston said she posed the same funding question to TDOT administrators and a state representative, and neither had an answer.

“Well, I asked the same question to TDOT administrators and to a state representative a few weeks ago and they didn’t have an answer either,” Pinkston said.

Pinkston said Tennessee can no longer avoid long-term financing and argued low-interest loans, without raising taxes, are the only way to expand infrastructure while keeping the budget balanced as required by the state constitution.

“The reality is that there are gaps in our funding as a state that we have not been responsible with. And we need to look at good low interest loans that we can use to expand our infrastructure,” Pinkston said.

“I don’t see any other way outside of that in order to keep our budget tight and keep it balanced as our constitution requires,” Pinkston said.