Tennessee Gov. Bill Haslam alienated conservative Republicans earlier this year when he pushed a 6 cents per gallon gas tax increase through the Tennessee General Assembly and signed the hike into law despite the state’s $1 billion surplus.
Conservative state legislators and activists charged that Haslam’s family-owned company, the national truck stop chain Pilot Flying J based in Knoxville, appears to be in a position to benefit financially from the 6 cents per gallon gas tax increase and 10 cents per gallon diesel tax increase championed by the governor that went into effect on July 1.
“As we fought against the $300 million Haslam fuel tax increase earlier this year there was really no explanation for his insistence on a tax increase while the state was sitting on a billion dollar surplus and another billion in new recurring revenue,” Andy Ogles, who recently resigned as Americans for Prosperity’s (AFP) Tennessee state director to run for the Republican nomination for the U.S. Senate, tells Breitbart News in an exclusive interview.
“Nor did the governor’s administration ever refute the apparent financial benefits that his family business could potentially receive from that fuel tax increase,” he adds.
“I was concerned during the debate over the gas tax increase as to whether or not the governor’s family stood to financially benefit from the plan, and we could never get a clear answer about that nor was his administration willing to explain the potential conflict of interest,” Ogles continues.
“AFP tried to stop it, AFP will try to repeal it and I believe there are lots of unanswered questions about why it was passed,” Ogles says.
Gov. Haslam’s net worth, estimated at $2.5 billion, is based on his inherited interest in family-owned Pilot Flying J, one of the largest privately held companies in the country, with revenues in 2016 of $19 billion. The company operates about 30 truck stops in the state of Tennessee (out of more than 500 across the country).
The governor’s older brother, Jimmy Haslam—who was Senator Bob Corker’s (R-TN) roommate in college—is the company’s CEO. In 2012, Jimmy Haslam bought the NFL’s Cleveland Browns for $1.05 billion.
Sources tell Breitbart News Jimmy Haslam has been trying to squeeze every possible penny to the bottom line of the high volume, low profit margin business since he acquired the Browns and the company was hit with a $92 million penalty by the Department of Justice in 2014 as part of an ongoing investigation of an illegal kickback scheme which has seen the conviction or plea bargained guilty pleas from a number of top level Pilot Flying J executives.
Former company President Mark Hazelwood, who reported directly to CEO Jimmy Haslam, goes on trial this month, along with three other top executives.
The conservative blog Rocky Top Politics noted after Gov. Haslam proposed the gas tax increase in January that “Pilot could make a bunch of moolah off the gas tax increase” by playing the float, adding that “it would all be legal.”
“The gas tax will be collected at the pump. Pilot is the largest distributor of diesel fuel in the state. They will collect the taxes for every gallon of fuel pumped for the state, every minute of every day. Annually, that could come to tens if not hundreds of millions of dollars collected by Pilot for the state,” Rocky Top Politics said.
Assuming approximately $1 billion of Pilot Flying J’s $19 billion in annual revenue comes from its 30 Tennessee locations, the extra cash held by Pilot Flying J arising from the increase in gas taxes and diesel taxes would be somewhere in the range of $50 million to $80 million annually.
Over any 20 to 51 day period, that would mean an extra $5 million to $8 million in company bank accounts drawing interest for the company, which could generate an extra several hundred thousand dollars in income per year for the company.
“As I speak to Republican groups across the state one of the issues that comes up most often and which Republican primary voters are incensed about is the fact that Governor Haslam led the way to raising fuel taxes on everyday Tennesseans while we had a billion dollar surplus,” former State Senator Mae Beavers, who is running for governor herself, tells Breitbart News.
“When they realize the Governor’s scheme included a tax cut that primarily benefitted a few dozen of his corporate cronies plus puts money into the pockets of his own family’s business, they become furious,” Beavers adds.
“There is so much justified distrust of our elected officials and the fact that so much of what they do is more focused on their personal financial interests, securing donations from lobbyists representing special interests, and promoting crony capitalism. We need to restore public trust by avoiding even the appearance of impropriety, not taking advantage of every opportunity for some personal gain at the taxpayers expense,” State Rep. Judd Matheny (R-Tullahoma), who is a candidate for Congress in Tennessee’s 6th Congressional District, tells Breitbart News.
“It really shouldn’t be hard for our elected officials to simply do the right thing,” Matheny adds.
Conservative legislators also pointed out that during his two terms in office as governor of Tennessee, Haslam reduced the Highway Fund budget by 13 percent, while the state budget grew by 20 percent before he introduced his massive gas tax increase in January. During that period of time under the Haslam administration, Tennessee Department of Transportation “overhead” costs have grown by 63 percent, while “highway infrastructure spending” has shrunk by 33 percent.
Apologists for the governor’s plan attempted at first to assert Pilot Flying J would not hold on to extra cash from the gas tax increase for up to 51 days, but the Tennessee Department of Revenue confirmed those details.
“The gasoline tax is imposed when the fuel is first imported into Tennessee. The diesel tax is imposed when the fuel is sold to the wholesaler. In either case, the taxpayer is the importer/supplier, and the return is due on the 20th day of the following month,” Kelly Cortesi, director of communications for the Tennessee Department of Revenue told the Tennessee Star.
“[B]etween the time when the tax is incurred as opposed to the time the taxes are remitted with the tax return to the state, that money is retained by the importer/supplier anywhere from 20 to 51 days depending on the month,” the Tennessee Star noted, adding that a question “has been raised concerning a possible conflict of interest for the Governor’s fuel tax plan because of his equity holding in his family’s privately held Pilot Flying J, a company that is both a distributor and retailer of gas and diesel fuel.”
“It is also a question that can be easily and publicly answered should either the House or Senate Transportation Committees invite representatives from both the Tennessee Department of Revenue and Pilot to answer in public testimony,” the Star observed.
The Haslam-controlled Republican leadership in the Tennessee General Assembly, however, refused to allow representatives of the State Department of Revenue to testify on that issue during committee hearings on the bill, and failed to call Pilot Flying J executives in to explain the tax increase’s impact on their own revenues and profits.
“In a stunning abuse of power, State Rep. Barry Doss (R-Leoma) broke a long-standing rule of the Tennessee House of Representatives to ram an amended version of Gov. Haslam’s gas tax increase through the House Transportation Committee he chairs on Tuesday,” the Star reported in March.
State Sen. Paul Bailey (R-Sparta), Chairman of the Tennessee State Senate Transportation Committee, was asked whether a full and open discussion in a committee hearing of exactly what impact Gov. Haslam’s proposed fuel tax increase will have on the Haslam family business would be in the public interest.
“I’m certainly open to having a representative from the petroleum industry lay this issue to rest. However, I do not think we should single out one business regardless of who owns the company,” Bailey told the Star:
“The payer of these taxes remit payment to the state upon delivery to their terminals; therefore, the only ‘float’ comes to the benefit of the state which is paid before fuel products are actually sold to end users,” Bailey added.
The question left unanswered by State Sen. Bailey is this: How does this square with Governor Haslam’s commitment to “Transparent Tennessee?”
Bailey may have offered an accurate description of one aspect of the impact of the proposed gas tax increase on Pilot Flying J.
“Critics have asked, however, whether voters in Tennessee have a right to hear that question—and any other question members of the relevant committees of the Tennessee General Assembly wish to pose on the gas tax’s impact—answered by a representative from Pilot Flying J,” the Star noted.
The apparent benefit that came to Pilot Flying J from the gas tax increase—of whatever size it may ultimately be determined to be—is not the only complaint many conservatives and Tennessee Republicans have about Haslam’s tenure as governor.
“Bill Haslam has shown a disturbing pattern of insider deals that benefit his own financial interests and those of his cronies,” one Capitol Hill observer tells Breitbart News.
“From questionable state contracts with Jones Lasalle to a sweetheart tax cut for a Pilot Flying J board member, to the benefits his family business gets from a massive tax increase on Tennessee drivers, there always seems to be some hidden agenda that only gets revealed when you ‘follow the money.’ He constantly treats taxpayer money like a piggy bank for him, his family and his business partners,” the Capitol Hill observer notes.