With a 67-21 final favorable vote, the House left it up to the Republican governor to sign into law a bill that includes the state's first gas tax increase since 1989.
Haslam said he knew the bill would face a tough road to passage, but lawmakers could now pass on "good news" to Tennesseans because of the legislation.
"While your gas bill might go up, it also means your grocery bill is going down more," Haslam said. "And there are going to be billions of dollars' worth of road improvements that are needed in Tennessee that are now going to be on their way to happening quicker."
Both chambers already finished the bulk of their work by passing the bill Wednesday, but left a property tax break for disabled veterans unresolved.
Senators amended the legislation to increase property tax relief to disabled veterans to up to $175,000 in property value, from the current $100,000. The amount was decreased to $100,000 in 2015 because of concerns about growing costs in the program.
On Monday, spats erupted in the House again over whether to consider the veterans tax break in a separate bill or keep it in the larger roads package. Several angry lawmakers said they wanted to support the veterans tax break without voting for the gas tax increase. They contended that veterans were used as political pawns.
Republican Majority Leader Glen Casada of Franklin blasted the inclusion of multiple, unrelated topics in the same bill.
"That's not leadership," Casada said. "That's bribery."
Still, the House had enough support for the property tax change and passed the bill a final time. Casada ultimately voted for the bill.
Rep. Barry Doss, a Republican from Leoma who sponsored the legislation, said most lawmakers disagreed with having the property tax lumped into the bill. But he said this was a vote for tax relief.
Even lawmakers who detested the gas tax hike were among those who voted favorably Monday.
"Voting for this is not voting for the bill," said Rep. Jeremy Faison, R-Cosby. "I voted against it; you know I voted against it. But I'm going to vote tonight for our veterans."
Haslam and other supportive Republicans said the proposal's tax cuts would offset the gas tax increases for consumers — 6 cents per gallon over the next three years and 10 cents per gallon on diesel over the same period.
The bill is estimated to generate another $350 million for road funding. However, it is also expected to cut other taxes by $400 million. They include a 20 percent reduction in the sales tax on groceries, a $113 million cut in corporate taxes paid by manufacturers and a 1 percent reduction in the tax on earnings from stocks and bonds.
The bill lists nearly 1,000 projects that would be funded with the new revenue.