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VOL. 132 | NO. 77 | Tuesday, April 18, 2017

Fuel-Tax Bill Short of Votes in the House

By Sam Stockard

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NASHVILLE – Votes aren’t adding up in the House of Representatives for passage of the governor’s gas tax/tax cut legislation.

BILL HASLAM

With floor debate scheduled Wednesday morning, not only is a Republican head count showing lack of support, Democrats aren’t exactly lining up behind the measure. The minority party says it wants concessions on other items from the governor before it can vote for the IMPROVE Act, and some Democrats say they won’t go for a combination of tax cuts for wealthy investors tied to a higher gas tax.

A House Republican Caucus head count on popsicle sticks last week showed 37 opposed to Gov. Bill Haslam’s bill, 30 in favor and six not voting. That leaves one unaccounted for in the 74-member caucus.

But with only 30 backing the combination of tax reductions and fuel-tax/vehicle fees increases – called an overall tax cut by some legislators – the governor would need to find 20 more votes to gain approval in the House.

“My sense is there are not 20 (Democrat) votes as we stand here today,” House Democratic Caucus Chairman Mike Stewart said late last week.

Stewart, of Nashville, was one of three House Democrats who dissented on the measure in the House Calendar and Rules Committee last week when it was scheduled for consideration on the House floor. The others were Democratic Caucus Leader Craig Fitzhugh and Rep. Harold Love of Nashville.

“I’m interested in things that make our tax code and make our overall budget better for people who work for a living, and we’re still looking at that,” Stewart said.

Rep. G.A. Hardaway said he doesn’t plan to vote for the IMPROVE Act unless amendments are accepted to trim the food tax even more, provide more spending for domestic violence victims and to outline strategies to help minorities be “guaranteed a piece of the pie,” especially in terms of bidding on state projects such as road construction.

The Memphis Democrat said he read one report in which the governor said he wouldn’t be “held hostage” in the negotiation process.

“If that’s his attitude, it’s just not gonna be a fun time,” Hardaway said.

Fitzhugh, of Ripley in rural West Tennessee, wants support for Medicaid expansion and a $250 million fund created for public school systems.

“We have the opportunity this budget year to set up something that’s pretty amazing to help every school system in this state, including Davidson County, Lauderdale County and anywhere,” Fitzhugh said.

Fitzhugh points out the IMPROVE Act is “intertwined” with the governor’s proposed $37 billion budget, which is on hold until action is taken on the gas tax/tax cut bill.

The House and Senate plans call for a three-year phase-in of 6 cents on the gas tax, pushing it to 27.4 cents per gallon, and 10 cents more on the diesel tax, raising it to 28.4 cents per gallon. In addition, it would place a $100 fee on electric cars, add $5 to the state’s vehicle registration fee and give local governments the option to raise a set of six taxes to pay for mass transit projects through voter referendum.

To offset those fuel and vehicle fee increases, it decreases franchise and excise taxes on manufacturers, expedites cuts in the Hall tax on investment income by 1 percent each of the next two years and cuts the food tax to 4 percent from 5 percent.

In full effect, the state would be cutting taxes by $400 million and raising fuel taxes and fees by only $350 million, the bill’s sponsors say. Property tax breaks for veterans and seniors are not part of the House plan.

Rep. Bo Mitchell of Nashville is one of several Democrats hardly enthused with the bill.

“Like my colleagues, I see the needs for transportation. I’m all for improving transportation, mass transit in this state,” Mitchell said. “But I’m also about fairness, and I’m not for giving a huge tax cut to the top 5 percent wealthiest people in the state of Tennessee while we’re raising the tax on people trying to get to work in the morning. So until they can equal that out, they’ve got some work to do to get 20 (votes).”

An alternative plan is expected to be presented on the House floor, likely one taking funds from the general fund, which is flush with $2 billion in extra money this coming year. Such an option hasn’t garnered much traction in House committees, but it will draw plenty of support in the full House, where every member will cast a vote.

Reports show House Speaker Beth Harwell, who helped forge an option using auto vehicle sales taxes to fund transportation, is “leaning” toward support of the governor’s plan if no other alternative gains ground.

Senate is on board

If the House does come up with an amended version differing greatly from the governor’s bill, it would probably be sent to a conference committee for negotiations, according to Lt. Gov. Randy McNally.

Using motor vehicles sales taxes is a non-starter in the Senate, he said. But while he’s concerned the bill could fail in the House, he believes the Senate will be able to work things out.

“We’ll take the process one step at a time and try not to anticipate where they are and just deal with the issues as they come up,” McNally said.

Senate Majority Leader Mark Norris, who rewrote the governor’s bill to increase the food-tax reduction and phase in the gas-tax increases, said the Senate largely supports the measure.

“And they love it. They get it. They see that it really is a tax cut,” said Norris, a Collierville Republican.

He pointed out Sen. Joey Hensley, a Hohenwald Republican, voted against the bill in the Finance, Ways and Means Committee last week but then shifted and voted in favor of a bridge replacement program that will be funded by the proposed fuel-tax increases.

Opposition could come, as well, from Clarksville Republican Sen. Mark Green, who has been nominated to be secretary of the U.S. Army. Green, a former gubernatorial candidate, is considered to be largely aligned with Tea Party.

“You can count on some people saying no to everything, but the majority will support this,” Norris said.

Sam Stockard is a Nashville-based reporter covering the Legislature for the Memphis Daily News. He can be reached at sstockard44@gmail.com.

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 57 57 1,266
MORTGAGES 48 48 964
FORECLOSURE NOTICES 11 11 162
BUILDING PERMITS 87 87 2,838
BANKRUPTCIES 34 34 652
BUSINESS LICENSES 10 10 286
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0