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VOL. 132 | NO. 22 | Tuesday, January 31, 2017

Governor Defends Big Proposals for Statewide Infrastructure

By Sam Stockard

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NASHVILLE – Protesters overshadowed Republican Gov. Bill Haslam’s State of the State address Monday night, chanting in the Capitol in opposition to a spate of executive orders from President Donald Trump.

Bill Haslam

A throng of several hundred people shouted for refugee and abortion rights as legislators and the governor emerged after he introduced a $37 billion spending plan with education initiatives aimed at providing free tuition to college-attending adults.

Sen. Lee Harris surveyed the raucous crowd and said, “This is the state of the state right now, the widening division. We didn’t hear the governor address anything that’s going on right now. And I think that’s disappointing, given the state of the state.”

Harris, a Memphis Democrat, says Haslam gave a good speech but failed to address what is happening nationwide in response to Trump’s executive orders.

“It wasn’t leadership, and he didn’t recognize the moment. All I can say as a Tennessean is I’m disappointed,” Harris says.

They held signs saying “History is also watching” and “No ban no wall. We are watching.”

“I’m here because I think we need in this country to allow refugees in who are being persecuted and at the risk of dying, and I think our mayor ought to be able to continue to make Nashville a sanctuary city,” said one of the protesters, Dr. Alan Bachrach.

Flush with money from previous budgeting, Haslam proposed a $37 billion spending plan designed to bolster education. Out of a total $836 million in capital investments, the governor’s budget plan contains a $44 million University of Memphis music center using $29 million of state funding, and an $11.5 million Tennessee College of Applied Technology Memphis satellite campus.

The governor also proposed the Reconnect Act, a measure to offer all adults the opportunity to attend community college tuition-free as well as the STRONG Act to offer free tuition to National Guard members at Tennessee universities and colleges.

“We don’t want cost to be an obstacle anyone has to overcome as they pursue their own generational change for themselves and their families,” Haslam says.

Lt. Gov. Randy McNally termed the governor’s presentation an “excellent talk,” one outlining the needs for education, infrastructure and a smaller, more efficient government.

“We are proud of Tennessee’s status as a low-tax, low-debt state. Gov. Haslam’s proposed budget ensures we remain one,” McNally says.

State Rep. Joe Towns, a Memphis Democrat, also says Haslam’s proposals are strong for education. But standing in the midst of the chanting throng, he called the crowd “excellent.”

“I don’t think this country anticipated that you’d have this immediate reaction to Trump,” Towns says. “I don’t think they expected Democrats to be this organized and this fierce on the first day and the first day we’re back.”

Touting additional money to go toward K-12 and higher education with marked improvement in those areas, as well as millions more for TennCare, Haslam opened his sales pitch to lawmakers for approval of his major initiative, the IMPROVE Act. It combines fuel-tax increases and fees to chip away at $10.5 billion in backlogged bridge and road projects, the impact of which he wants to soften with business tax cuts for the fiscal 2017-18 proposal.

“Scores of mayors across Tennessee – cities and counties, rural and urban – have told me that, if we don’t do something to address the fuel tax, they will have no alternative but to raise the property tax in their municipalities,” says Haslam, whose proposal is designed to fund more than 960 projects statewide by 2030. Otherwise, he says, they could wait another 15 years or more.

Haslam’s budget plan is equipped with a $1.1 billion surplus in non-recurring money, and state leaders are projecting nearly $1 billion more in extra recurring money to use in the coming budget, most of which is already spoken for in the governor’s proposal.

The governor presented a total of $279 million in tax cuts through a half-percent reduction in the grocery food tax, decreases in business franchise and excise taxes to make the state more competitive in job recruiting and a 1.5 percent cut to the Hall income tax, dropping it to 3.5 percent in the coming year. The Hall tax is to be eliminated by 2022.

“I am confident this tax cut will mean more jobs for Tennesseans in the future,” Haslam says.

Those are designed to offset a total of $278 million in new revenue under the governor’s proposal to raise the gas tax by 7 cents and diesel tax by 12 cents, tack $5 on registration fees, and add fees on alternative-fuel vehicles such as electric cars.

Fuel-tax increases at a time the state government has extra money on hand are being met with opposition from numerous members in the House.

“I know some of you think we should transfer surplus money to the Highway Fund for transportation,” Haslam says. “We are – to the tune of $277 million in last year’s and this year’s budget combined.”

That money pays back transportation funds used to balance the budget in 2007, but the governor offers several reasons the state should raise fuel taxes and fees and not use its extra money for transportation projects.

“First, while we do have a surplus, we do not have a pile of money without a claim to it – as I mentioned earlier,” he says.

He contends a short-term surplus shouldn’t be used for long-term needs such as road work. Haslam says out-of-state motorists who stop to fuel up in Tennessee should help fund transportation projects, and he contends using surplus dollars would leave cities and counties strapped for transportation projects.

“I know that some of you have said you will never hit the green button for tax increases,” he said, noting if the IMPROVE Act takes effect Tennessee would still have the lowest taxes in the nation.

Towns predicts Haslam will have to negotiate with Republicans to pass the seven-cent gas tax increase.

If his plan is approved, all told his administration will have cut $540 million in annual taxes since 2011, nine times more than the highest amount cut by any governor and Legislature in state history.

Haslam’s budget includes $656 million from revenue growth and savings in fiscal 2016 plus $511 million in projected surplus funds this fiscal year, totaling $1.1 billion in non-recurring surplus.

The governor’s proposed budget takes that $511 million and proposes a 3.17 percent revenue growth rate to bring in $366 million in fiscal 2018, plus other adjustments for $957 million in extra money. About $280 million of that would be subtracted for his proposed tax reductions, leaving $749 to pay for increases in state salaries and benefits, higher education, K-12 education, capital maintenance and other agencies.

K-12 teachers, for instance, could see a 3 percent pay raise.

The plan invests a total of $214 million in TennCare and provides $132 million for the rainy day fund, bringing it to a record $800 million.

Haslam also addressed the Broadband Accessibility Act he introduced last week designed to let electric cooperatives enter the retail broadband market and to provide private companies with $45 million in grants and tax breaks over three years to reach more than 270,000 Tennesseans with weak or no internet connection.

In other funding proposed for higher education in Shelby County, the University of Memphis would receive $450,000 for a baseball addition, $1 million for engineering student service improvements, $800,000 for fieldhouse gym improvements and $1.5 million for research start-ups.

The University of Tennessee Health Science Center General Education Building phase II is planned to receive $8.3 million, and $6.5 million is scheduled for restroom upgrades.

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

PROPERTY SALES 101 603 9,602
MORTGAGES 92 538 10,616
BUILDING PERMITS 215 1,282 20,958
BANKRUPTCIES 51 408 6,108