Legislature passes budget, says ‘so long’ for the year

By John Rodgers, NashvilleCityPaper.com
June 13, 2007

State lawmakers gave final approval to a $28 billion state budget Tuesday and ended a five-month legislative session that saw Tennesseans get a slight reduction in their food tax, record investments in the rainy day fund and major education funding increases.

Monday, the House and Senate had passed different budget bills. But Tuesday, the Senate adopted the House’s version of the budget on a 28-4 vote.

The passage of the budget bill was the most consequential of several measures approved in a typical flurry of legislative activity in the final days. This year, like most legislatures, lawmakers delayed action on many of the most significant bills until the end of the session.

In the end though, Gov. Phil Bredesen said he thought the Legislature did a good job.

“We proved that we can manage in the tough times. This session proves we can maintain our discipline in the good times,” Bredesen said in a statement. “Our record funding for education and the rainy day reserve are smart investments in the future of Tennessee.”

Lt. Gov. Ron Ramsey (R-Blountville), who started the session off by unseating John Wilder and his 36-year run as Senate speaker in January, said the appropriations bill was a “good budget.”

“We have more money than we’ve ever had in the rainy day fund,” Ramsey said. “It has the most tax relief ever given in one budget as well as the largest investment ever in education.”

Key budget points

The $28 billion budget for the next fiscal year, which covers July 1 through June 30, 2008, will include the following:

• Provides about $290 million for Bredesen’s K-12 funding overhaul of the state’s Basic Education Program (BEP), which is the state’s funding formula for K-12 education. The overall plan will cost about $524 million when fully funded.

• Cuts the state sales tax on food by a half of a percent from 6 percent to 5.5 percent starting Jan. 1, 2008.

• Adds about $250 million to the state’s rainy day fund to take the savings account to about $750 million by July 30, 2008.

• Gives state employees a 3 percent across-the-board pay raise, provides $23.8 million to make up for salary inequities for longtime state workers, and increases the state’s 401k contribution for state employees from $40 to $50 per month.

• Adds another sales tax holiday for Spring 2008.

• Funds $23.5 million for increased jail time for criminals who use a firearm while committing a felony as well as provides money for hiring 32 additional assistant district attorneys and 19 public defenders.

Republican Sens. Mae Beavers of Mt. Juliet, Dwayne Bunch of Cleveland, Jack Johnson of Brentwood and Paul Stanley of Germantown voted against the budget bill.

When asked why she voted against the budget, Beavers said one reason was “pork, pork, pork.” She referenced one example in the $750,000 that zoos in Chattanooga, Knoxville, Memphis and Nashville will each receive in the state budget.

“What’s going to set us up for an income tax is the spending they are doing,” Beavers said. “They’re spending every penny they can get their hands on.”

Sen. Johnson (R-Brentwood) said he voted against the budget for a number of reasons, including that he did not receive the $190,000 he was seeking to have the last 800 feet of a road in Williamson County finished.

Also, Johnson said he voted against the budget because it broke the state’s constitutional cap on spending, commonly known as the “Copeland Cap.”

“I am not going to come in here in my very first budget and pop that cap,” Johnson said.

Sen. Douglas Henry (D-Nashville) supported the budget, singling out the increases in the state’s rainy day fund as something he particularly favored. But Henry said he opposed cutting the sales tax on food, saying he didn’t “want any inroads into the sales tax.”

“It’s the best tax we’ve got from a production standpoint,” Henry said.

House Majority Leader Gary Odom (D-Nashville) praised the budget, saying it “made some outstanding improvements in our public education system.”

“I think it’s been a very productive session,” Odom said.

Seniors get property tax rates frozen

Besides concurring on the budget, lawmakers also gave approval Tuesday to a bill to allow the property tax rates of qualifying senior citizens to be frozen.

The property tax bill, resulting from one of last year’s constitutional amendments, will allow local governments to pass ordinances to freeze the property tax rates of senior citizens that have household incomes under the median income of seniors in that county.

In Davidson County, the income ceiling that seniors would have to be under is $34,256. Earlier estimates had the income ceiling in Davidson County at $38,881, but the formula was changed resulting in the lower limit.

Of the state’s 95 counties, 51 have senior median incomes at $24,000 or less. Seniors with incomes of $24,000 or less can also use a state program to have their property taxes rebated. The budget raised the income eligibility for those rebates from $20,000 to $24,000.

Tobacco issues tackled

Lawmakers also took two swipes at tobacco.

Earlier this year, Bredesen proposed a 40-cent-per-pack cigarette tax increase.

Legislators went above what Bredesen wanted and passed a 42-cent-per-pack increase, which is estimated to take in about $230 million. The majority of that money, about $200 million, will go toward implementing Bredesen’s BEP reforms as well as aiding higher education. The remaining $21 million will be used for agricultural enhancement grants with about $10 million for the state’s trauma centers.

The second swipe at tobacco was a bill that banned smoking. But the measure approved was a watered down version of what was originally proposed.

The smoking ban that will go into effect exempts establishments like bars and business with three or fewer employees but does ban smoking at restaurants.

Lastly, the budget for the first time since the [Don] Sundquist administration did not take any money out of the state’s highway fund for roads. It also added $10 million back into it on a one-time basis. And lawmakers were not swayed by AT&T’s extensive lobbying effort and did not vote on a bill to allow the telecom to get a statewide television franchise. The move, stringently opposed by the cable industry and local governments, was delayed until 2008.