VOL. 41 | NO. 17 | Friday, April 28, 2017
IMPROVE Act fight an insight into testy election ahead
In case anyone’s keeping stats, Senate leadership soundly defeated House leadership this session in the gas tax/tax cut battle.
Whether this is a forerunner to a Republican gubernatorial primary remains to be seen as Senate Majority Leader Mark Norris and House Speaker Beth Harwell weigh decisions. It’s not as if they’d be facing off against each other, though, since businessman Bill Lee and former Economic and Community Development Commissioner Randy Boyd are definitely in the race and not hurting for money.
But based on overwhelming votes for the IMPROVE Act, Norris and Lt. Gov. Randy McNally rolled to a win while House Republican leaders limped to the final horn, showing a bit of ambivalence along the way.
It wasn’t even close in the Senate where it passed 25-6, largely with McNally, Norris and Speaker Pro Tem Jim Tracy guiding the governor’s revamped plan. In fact, Norris brokered a new version of the governor’s bill to make it a tax cut, instead of tax neutral, complete with a one-cent food tax reduction, which eventually drew in Democrats no matter how much they howled about tax breaks for the wealthy.
And while some speculators figured on a bare-majority margin in the House, the ultimate 60-37 outcome made folks quickly forget a GOP “whip count” against the bill – taken on popsicle sticks – coupled with Democrats’ reservations, which could have spelled trouble in days just before the final vote.
Here are a few oddities in the brouhaha over the IMPROVE Act, which will raise gas and diesel taxes, along with vehicle fees, to be offset by cuts in the food tax, Hall tax on interest and dividends and franchise and excise taxes on manufacturers. It’s supposed to be $400 million in cuts and $350 in increases.
At the jump, the bill barely survived the House Transportation Subcommittee, where Chairman Terri Lynn Weaver sent it to the back of the line and called on Rep. David Hawk to present an alternative plan, which would have steered one-fourth of 1 percent of the sales tax toward the transportation fund instead of raising fuel taxes. The meeting was adjourned suddenly in a procedural move.
The next week, House Speaker Pro Tem Curtis Johnson broke a 4-4 tie in the committee to send it on to the full House Transportation Committee. Otherwise, it might have gone the way of Insure Tennessee into the legislative trash heap.
Rep. Barry Doss, who wound up carrying the bill to passage in the House, saw it through the full Transportation Committee two weeks later. Incidentally, Harwell appointed him to the chairman’s post there in place of Rep. Jimmy Matlock, who ran against her for the speaker’s job last fall. Matlock voted against the IMPROVE Act, while Doss championed it.
The House “Fire and Brimstone Caucus,” led by Rep. Jerry Sexton, threw a fit a few days later when Rep. Tim Wirgau rushed the bill through the House Local Government Committee. Even Doss conceded it moved too quickly there, apparently with a member calling for a vote before any discussion could take place. But rather than defend Sexton, several Republicans told him to learn the rules.
Just when it looked as if Speaker Harwell was pulling the strings for Gov. Bill Haslam after he helped her win re-election last fall, she did an about face and said she was working with Hawk, Johnson and Republican Caucus Chairman Ryan Williams on an alternative plan.
That plan turned out to be a retread, though, a proposal to use sales tax revenue from the sale of new and used cars to pay for transportation projects, letting Tennesseans pay for everything and taking money from the general fund, long a no-no for transportation projects. Even though it got absolutely no traction in earlier committees under a different sponsor, Hawk brought it up again in the Finance, Ways and Means Committee, and, then on the House floor. Predictably, it went nowhere, with Democrats calling it the “horrible Hawk bill.”
It was so bad, according to House Democratic Caucus Leader Craig Fitzhugh, his group had to go “all in” for the governor’s legislation. Lawmakers from urban areas also liked the measure allowing local governments to hold referendums and raise taxes for major mass transit projects, which are crucial to the future of Nashville and Memphis.
“I’ve never worked so hard for a Republican bill in my life,” Fitzhugh says, as 23 of 25 Democrats joined 37 Republicans voting for it.
Lots of variables
Those who voted against the IMPROVE Act, which is designed to start chipping away at a $10.5 billion backlog on 962 projects, had – and still have – plenty of good reasons. Instead of raising taxes, Gov. Haslam could simply have taken a billion dollars of surplus money and send it to the transportation fund for road and bridge projects. That would knock out three years’ worth of tax increases and push this matter down the road a bit further, all while leaving the state with nearly a billion more in extra recurring money.
When you’re flush with cash, it’s hard to justify raising taxes, even if you call it a “reallocation,” as Norris does, and make some across-the-board tax cuts. After all, the Legislature was already locked into a Hall tax phase-out within five years, so, in a way, it was counting a tax cut it had already approved.
Another sticking point was the $5 increase in vehicle registration fees. In some counties, the wheel tax is virtually non-existent, while in the bigger counties it takes a big check to renew your tags.
Throughout the debate, Norris and Doss argued that average Tennesseans would get a bigger tax break at the grocery store than they would pay extra at the pump.
But when Democratic Rep. Karen Camper of Memphis pointed out the impact of the registration fee in a finance meeting, she was shut down quickly. The only other person to mention the registration fee was Republican Rep. Cameron Sexton of Crossville, who pointed out on the House floor that the purported tax windfall of $2.19 per month, using national averages for a family of four with two cars, was questionable at best.
Paying $10 extra for vehicle fees would drop that windfall down to $1.36 a month, as much as some people lose while fumbling change at the drive-through window.
All this for a plan that could take 15 years or so to come to fruition. By that time, most of us will be retired, dead or both.
But McNally says he believes it’s sufficient.
“I think it will greatly accelerate the long-term projects they have on the list,” he points out.
Meanwhile, Norris says claims that the IMPROVE Tax will put the biggest burden poor people are “ridiculous.”
“Nothing could be further from the truth. Everybody eats whether they’re on assistance or not, and not everybody drives,” Norris says. “A lot of them do work, 331,000 Tennesseans are employed by these manufacturing concerns, which will now have the option to benefit from change in the excise and franchise tax. This is beneficial across the board. And that was just a ploy to throw some people off.”
Coupling the tax reductions with the increases was likely the only way to get a large number of House Republicans to vote for the plan, throwing in the franchise and excise single-sales factor to attract key backers such as Rep. Gerald McCormick of Chattanooga and Rep. Mike Carter of Ooltewah, who argued Tennessee is losing jobs because of its high business taxes.
Norris dealt with predictable resistance in the Senate from nay-sayers such as Sen. Dolores Gresham, who said she had to keep her promise not to vote for a tax increase and cast skepticism as the motto made popular by former Lt. Gov. Ron Ramsey, “It matters who governs.”
“Perhaps, indeed, it doesn’t matter who governs,” said Gresham, a Republican from Somerville in rural West Tennessee.
Norris responded by pointing out no district is receiving more road projects than Gresham’s, but he didn’t dwell on the matter, though he did mention something about “false promises and false premises.”
“It does matter who governs. By golly, it matters how we govern too,” he adds.
Taking a stand or not
But while Norris and McNally never wavered in their support of the new and improved IMPROVE Act, saying it was the responsible way to pay for road and bridge improvements, keeping them within the transportation fund and letting out-of-state travelers and trucker help pay the bill, Harwell and House leaders left people scratching their heads.
In fact, Harwell voted against the amendment that rewrote the bill, then voted for the bill after Hawk’s measure on car sales taxes fell by the wayside.
“Leadership worked with members to offer the alternative because there was clearly an appetite among the caucus to have one,” says Kara Owen, spokeswoman for the Belle Meade Republican. “Speaker Harwell voted for the alternative plan because that is the proposal she preferred. However, it failed to get the necessary number of votes for passage.
“Ultimately, she voted in favor of the bill because she recognizes the need for properly funding our infrastructure, while also providing substantial tax cuts for all Tennesseans.”
Meanwhile, Casada always liked Hawk’s plan better but would support whatever measure came out of the Transportation Committee. He didn’t feel House leadership failed to carry the day, saying he, Harwell and Ryan Williams thought there were better plans than the IMPROVE Act.
“But we didn’t push for the other plans, and we just let the membership analyze it on their own and come to their own conclusions,” he says. In fact, Casada voted for the Barry Doss (or Norris plan) but was absent for work reasons when the final vote took place, instead of giving it a thumbs up or down. By that time, it was done after 70-something amendments plummeted in a five-hour meeting.
The only difference between the House and Senate bill came down to property tax relief for veterans and the disabled and elderly. And, once again, Norris negotiated a deal, getting a bigger break than expected from the governor and matching the House’s move to give veterans relief on up to $175,000 of property value. All told, it’s another $7 million in tax breaks and was expected to be wrapped up this week.
But while Norris calls the process “very productive, very healthy,” he was clearly irritated with Harwell’s vacillation midway through the session. When asked if she needed to make a stand and get on board with the governor’s plan, Norris delivered the quote so far of the 110th General Assembly: “There’s a fine line between indecision and deception.”
He declined to expound on the deception, but he might be able to use it against Harwell if they make it to the stretch run for governor.
Then again, Harwell could go to Bean Station in East Tennessee and say, “I tried to kill the gas tax.”
Sam Stockard can be reached at email@example.com.