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VOL. 41 | NO. 18 | Friday, May 05, 2017

Tennessee Senate passes $37B spending plan for next year

By Sam Stockard

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The state Senate approved a $37 billion budget Monday complete with the governor’s IMPROVE Act package of fuel tax increases and tax reductions.

Senators passed the measure 28-2 and sent it to the governor despite opposition led by Democratic Sen. Lee Harris of Memphis who argued the body would be breaking the Copeland cap, a law prohibiting the spending of revenue that exceeds the state’s economy’s growth rate.

“That is a limitation on spending in our Constitution. That is a good thing to have, and we should be careful about spending,” Harris said.

He pointed out some $520 million in the budget involves the spending of excess revenue, which will go into the rainy day fund, TennCare fund, state pension and unfunded liabilities for retirees.

But while several senators said they felt the Legislature would be violating the constitutional amendment passed by former legislator David Copeland 40 years ago, Senate Majority Leader Mark Norris contended the Senate would have to change its budget dramatically, cutting contributions to the rainy day fund, TennCare fund and tax reductions.

“We made the determination in this budget and the committees that we wanted to deal with those revenues by returning them to the taxpayers,” Norris said.

Ultimately, a measure recognizing the Senate would be spending $438 million in over-collections passed the body. Senators also voted not to move it ahead of the vote on the budget.

The Senate budget plan includes the IMPROVE Act, which Norris referred to as the Tax Cut Act of 2017, with increases in gas and diesel taxes in addition to vehicle registration fee increases, which are more than offset by reductions in the food tax, Hall income tax on interest and dividends and a decrease in franchise and excise taxes for manufacturers.

Norris said the budget, which he sponsored and largely rewrote to push the IMPROVE Act to passage, lays a foundation “for peace, safety and happiness” of the Tennesseans by cutting taxes, reallocating resources and investing in the people, Norris said.

The idea is to increase funding for the state’s transportation fund to expedite 962 road and bridge construction projects over the next 15 years, with the state facing a $10.5 billion backlog on infrastructure work. In addition, it repays $120 million to the transportation fund taken a decade ago to shore up the general fund.

“We are not a third-world state. We are Tennessee,” Norris said, nothing sub-par roads cost state residents $5.6 billion annually, with Memphis residents wasting $1,821 a year.

The budget plan is buoyed by 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.

For the second year in a row, the budget takes on no new debt. At the same time, it contains $749 million 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. It also hires 25 more officers for the Department of Safety, in addition to more than 50 assistant district attorneys.

“This budget includes $250 million in tax cuts, $127 million in spending cuts and brings our rainy days fund to its highest level in years,” Lt. Gov. Randy McNally said. “It is a tremendous achievement by every member of each body of the General Assembly”

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

Out of a total $836 million in capital investments and maintenance, 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.

It also contains $18 million for a West Tennessee Veterans Home in Shelby County.

A total of $67.4 million in supplemental appropriations is included in the budget plan, with $1.7 million to go toward a lawsuit with the state of Mississippi over the Memphis aquifer. In its 13th year, the lawsuit filed by Mississippi seeks $615 million in damages, claiming Memphis Light, Gas and Water is improperly pumping millions of gallons of water from the Memphis Sand and Sparta Sand and leaving “cones of depression” in the water table.

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 can be reached at sstockard44@gmail.com.

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