Tennessee Legislature opens with revenue worries

photo In this 2014 file photo, Tennessee House members, including Rep. Glen Casada, R-Franklin, left, and Rep. Gerald McCormick, R-Chattanooga, right, say the Pledge of Allegiance as the 108th General Assembly is reconvened in Nashville.
photo House Speaker Beth Harwell, R-Nashville, talks to a House member as the 108th General Assembly is reconvened Tuesday in Nashville. The session is expected to feature debates over creating a school voucher program and whether to allow supermarkets to sell wine.

NASHVILLE - Tennessee lawmakers opened their 2014 session Tuesday with the House offering a bipartisan tribute to the late Rep. Lois DeBerry before Republicans and Democrats promptly fell out over how bad the state government's revenue picture really is.

House Finance Committee Chairman Charles Sargent, R-Franklin, warned members of his panel that with revenues falling below projections, lawmakers are "definitely looking at a challenging year."

He also announced new guidelines on members' filing budget amendments seeking to add items to the state's annual spending plan.

But House Minority Leader Craig Fitzhugh, D-Ripley, questioned whether things are as dire as Republican Gov. Bill Haslam says.

"I really don't think so," Fitzhugh said.

He noted November sales tax collections were off primarily due to Thanksgiving coming so late in the month. Figures for December won't be reported until next month. A former Finance Committee chairman, Fitzhugh also argued that while business franchise taxes fell below estimates, the taxes are notoriously volatile.

Last week, state Finance Commissioner Larry Martin said business tax collections fell more than $54 million below projections in December, contributing more woes for what is now an estimated $175 million shortfall during the first five months of the fiscal year.

Haslam will present his proposed 2014-15 annual spending plan for the state in February. This year's budget is $33.1 billion. State funds account for about $15 billion.

Earlier in the day, lawmakers flooded into the state Capitol as they opened the second annual session of the 108th General Assembly. Republicans leaders are aiming to finish work quickly with all 99 House members and 17 of 33 senators up for re-election this year.

House members opened their first session with a bipartisan memorial service honoring the chamber's former speaker pro tempore, DeBerry, D-Memphis, who died last summer after a battle with pancreatic cancer.

Among those paying tribute to DeBerry, who served some 40 years and became the highest-ranking black in House history, was Rep. JoAnne Favors, D-Chattanooga.

Senators also met, arguing over a bill limiting the interest rates that law firms or investors can charge plaintiffs for financing major lawsuits.

The business-backed bill's sponsor, Senate Commerce Committee Chairman Jack Johnson, R-Franklin, said he wanted to put a halt to "wild wild west" charges. His bill would cap interest at no more than 25 percent.

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But Democrats questioned the bill as did several Republicans, including Sen. Todd Gardenhire of Chattanooga. Noting the private sector is based on people taking risks on investments, Gardenhire questioned whether the bill is "violating a basic principle of free enterprise."

It ended up passing 27-2 with Gardenhire voting no.

Meanwhile, Senate Republicans and Democrats have their own disagreements over big a problem the state really has with revenues.

"It appears to be a pretty tight year," said Senate Finance Committee Chairman Randy McNally, R-Oak Ridge. "It could get a lot better. It could get a lot worse."

McNally said he wants to "drill down" into what's happening on business taxes. In Sargent's committee hearing, state Revenue Commissioner Richard Roberts said there are a number of factors in the falloff from projections.

Under state requirements, most companies wind up making tax payments based on estimates. But what actually occurs can be less with companies later seeking refunds or tax credits, Roberts said.

Senate Minority Leader Jim Kyle, D-Memphis, is skeptical over how bad a situation the state faces. Kyle said he has watched governors seek to control lawmakers' expectations on revenue any number of times during his three decades in the legislature.

"That's a governing technique claiming you don't have any money," Kyle said. "Instead of saying 'I don't want to do a, b and C, you say we can't afford to do a, b and c. I'm with you, but we can't afford it.'

"And," Kyle added, "if you move through a real quick session and people don't have a chance to go behind those reports and numbers, that's difficult."

Republican leaders are aiming to adjourn their annual session sometime in April.

Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550.

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