UTC, Chattanooga State to benefit from Tennessee's just-passed $35 billion budget

Tennessee Gov. Bill Haslam

NASHVILLE - Tennessee lawmakers on Thursday gave final approval to the state's nearly $35 billion spending plan for the fiscal year that starts July 1, sending the measure on to Gov. Bill Haslam.

Representatives voted 87-7 for the budget bill. Senators approved it earlier on a 32-1 vote.

Haslam played the dominant role in shaping the 2016-2017 budget and is expected to sign it.

It includes a quarter billion dollars in new funding for K-12 education, $165 million more for higher education and also returns $142 million to the state highway fund, which was taken prior to Haslam's taking office in 2010.

The spending plan provides pay raises for teachers, state workers and higher education employees.

With the state awash in as much as $1.8 billion in new revenue growth, it also devotes at least $464 million of one-time money to capital projects.

In fact, the budget makes no provision for issuing bonds to pay for projects. Majority Republicans gloated the new buildings or renovations in areas ranging from state office buildings to college campuses won't add a dime to the state's bonded indebtedness.

The budget provides $35.9 million to put UTC's old Lupton Library to new uses as well as renovate portions of the Chattanooga university's Fine Arts Center.

Yet another $2 million will go toward helping renovate Chattanooga State's Center for Engineering Technology, Arts and Sciences.

"When folks at home ask you what's the most important thing you do each year, I hope you tell them the budget," Senate Majority Leader Mark Norris, R-Collierville, said while presenting the bill to colleagues.

He noted the state's budget is the "well spring" for state government activities.

"I like to say [the budget] focuses on the four 'Es' of Tennessee: employment, education, economic opportunity and enforcement of the law," Norris said.

Other provisions include restoring prior cuts to TennCare providers' reimbursements and hiring a dozen new Tennessee Highway Patrol officers.

But critics, largely Democrats, charged the budget doesn't go far enough, with Rep. Antonio Parkinson, D-Memphis, accusing majority Republican leaders of trying to hog all the "pork" for a select few and shortchanging even many of their own GOP colleagues.

Republicans defended the spending, with Majority Leader Gerald McCormick, R-Chattanooga, noting one of the largest projects affects the district of Rep. JoAnne Favors, D-Chattanooga.

McCormick later said he was referring to the Chattanooga State building funding but added he could just as easily have included UTC's new building, since that's in her district as well.

While majority Republicans largely danced around the edges of Haslam's proposal, they did agree in behind-the-scenes negotiations among themselves and the governor to slash the state's Hall Income Tax on stocks and bonds by 17 percent.

The proposal takes the levy from 6 percent to 5 percent, but the actual bill allowing it still will have to be passed Monday or Tuesday when lawmakers return to the Capitol to conclude their annual session.

The Hall change means $27 million less for the state and about $15 million less for cities, which have been grumbling over the hits to their budget.

Meanwhile, House Minority Leader Craig Fitzhugh, D-Ripley, did some hitting of his own, chastising the Republican majority for cutting taxes on people who can afford it, including himself.

"I'm a lucky fellow," Fitzhugh, a banker, told the chamber. "I get to pay some of the Hall Tax, and I really don't mind. It helps But let's remember who pays that tax. It's a relative few."

He warned the image won't be good by cutting taxes paid by wealthier Tennesseans, with Haslam expected to propose a gas tax next year that would affect all.

House Finance Committee Chairman Charles Sargent, R-Franklin, pointed out the new budget also provides $37 million to shore up a property tax relief program for disabled veterans as well as senior citizens. But Fitzhugh countered that it introduces means testing.

Haslam, a billionaire according to Forbes Magazine, has been resistant in the past to major changes in the Hall Tax, but his fellow Republicans, many who face contested GOP primaries while the influential Americans for Prosperity-Tennessee clamor to abolish it, were bent on cutting it.

Sargent said the "intent" was to reduce the Hall rate over time to zero and kill the tax entirely.

The budget also puts $100 million into the state's Rainy Day emergency reserve. That brings it back up to almost $700 million, close to the amount that was there prior to the Great Recession.

Speaking later, Rep. Patsy Hazlewood, R-Signal Mountain, said that "I think all of us as Tennesseans can be happy that we have a balanced budget, that our state is in good financial condition and that we're able to fund things we need to do to keep our state on the right trajectory."

A freshman lawmaker who sits on the Finance Committee, Hazlewood said "there's never going to be enough money to do everything we all would like."

Contact staff writer Andy Sher at asher@timesfreepress.com, 615-255-0550 or follow via twitter at AndySher1.