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Tennessee Sen. Bo Watson, R-Hixson, addresses those gathered for a legislative forum at the Hamilton County Department of Education on Nov. 5, 2013.

NASHVILLE — A controversial "de-annexation" bill was killed for the year this week when a Senate panel shipped it off for summer study over objections of Speaker Pro Tempore Bo Watson, the measure's sponsor.

The Hixson Republican later vowed to come back next year with the bill, which as amended would have allowed residents living in areas annexed by Tennessee towns and cities since May 1, 1998, to hold referendums and decide whether to secede from municipalities.

"This isn't an issue that goes away," Watson said.

Earlier Wednesday, Senate State and Local Government Committee members voted 5-3 with one member abstaining as the bill was sent off for summer study.

That came after the panel performed major surgery in recent days on the House-passed version of the measure.

Because the General Assembly is expected to adjourn its annual session next month, Wednesday's maneuver kills the bill. It's a way of saying no, Watson later said.

"I respect the process," Watson said. "This process can be very frustrating at times. Am I disappointed? Sure. Basically we have a bill the committee constructed."

Meanwhile, leaders of Tennessee towns and cities, including Chattanooga, expressed relief.

"There's no doubt that cities are central in driving the Tennessee economy," said Chattanooga Mayor Andy Berke, who along with mayors of Memphis and Knoxville, as well as AutoZone founder Pitt Hyde and other top Memphis businessmen spoke out against the bill last week in a hearing.

"As business leaders testified to the Senate," Berke added, "this bill would have been disastrous to our economic growth, so we are happy to see it taken off the table for this session."

Margaret Mahery, executive director of the Tennessee Municipal League, said she believes the Senate panel did the right thing.

"There are a lot of unanswered questions [so] we need to make sure we're doing everything proper and correct," she said. "This is not just for the cities but it's for the people who live in the cities. And we just need to make sure we're moving properly before we do something we're going to end up two years down the road having to look at again."

Rep. Mike Carter, R-Ooltewah, the House sponsor, said he was "stunned" by the Senate's action. He had previously passed a version that would have applied the bill to just five cities, including Chattanooga, that his bill stated had previously taken "egregious" annexations.

"I had some senators that asked me to stay out of the process, that I was 'Public Enemy No. 1' in Memphis and some offices in the Senate. So I stayed out.

"There are always going to be elected officials who think they know what's better for people than people know themselves," Carter said, then added sarcastically, "I don't have any problem with that. I'm impressed by Putin's annexation of the Crimea with 100 percent of the 'vote' in a 'referendum.'"

The de-annexation bill was a followup to Watson and Carter's landmark 2014 bill ending Tennessee's decades-old law allowing cities to annex by ordinance. Critics had called it forced annexation because residents of affected areas had no voice, as they weren't city residents at the time.

Watson and Carter then set about addressing what they considered past abuse.

Previously, the Senate State and Local Government Committee members restored the de-annexation bill to its original language, applying it to all 350 towns and cities.

Both House and Senate versions of the bill would have required residents who vote to leave a city to continue to pay property taxes for roads, sewers and other improvements made while they resided in the municipality.

And both versions also allowed cities to exclude commercial and industrial property from leaving cities.

Despite that, Memphis claimed the bill could cost the city up to $80 million in revenues and bring financial ruin to a community that is already in a precarious financial state. About $28 million of that was residential property tax that Watson and Carter maintained had been addressed to a good extent in the bills.

Chattanooga Mayor Berke and other officials initially feared the bill would impact companies like Volkswagen that are in territory annexed by previous Mayor Ron Littlefield.

City financial figures estimate figures show the residential properties affected now pay $1.72 million in property taxes and another $166,000 in loss in water quality charges to meet federal clean water requirements aimed at preventing raw sewage from entering the Tennessee River during heavy storms.

Including commercial and industrial properties with residential property annexed beginning in 1998 brings the tab to a combined total of $5.7 million, according to city figures.

Earlier Wednesday, State and Local Government Committee members voted for the surprise motion, offered up by Republican Caucus Chairman Bill Ketron, R-Murfreesboro, to shuttle the bill off to summer study.

In arguing against Ketron's motion, Watson said "this committee has invested, I would argue, more time on this legislation than any study committee. The legislation that is before this committee today is a creation of this committee."

Earlier this week, the committee led by Sen. Ken Yager, R-Kingston, made major changes to the bill, some with Watson's support and several over his objections.

Watson also pointed out that when the House-passed bill came to the Senate, it was re-referred to Yager's committee with Yager and Majority Leader Mark Norris, R-Collierville, assuring everyone the bill would come back to the floor.

Ketron, however, said the bill's impact is so potentially large that lawmakers need to take great care on the issue, citing the financial impact.

Moreover, Ketron said, he has issues in Rutherford County, which he represents. He noted that it took him seven years to pass a bill allowing sales of wine in grocery stories. It was an important bill, Ketron said, but doesn't have nearly the impact of de-annexation. It could impact pending lawsuits and have other effects, he argued.

Senators must "make sure that we get this right," Ketron said.

Yager voted to send the bill to summer study, while Norris voted against it.

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

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