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State Sens. Bo Watson, right, and Randy McNally participate in a legislative hearing at the Hamilton County Department of Education in Chattanooga, Tenn., on Thursday, October 29, 2015. State Sen. Bo Watson held the meeting to discuss state incentives used for Volkswagen's Chattanooga plant expansion.

NASHVILLE — State Sen. Bo Watson's municipal de-annexation bill ran into trouble on the Tennessee Senate floor Monday and was re-referred back to committee over the Hixson Republican's objections.

Senators sent Watson's bill, which passed the House last week, back to the State and Local Government Committee on a 19-12 vote.

They later directed the committee to meet and consider the bill Wednesday in a special meeting. The purpose is to examine House amendments restricting the would-be law's application to just five cities, including Chattanooga, which the bill says engaged in "egregious" annexations in the past.

The bill would allow citizens in tracts annexed from 1998 forward to petition for elections to de-annex themselves. Residential property owners would continue paying taxes on bonds cities issued to make improvements while the residents lived within the municipality.

Earlier, Senate State and Local Government Chairman Sen. Ken Yager, R-Kingston, objected to amendments placed on the House version of the bill by Rep. Mike Carter, R-Ooltewah.

Yager questioned the constitutionality of amendments, which under Carter's bill would limit de-annexation by public referendum to just six cities. Johnson City was amended out on the House floor after city officials moved to de-annex some property as the bill loomed.

The chairman said the limitations and some other provisions were not what the Senate envisioned when Watson's version was moved out of Yager's Senate panel last year.

"The amendment that the House has put on is totally unacceptable and totally out of line with the sentiment and policy that drove those votes last year" in his committee, Yager said.

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Yager also questioned what he called a vague enactment date and predicted that problem and the limitations to just a handful of cities based on what Carter's language describes as their past "egregious" actions on annexation would put the state before courts and result in the law being tossed out.

Watson said he believed "the chairman is premature" because he is assuming the Senate amendments won't be accepted by the full Senate.

As amended by the House, the bill includes only Chattanooga, Knoxville, Memphis, Kingsport and tiny Cornersville, Tenn.

After losing the vote on the re-referral motion, Watson pushed hard to set a definite time for the bill to be considered by Yager's committee. After various parliamentary maneuvering, and some confusion, it was agreed to set it to Wednesday.

Republican Senate Speaker Ron Ramsey told reporters earlier Monday he planned to amend out Kingsport, which he represents, from the House bill. And the speaker, a close friend of Watson's, called into question the House bill's constitutionality and fairness.

Earlier Monday, Republican Gov. Bill Haslam, a former Knoxville mayor, reiterated his concerns about the bill. But he stopped short of threatening a veto.

Memphis officials in particular are angered over the bill, saying the loss of funds it estimates at $27 million threatens the city's already precarious financial situation.

"Everybody knows Memphis has had financial challenges around pensions and everything else. I think doing that at this point in time raises some concerns," Haslam said.

Carter said the bill addresses that by requiring departing residents to continue paying bonded indebtedness for improvements made while they were in the city. But Senate critics said that would not cover all expenditures made by cities.

Chattanooga Mayor Andy Berke's office said while the bill requires former residents to continue paying on bond-issued debt, the city has made a number of improvements through non-bond means or with designated revenue.

The bill lets 10 percent of registered voters living in areas annexed by the five cities since 1998 to petition for a de-annexation referendum. And a majority vote would let them leave.

Carter said the bill also would let citizens who voted "no" to ask the cities to let them back in. But Berke's office questions how that would impact emergency services.

Earlier Monday, reporters asked Ramsey if he thought it was fair for the General Assembly to target just the five cities.

"That's a good question," the speaker said. "That's the reason I'll vote no on the bill."

Ramsey also said cities for decades were legally able to annex new territory by ordinance, a means outlawed two years ago by another Watson and Carter bill. Now residents can hold a vote on annexation.

The speaker said he has backed doing away with annexation by ordinance since his first 1992 campaign. With the 2014 change in law, he said, "we set a line in the sand that from this point forward, anybody that's annexed has the right to vote on this. But now we're reaching back to get those that were annexed, legally under the law, by contract."

Ramsey also said there already is a way under current law for residents to move for de-annexing if cities aren't meeting their obligations to provide services under a public "plan of services."

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

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