Tennessee Gov. Bill Lee on Thursday announced a proposal to suspend state and local taxes on groceries for 30 days amid the highest inflation in 40 years. Late last week, Georgia Gov. Brian Kemp signed a bill that temporarily suspended that state's gas tax.
Maryland Gov. Larry Hogan was the first governor to pursue relief proposals last week, immediately suspending the state's gas tax for 30 days. Kemp's suspension in Georgia will last through May 31. Now, lawmakers in Maine, New Jersey, Pennsylvania, New York and Washington are considering suspending their state's gas taxes.
The average price of a gallon of gasoline recently broke its all-time record, according to the American Automobile Association. The new record is $4.26 per gallon, shattering the previous record of $4.11 set in July 2008.
Lee's proposal will be included in the 2022-2023 fiscal year budget amendment, which will be delivered to the General Assembly on Tuesday.
"As Americans see their cost-of-living skyrocket amid historic inflation," the Republican governor said in a news release, "suspending the grocery tax is the most effective way to provide direct relief to every Tennessean. Our state has the ability to put dollars back in the pockets of hard-working Tennesseans, and I thank members of the General Assembly for their continued partnership in maintaining our fiscally conservative approach."
The release did not say when the suspension might begin or say what impact the loss of dollars to the state treasury would be.
We understand the sentiment of Lee and the other governors in making their proposals and appreciate that every little bit helps in the battle against the shrinking U.S. dollar.
(The Tennessee legislature had given state residents a noninflation-related break last July when members approved a sales tax holiday for food, food ingredients and prepared food.)
But Federal Reserve Chairman Jerome Powell on Monday said it would take three years to bring inflation, currently at 7.9% annually, back to a normal level.
In a speech to the National Association for Business Economics, he noted that inflation preceded the Ukraine War - a fact the Biden White House conveniently forgets to mention - and said it has confounded forecasters in not coming down sooner than expected.
It also, according to pollsters, is the biggest issue facing voters today.
The bloated federal COVID relief bills over the last two years have given many states - even the ones, unlike Tennessee, who have not been fiscally responsible - lots of cash. Yet, U.S. Sen. Bill Hagerty, R-Tenn., told a state television station in an interview Wednesday it was one of those bills - the March 2021 $1.9 trillion American Rescue Plan - that was the match that sparked the inflationary price spikes.
So what do Messrs. Lee, Kemp, Hogan and others who may pass legislation do at the end of the 30 days or designated period when their tax suspensions end? And with at least a three-year inflationary slog ahead, how many times can governors suspend taxes before their state's coffers are threatened?
And how, if at all, will it play in the races of Kemp and Lee, who face re-elections this year? Maryland's Hogan doesn't have to worry about that. He is finishing his second term and is constitutionally barred from seeking a third term.
Kemp, perhaps sagaciously, set his gas tax suspension to sunset a week after the May 24 GOP primary battle in which he is locked with former U.S. Sen. David Perdue, who has been endorsed by former President Donald Trump. If gas remains high through the summer - and summer gas prices are always higher - will voters blame Kemp if he doesn't institute another suspension? And if he wins his primary with Perdue, will that make voters more apt to vote for likely Democratic nominee Stacey Abrams, whose party most voters currently blame for inflation?
Lee, meanwhile, has no significant opposition in the Republican primary, but would the removal of the 30-day grocery tax - and no secondary suspension - send voters into the hands of Democrats?
Thursday announcement, not surprisingly, already started some legislators' teeth gnashing.
State Rep. John Ray Clemmons, D-Nashville, took to Twitter to voice his disapproval of Lee's proposal, saying he and state Rep. Bo Mitchell, D-Nashville, proposed a gas/diesel tax suspension earlier this year and were shut down.
"This. Is. Rich," he wrote, adding that the governor is now trying "to save face by pivoting to a tax that Dems have been fighting to cut/repeal for yrs. He & his admin killed my bill to make fruit/veg tax-free less than 1mo ago."
In truth, it's probably some election-year politics and some felt need to give state residents some relief. But it's what happens when the tax suspensions run out in Georgia and Tennessee - and elsewhere - that should be interesting.