NASHVILLE - Gov. Bill Haslam's proposed $37.1 billion annual spending plan heads to the state House and Senate floors today for what legislative leaders hope will be final action.
House and Senate Finance committees on Wednesday approved the annual appropriations bill, along with three other accompanying measures.
The legislation includes funding for everything from education and health care programs to a whopping $892 million appropriation for capital projects in areas ranging from university and college campuses to fixing general state government buildings.
Those projects would be funded outright without issuing bonded indebtedness. The budget also would fund pay raises for state employees, teachers and higher education personnel in addition to providing more funds for other K-12 and higher education operations.
Tennessee is projected to have a surplus of $1 billion in recurring revenue in the current budget when it ends on June 30 and about $1 billion more in one-time money.
It's the result of higher-than-usual growth in the 2016 fiscal year and this year.
The new budget anticipates cuts in three taxes used to support the general fund to the tune of $400 million annually. They were included in Haslam's IMPROVE Act, which raised gas taxes and fees to provide $350 million more for roads.
At lawmakers' insistence, the bill cut the $400 million from elsewhere, including a 20 percent reduction in the sales tax.
"This is good work," Senate Majority Leader Mark Norris, R-Collierville, told Senate Finance Committee Chairman Bo Watson, R-Hixson, and other panel members during his presentation of the bill. "You're being good stewards of the public's money."
Still, not everyone is happy.
During the same meeting, the focus of Sen. Todd Gardenhire, R-Chattanooga, was not so much on the appropriations bill they'd just approved but an indexing bill to address the state busting the "Copeland Cap" because of the huge surplus revenues in last year's and the current year's budgets.
The constitutional provision says state revenues can't exceed the percentage of Tennesseans' annual per capita income growth. That is unless lawmakers pass the indexing bill acknowledging that they're aware of it.
The senator closely questioned Haslam Budget Director David Thurman and later Deputy Comptroller Jason Mumpower on what was happening.
Becoming increasingly dissatisfied with their explanations, Gardenhire questioned why the administration didn't come forward as early as February with a sales tax holiday or other means to return the money to Tennesseans' pockets.
"We had the time to do it, set it up for the month of May to see how much money was left over or not left over instead of waiting till May to attack this problem," Gardenhire said. "Why wait until the last minute to bring this discussion to the table? It really nullifies the Copeland Cap."
Majority Leader Norris then weighed in, saying, "You can sort of 'one-arm' it along and take it up every February if you want."
Norris, who pushed Haslam on the tax cuts, added that "it occurred to me the better part of valor was to cut the taxes in the first place. More on point, this going forward, don't collect so much. That's why I rewrote the governor's bill, all right? Four-hundred million dollars worth of tax cuts. And with the base reductions you just voted on, another $127 million [in cuts]."
That collectively is "way over" the estimated $438 million by which the state is exceeding the Copeland Cap, Norris said, noting that with a one-time tax holiday, "you wouldn't have had the permanent cuts you've passed now" through the IMPROVE Act.
Noting the appropriations bill does "good things," Norris added that "plenty of things you want funded, they got funded. I guess we could have gone back and looked at some of the things you got funded."
The state isn't expected to have a problem in the new 2017-2018 budget on the floor Thursday, Norris said, "because we quit taking the taxpayers' money."
Firing back, Gardenhire said, "Sen. Norris, I appreciate you making light of my comments. But you might not have noticed that I 'two-armed' to help you cut those taxes. I didn't use one arm at all. And I was with you from the very beginning. I appreciate you recognizing that and pointing it out to us."
Gardenhire added, "I will continue to support those tax cuts whether you like it or not."
As Gardenhire and Norris began to talk over one another, Watson interjected with several quick raps of his gavel, saying, "The spirit of the debate must stay on the issues."
Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow him on Twitter @AndySher1.