"You have to deal with reality," a glum governor tells the press Wednesday.

NASHVILLE -- Tennessee state government got -- if not a full reprieve -- a stay of execution Wednesday, as Governor Don Sundquist and legislative leaders reached a compromise on the “concept” of a patchwork budget bill based on one introduced by Sen. Jerry Cooper (D-McMinnville).

The governor announced the agreement during a visit to Legislative Plaza just before noon -- as the House Finance Committee met in a committee room nearby to consider details. His mood was one of resignation. “It’s not a long-term solution,” he told reporters. “Those who follow us are going to find out it’s a problem they’re going to be facing next year. I would hope the momentum for tax reform would go forward.” Wanly, he described the outcome -- which still must be debated and voted on by the House and Senate on Wednesday -- as “my last shot.”

He said, “You have to deal with reality. And that is, we’re facing a shutdown. Friday night, at midnight, we came close. Two nights ago. We can’t tolerate that.”

The decision by Sundquist to decision to give up and forgo his plans for tax reform based on this or that variant of a state income tax obviously came hard for him. “We’ve been trying for 3 years to do something about this,” he said. His glum looks brightened only a little when Cooper, author of the plan which is potentially the most lucrative of the handful of patchwork plans still being considered, happened by.

“Governor,” the senator said cheerily and flashed Sundquist a thumbs-up signal. Sundquist brightened up a little more in subsequent brief hallway conversations with John Ford and Steve Cohen, two Democratic senators from Memphis who have been dependable allies during Sundquist’s long -- and ultimately unavailing -- effort to revamp the state’s tax structure.

House Speaker Jimmy Naifeh, in a speech from the House podium, joined Sundquist in retreating from the income-tax fight: ``In this state right now," the Speaker said, "the income tax/tax reform bill does not have the votes. We cannot pass it.... We've got to pass a revenue measure. We've got to help those people who cannot help themselves.... It's really time for us to move on.... We need to get that common bond back together.... No more this side and that side. No more being held to vote for this thing or that thing. I've made that clear (to income tax supporters).''

Like Naifeh and the governor, other supporters of tax reform were seemingly resigned to the inevitable -- but plainly not pleased. “There are a lot of different taxes on everybody,” sighed Linda McCarty, director of the Tennessee State Employees Association, who saw her constituency bare holding its own in the plan. “My horrendously overworked work force that is miserably underpaid will be asked to go home and celebrate that they’re able to watch a parade.” She would have preferred that efforts to get a better agreement continue through Independence Day celebrations on Thursday and the subsequent weekend. “They couldn’t do a finer celebration of the 4th of July than to stay here working day and night until they got a solution.”

On the other hand, State Senator Marsha Blackburn, the Williamson County Republican now seeking the 7th District congressional seat, found the Cooper plan too generous. She said she and a small group of fellow legislators had not given up on the idea of a no-new-taxes budget -- one, moreover, which would not require the suspension of state-shared payments to local governments and the downsizing of education which were components of the so-called ÔDOGs’ no-new-taxes budget worked on by various legislative leaders.

Blackburn said she was still being deluged by communications from Tennesseans who wanted to hold the tax line. “The cutest thing!” she said of one caller, who told her, “Marsha, I’m taxed out,” and, she related, went on to advise, “Shut her down and come on home” -- the exhortation seeming to apply to the current extended legislative session, not to state government itself, though Blackburn did not specify.

Though it will no doubt be modified by the two legislative chambers, perhaps significantly, the Cooper plan (whose “concept” Sundquist accepted as a basis for agreement) provides for:

  • an increase in the state sales tax from 6 percent to 7 percent, with grocery food purchases exempted from the additional one-percent.

  • A 10 percent increase in taxes on alcohol and tobacco products.

  • Extension of the sales tax to coin-operated machines.

  • “Decoupling” from various federal tax breaks given to business.

  • A $10 increase in motor vehicle registration fees and commercial vehicle fees.

  • Increasing the “professional privilege” tax from $200 annually to $300.

  • Raising the “single article” cap on the sales tax so that certain revenues now going to local governments would be retouted to the state.

    Adherents of another plan, the so-called "CATS" Budget, which would generate less revenue than Cooper's plan with a differently shaped tax bundle, indicated they might contest the final outcome in sessions Wednesday night.

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