Tennessean
BILL STEBER / STAFF Rep. Matt Kisber, left, chairman of the House Finance Committee, talks with Sen. Jim Kyle, vice chairman of the Senate Finance Committee, and John Morgan, state comptroller. TWO INCOME TAX PLANS MAY come to a vote TODAY.
Sales tax plan rejected; proponent may take idea to Senate floor
By BONNA de la CRUZ Staff Writer
A stopgap tax package, billed as an alternative to a state income tax, was rejected yesterday by the Senate Finance Committee, as advocates of two separate income tax plans said they might ask for votes today.
State lawmakers are facing a Sunday deadline to approve a budget and avert an almost total shutdown of state government. They need $877 million to fund the present-day level of services.
The Senate Finance Committee voted down a business and sales tax proposal called Continuing Adequate Taxes and Services, dubbed the plan, but its sponsor, Sen. Doug Jackson, D-Dickson, said he would bring it back.
''A cat has nine lives, and we've only used one,'' Jackson said shortly after the 5-6 vote. The plan would generate $766 million by raising the sales tax to 8.75% statewide, imposing $200 million of new business taxes and increasing cigarette and alcohol taxes.
Jackson asked the Senate committee to approve the plan in concept and said he would add details in an amendment on the Senate floor, from where the plan then would be sent back to the committee.
Sen. Jim Kyle, D-Memphis, said that legislators ordinarily did not vote on ideas and that Jackson's proposed process was ''convoluted.'' Sen. Bob Rochelle, D-Lebanon, said he would not participate in what he termed a ''charade.''
Afterward, Jackson said two key Senate supporters on the committee — Joe Haynes, D-Goodlettsville, and Ward Crutchfield, D-Chattanooga — told him that would be the only way to get the bill out of the committee to the Senate for a vote. Another member who had promised his support reneged, he said.
Two income tax plans remain on the table. They are:
• House Speaker Jimmy Naifeh's 4.5% income tax, which would raise $970 million and roll back some sales taxes.
• A 6% income tax that abolishes the state's 6% sales tax. A 2.75% local sales tax would remain in place. The plan still lacks a vote or two in the Senate for passage, Sen. Jerry Cooper, D-Morrison, said.
The ''6 and 0'' plan by Lt. Gov. John Wilder and Kyle was being tweaked yesterday in part because initial estimates that it would raise $1.2 billion were wrong.
Also, a component that would impose a 9.75% tax on amusements, restaurant bills, rental cars and hotel charges — which tourists would typically pay — is likely to be lowered to 8.75%, the rate now in effect in parts of the state, Kyle said. In exchange, taxes on business property and profits probably will be raised, Kyle said.
Dave Goetz of the Tennessee Association of Business said the state already had the third-highest franchise tax in the nation. Corporations pay 25 cents per $100 of property value.
Committee's rollcall vote
Here is the Senate Finance Committee roll call on the Continuing Adequate Taxes and Services proposal, which was defeated with five members voting yes and six voting no.
Yes: Ward Crutchfield, D-Chattanooga; John Ford, D-Memphis; Joe Haynes, D-Goodlettsville; Micheal Williams, R-Maynardville; Douglas Henry, D-Nashville.
No: Ben Atchley, R-Knoxville; Tim Burchett, R-Knoxville; Bill Clabough, R-Maryville; Gene Elsea, R-Spring City; Jim Kyle, D-Memphis; Bob Rochelle, D-Lebanon.
http://www.knoxnews.com/kns/politics/article/0,1406,KNS_356_1235181,00.html
Senate panel rejects CATS Finance Committee's vote is 6-5
By Tom Humphrey, News-Sentinel Nashville bureau June 28, 2002
NASHVILLE - A Senate committee on Thursday rejected the patched-together package of taxes known as "CATS," while the latest state income tax proposal was rescheduled for a vote today.
"This game of brinkmanship has got to come to an end," said Sen. Doug Jackson, D-Dickson, sponsor of the CATS plan. "We're at the midnight hour."
Despite an upsurge in such commentary, most indications were that the Legislature's budget impasse will continue into the weekend, butting against the actual deadline of midnight on Sunday.
Without some sort of budget by then, state government would effectively shut down. A pending proposal would allow some "essential" functions - such as the operation of prisons and mental institutions - to continue in operation through Friday, July 5.
Jackson asked the Senate Finance Committee on Thursday to send his CATS plan - the acronym stands for Continuing Adequate Taxes and Services - to the Senate floor for a vote even though it is subject to further changes.
Sen. Robert Rochelle, D-Lebanon, denounced the effort as a "charade" that is "signaling a total breakdown" in the normal legislative committee system.
When the bill came up for a vote, six senators voted to kill CATS, while only five senators supported it.
"A cat has nine lives; we've only used one," Jackson said afterward, promising to otherwise try to bring the bill to a vote of the full Senate.
"This is the only plan, when you talk to legislators and run the numbers, that can get 50 and 17" votes, said Jackson, referring to private nose counts.
Fifty votes are needed for a bill to pass the House, and 17 are needed in the Senate.
Other private nose counts indicated the new "6-and-0" income tax plan, backed by Sen. Jim Kyle, D-Memphis, and Lt. Gov. John Wilder, could pass the Senate Finance Committee and is apparently within a single vote of having 17 on the Senate floor.
The Kyle-Wilder bill was to have been brought to the Senate Finance Committee for a vote Thursday, but that was postponed until today.
State Comptroller John Morgan, who drafted the plan, said there had been miscalculations in projecting it would raise $1.2 billion in new state revenue for the coming fiscal year. He and some legislators said that may mean revising some provisions within the bill.
The bill would levy a flat-rate 6 percent state income tax and repeal the present general 6 percent state sales tax. However, the sales tax would remain at an increased rate of 7 percent on selected items - including alcohol, tobacco, restaurant meals and "amusements," such as tickets to sports events and concerts.
Also, local governments would still impose a sales tax at a rate of 2.75 percent, which would be uniform statewide.
The CATS bill, as described in its most recently revised version, has a dozen components ranging from an increase in the state excise tax paid by businesses to higher levies on alcohol, tobacco, vending machines and cable TV.
Jackson told the Finance Committee that if the bill were to be approved on the Senate floor, he would bring it back to the committee for another vote. He acknowledged that would be an unusual procedure but said the present unusual times warrant such action.
The bill would be available on the Senate and House floors if efforts to pass an income tax and other budget options fail, he said. That has become a real possibility, he said.
"The CATS proposal should be viewed as a life preserver - something you grab right at the last moment before you go down," Jackson said.
An income tax has been consistently spurned for more than three years, he said, but proponents are "now saying just give me another five days" - a reference to the pending "essential services" budget that would allow some government functions to continue until July 5.
In another development, the House on Thursday gave final approval to a bill that allows use of special reserve funds to cover a $475 million deficit in the current fiscal year's budget. The bill now goes to Gov. Don Sundquist, who supports it.
Included in the reserve-raiding bill is a provision that grants protection from lawsuits to state workers who continue on the job even when they are not being paid.
State Attorney General Paul G. Summers said workers who volunteer their services after a shutdown would be subject to personal lawsuits for any mishaps that occur on the job. Normally, the state government is responsible for paying damages for any liability faced by state employees, but that immunity legally evaporates when they are not being paid, Summers said.
In the 5-6 committee vote on CATS, only one East Tennessean voted for the bill - Sen. Mike Williams, R-Maynardville. Among those voting "no" were Sens. Ben Atchley, R-Knoxville; Tim Burchett, R-Knoxville; Bill Clabough, R-Maryville; and Gene Elsea, R-Spring City.
Tom Humphrey may be reached at 615-242-7782 or humphrey@edge.net.