Tennessee End of the Year Report
Tennessee Wine and Spirit Retailers Association
State lawmakers gave final approval to a $28 billion state budget on Tuesday that ended a five-month legislative session that saw Tennesseans get a slight reduction in their food tax, record investments in the rainy day fund and major education funding increases. Monday, the House and Senate had passed different budget bills, but by Tuesday afternoon, the Senate adopted the House’s version of the budget on a 28-4 vote. The passage of the budget bill was the most consequential of several measures approved in a typical flurry of legislative activity in the final days. This year, like most legislatures, lawmakers delayed action on many of the most significant bills until the end of the session.
Key budget points:
The $28 billion budget for the next fiscal year, which covers July 1 through June 30, 2008, will include the following:
• Provides about $290 million for Bredesen’s K-12 funding overhaul of the state’s Basic Education Program (BEP), which is the state’s funding formula for K-12 education. The overall plan will cost about $524 million when fully funded. A significant amount of that was raised by a 42-cent increase in the cigarette tax. Legislators went above what Bredesen wanted at 40-cents-per-pack and passed the increase, which is estimated to take in about $230 million. The majority of that money, about $200 million, will go toward implementing Bredesen’s BEP reforms as well as aiding higher education. The remaining $21 million will be used for agricultural enhancement grants with about $10 million for the state’s trauma centers.
• Cuts the state sales tax on food by a half of a percent from 6 percent to 5.5 percent starting Jan. 1, 2008.
• Adds about $250 million to the state’s rainy day fund to take the savings account to about $750 million by July 30, 2008.
• Gives state employees a 3 percent across-the-board pay raise, provides $23.8 million to make up for salary inequities for longtime state workers, and increases the state’s 401k contribution for state employees from $40 to $50 per month.
• Adds another sales tax holiday for spring 2008.
• Funds $23.5 million for increased jail time for criminals who use a firearm while committing a felony as well as provides money for hiring 32 additional assistant district attorneys and 19 public defenders.
Besides concurring on the budget, lawmakers also gave approval Tuesday to a bill to allow the property tax rates of qualifying senior citizens to be frozen. The property tax bill, resulting from one of last year’s constitutional amendments, will allow local governments to pass ordinances to freeze the property tax rates of senior citizens that have household incomes under the median income of seniors in that county. Of the state’s 95 counties, 51 have senior median incomes at $24,000 or less. Seniors with incomes of $24,000 or less can also use a state program to have their property taxes rebated. The budget raised the income eligibility for those rebates from $20,000 to $24,000.
The second swipe at tobacco besides the cigarette tax increase was a bill that banned smoking. The measure that was approved was a watered down version of what was originally proposed by the Governor. The smoking ban that will go into effect exempts establishments like bars and business with three or fewer employees but does ban smoking at restaurants.
The Legislature was presented with many bills pertaining to wine and spirits. Some of the major bills that were introduced but will be held over until next year include the direct shipment of wine to consumers, free wine samples at retail stores, and the sale of alcoholic beverages on Sunday. The granting for charitable organizations to sell wine and the ability for wineries to sell wine and other related agricultural products did succeed. The Governor signed HB 2120 Litz/SB 1807 Ketron which allows wineries to sell wine and related agricultural products that will be determined by the ABC in rules and regulations. HB 1529 Odom/SB 1223 Cooper creates an additional exemption under the special occasion license, allowing certain organizations to sell wine in closed containers for consumption on or off the premises. This exemption is available only to organizations that meet the following criteria: (1) is a bona-fide charitable organization; (2) is tax exempt under section 501(c)(3) of the Internal Revenue Code; (3) has been in continuous operation as a tax-exempt entity for at least 20 years; and (4) has an annual budget of at least $1,000,000.
Other Bills of Interest
- A bill that would allow for the sale of alcoholic beverages on Sundays between noon and eleven p.m. and on Labor Day, Fourth of July, and New Year’s Day failed in the Senate State/Local Government committee and never received action in the House.
- A bill that would authorize counties and cities to adopt ordinances to prohibit the sale of beer and alcoholic beverages within 2,000 feet of a drug/alcohol treatment facility was referred to committee but never received action.
- A bill that would require id tags for sellers on kegs was taken off notice in the House and never received action from the Senate.
- A bill that would increase the time period from 20-25 days for the manufacturer or distributor of beer to register at the office of the commissioner of revenue was held on the House’s desk and never received action in the Senate.
- A bill that proposed the sale of wine in certain retail food stores was defeated in Senate State/Local and never moved in the House subcommittee.
- Bills were introduced that would increase the tax on wine along with cigarettes but action was deferred as the introduction of a more comprehensive and supported cigarette tax bill passed.
The legislature is in adjournment until January 8, 2008. David and I appreciate the opportunity to represent your interests on Capitol Hill. We look forward to working with you again next year. Please feel free to call us or email us with any questions at David@mmwlobbyists.com or Beth@mmwlobbyists.com.
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