NASHVILLE, Tenn. — Ending one of the longest legislative sessions in
state history, the Tennessee legislature temporarily sealed the fate of
hard-fought efforts to implement a state income tax after weeks of vocal
anti-tax protests by thousands of Tennesseans.
Before adjourning the session Wednesday, the legislature overrode
Gov. Don Sundquist’s veto of the state budget, just 60 hours before a possible state government shutdown.
The $18.3 billion budget surpasses the current fiscal year’s budget by $1.6 billion and includes $445 million in state spending increases, including:
- $210 million to actuarially fund TennCare, the state’s troubled Medicaid program
- $110.6 million for 3.5 percent pay raises for all state employees and teachers
- $90 million to fund the K-12 education funding formula
- $84 million for higher education
- $16 million for long-term care for the elderly
- $14 million to adjust some state salaries toward private-market levels
Tennessee’s successful tax revolt
reported two weeks ago that daily tax protests, prompted by the legislature’s attempt to sneak an income tax proposal through in a rare Saturday morning session, caused support for the proposal to wither. Tennessee is one of nine states without a state income tax.
The protests included processions of horn-honking cars circling the state Capitol and citizens gathering outside legislative chambers to jeer legislators as they entered.
The success of the two-week tax revolt demonstrated the power of talk radio to mobilize opposition to the income tax. Two of Nashville’s competing talk-radio stations,
WLAC, joined forces and served as a catalyst for opposition to the tax proposal.
“I have worked in some competitive radio markets before, and I have never seen two competing stations work so closely to identify and speak out against a common political threat,”
Darrell Ankarlo, WTN’s morning show host, told WorldNetDaily.
Phil Valentine, WLAC’s afternoon host, said that WorldNetDaily’s coverage of the Tennessee tax battle has prompted inquiries and radio interviews from stations across the country.
“I just did an interview with a Seattle radio station last night, and they wanted to know how we were able to work together, because legislators in Washington state want to implement a state income tax as well,” Valentine told WorldNetDaily. “WorldNetDaily has made Tennessee’s tax battle a national issue, because taxpayers in other states know that if Tennessee falls, all the rest will follow like dominos. But what is so amazing about what the citizens have done here is to show that taxpayers can fight back and win.”
In retaliation for rallying opposition to the income tax, legislators proposed a
“talk-radio tax” that would have slapped broadcast companies with a 6 percent gross receipts tax, costing Tennessee radio stations $39.1 million next year alone. But after tax protesters rallied to their cause and the issue received attention from talk-radio giant Rush Limbaugh and the Wall Street Journal, legislators dropped the idea.
reported last week that one tax protester, Mark Cooper, was fired from his job at
Depot after driving his delivery truck around the state Capitol twice on a lunch break to protest the tax proposal. State employees, upset at having their pay raises reduced from 6 percent to 3.5 percent due to cuts in the governor’s budget, began writing down protesters’ license numbers and reported Cooper’s activity to his supervisor. After his plight was aired, Cooper has since received more than 25 job offers, most of which are higher-paying positions.
reported earlier this week, that the ongoing tax protests have prompted several pro-income tax legislators to lash out at constituents.
Sundquist’s veto of the state budget was the first by a governor in Tennessee’s history, but the House overrode the veto by a vote of 78-19 and the Senate by 20-9. According to the state constitution, only a simple majority is required in both houses to override a governor’s veto.
Subsequent to his veto defeat, Sundquist threatened to bring the measure up again later this year in a special session or in next year’s budget negotiations.
“I’ve just begun to fight,” he told reporters shortly after the legislature adjourned.
Sundquist has been handed defeat in his efforts to implement a state income tax in two regular sessions and two special legislative sessions over the past 15 months. Ironically, he campaigned in both 1994 and 1998 on a platform opposing the income tax, and had warned legislators in his 1999 State of the State address to avoid burdening Tennessee families with an income tax.
“All an income tax does is raise the tax burden on Tennesseans and create a way to finance the easy and endless expansion of government. Tennessee does not need a state income tax,” he said in his 1999 address. Sundquist changed his position less than a month later upon learning that the state’s mammoth Medicaid program, TennCare, was going to need an additional $192 million to remain actuarially sound.
The state’s major newspapers have joined Sundquist in editorializing against the no-new-taxes state budget, calling it “shameless,” “irresponsible,” and “a pretend budget.”
Taxpayer advocates and anti-income tax legislators, however, are claiming victory, saying Sundquist’s efforts to drag the session out in order to woo the handful of votes he needed backfired.
“Even the pro-income tax legislators just wanted to get out of here,”
Rep. Mae Beavers told WorldNetDaily. “Most of the members heard the voice of their constituents, who were telling them that they wanted a budget without tax increases. I think that’s why we saw such large margins to override the veto.”
Legislators complained of the heavy-handed efforts by Sundquist and legislative leaders to garner votes for the income tax.
Fowler, one of the leading anti-tax legislators, took to the Senate floor Wednesday to denounce Sundquist’s strategy of attrition.
“I’m tired of the politics of intimidation and coercion and brow-beating and trying to buy people off,” he said. “Leadership is not trying to beat people up. That’s what tyrants do; it’s what dictators do.”
Despite the apparent victory, few are ready to let their guard down. Michael Gilstrap, president of the
Tennessee Institute for Public
Policy, told WorldNetDaily that the battle to cut state spending has just begun.
“Even though they passed a budget without tax increases, this is still a beached whale of a budget,” he said. “Both Gov. Sundquist and the legislature took a pass this year on serious TennCare reform and our out-of-control spending problems. Things are getting so bad that if we don’t fix them in the next year, not even a state income tax can bail us out.”
Any future effort by Sundquist to push through an income tax will be without many key players who were involved in his recent attempts. John Ferguson, Sundquist’s commissioner of finance and administration and one of the income tax’s chief salesman, announced his resignation earlier this week, effective today.
Several pro-income tax legislators, fearful of voter backlash, have chosen not to run for re-election, including Rep. Bill McAfee, a House Republican sponsor of Sundquist’s income tax proposal last November, and Sen. Andy Womack, the powerful chairman of the Senate Education Committee. Many other pro-income tax legislators, both Democratic and Republican, have drawn strong opposition in their primary and general election races later this year.
The recent tax protests also prompted several Democratic House leaders to come out in opposition to the income tax for fear of losing their seats. Rep. Jere Hargrove, the House majority leader, Rep. Matt Kisber, chairman of the House Finance Committee, Rep. Gene Davidson, chairman of the House Education Committee, and Rep. Mike Williams, the House majority floor leader have all spoken publicly in favor of the income tax, but vowed in recent weeks not to vote for it, bowing to constituent demands and tough reelection campaigns.
In his comments to reporters Wednesday, Sundquist credited this abandonment of the income tax by House Democratic leadership as the turning point in the demise of the tax proposal: “The members said, ‘Why should I support this if the chairman of the Finance Ways and Means Committee is not going to do it? Why should I support this if the majority leader is not willing to stick his neck out?’”
A fight for another day
With primary elections approaching in August and all House and half of the Senate seats up for grabs in November, the state income tax issue will remain a hot-button topic. With escalating state budget demands, state leaders are confident that Tennessee’s tax battles are far from over.
But with overwhelming popular support against the state income tax and a vigilant talk-radio community, many Tennessee taxpayers are confident that they will have the final say.
“Tennesseans love their low tax, limited-government state,” Gilstrap said. “Regardless of all the political posturing and threats of gloom and doom, they’re not going to slink quietly back into the night.”