Because of backlash from local governments, the Hall tax is never likely to disappear, but legislators are always looking for ways to tweak it. The latest idea is to remove Social Security benefits from the income calculation that determines who has to pay the tax. Currently, the threshold is annual income of $37,000 or $68,000 for joint filers.
Betsy Phillips says the governor made plain to the credit agencies that outsourcing is an option because he had no other choice, given the legislature:
Okay, let's repeat the important point in here: We, as a state, need the best credit rating we can get. In order to show that we we deserve a good credit rating, we have to show that we can cover our obligations and repay any debts we might have. And here's the jam Haslam rightly identifies us as being in—our Medicaid and education costs keep going up but our politicians will not raise taxes to cover those costs (or for any reason). So, in order to show that we can cover our obligations, Haslam has to be able to show them ways we have of coming up with the money. When you can't raise taxes, you have to cut.
The governor smarts at the idea of repealing the Hall tax using surplus — he calls it "one-time" — revenue, instead he says the legislature needs to decide what they are going to cut commensurate to the lost tax revenue.
The income tax generated $303 million during the same fiscal year but only $189 million is retained by the state; the rest goes to local governments where the taxpayer resides. Kelsey’s bill doesn’t explicitly require it but he said the state should make up the revenue loss to local governments — effectively costing state government the full $303 million.
State Representative Joe Armstrong says he's looking forward to addressing the allegations that he schemed to turn a profit from the state hiking the cigarette tax in 2007. His accountant, who "ran" the money through his company, had agreed to a plea deal. More from the Nashville Post on what the accountant says happened.
As the governor plans his trip to talk about gas tax, Americans for Prosperity are planning their own sojourn to argue against an increase:
Haslam appeared undaunted that the group that helped defeat Insure Tennessee is once again lining up against him on the gas tax.
“Have at it,” the governor said. “That’s how democracy works.”
Nearing the end of state government’s fiscal year, Tennessee has collected nearly one half billion dollars more than expected, according to state officials.
Revenues totaled $974 million for May, when $50.5 million more than expected pouring into state coffers. Overall, the state has collected $495 million more than anticipated in the first 10 months of the budget year, with $452 million overcollected for the general fund, according to the Department of Finance and Administration.
“May collections recorded significant gains in sales tax revenues as well as corporate tax payments,” said Larry Martin, commissioner of the department, in a press release. “All other taxes, in total, showed marked improvement over collections of one year ago and were more than the budgeted estimates for May.”
The state collected $20.5 million extra in sales tax last month, a growth rate of about 9 percent, according to the agency. Franchise and excise taxes combined totaled $16 million more than the $50 million the state expected.
The only major taxes that came in below expectations last month were the inheritance and estate tax and the tobacco tax, which fell about $1 million and $500,000 short, respectively.
Tennessee government collected $90 million more than it expected to last month largely thanks to growth in franchise and excise taxes which help make up the "bread and butter" of the state's revenues, said the state Office of Finance and Administration.
“The significant improvement in April taxes reflects an increase primarily in franchise and excise taxes, and we also saw moderate growth in sales tax receipts which indicates increased consumer confidence,” said Larry Martin, Finance and Administration commissioner.
Combined, franchise and excise tax collections amounted to $73.3 million more than the state’s budgeted estimate, for a growth rate of more than 12 percent over last year. Accounting for an unexpected dip in revenues last year due to two one-time tax payments, franchise and excise taxes are up about 10 percent over last year.
Sales taxes climbed $12.2 million above expectations and 5.6 percent over this time last year. Other taxes topping expectations last month include privilege taxes, Hall income taxes and tobacco taxes. Inheritance and estate tax collections, business taxes, gasoline and motor fuel collections all fell below expectations.
Year to date nine months into the fiscal year, state revenues are $444 million more than anticipated.
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