Tennessee Senate passes $37B spending plan for next year

Tennessee Capitol (Photo: WKRN)

NASHVILLE, Tenn. (AP) – Tennessee’s $37 billion state budget proposal is heading to Gov. Bill Haslam after the Senate passed it easily Monday.

The Senate voted 28-2 to wrap up the legislature’s work on the spending plan. Republican Senate leaders praised the plan for what it funds, including $150 million for road improvements, as well as $250 million in tax cuts, $127 million in spending cuts and $132 million to stow away in rainy day reserves.

The budget lays “the foundation for the peace, safety and happiness of our people by further reducing taxes, resourcefully reallocating revenues, and responsibly reinvesting in our future as a state and as a people,” said Senate Majority Leader Mark Norris, R-Collierville.

On Thursday, House members bitterly fought over the bill and tacked on hundreds of millions of dollars in new spending. A group of disgruntled GOP members joined Democrats to tack on amendments that added money for plenty of special projects, including veterans’ flights to Washington, emergency care for infants and a $300 million pool to pay for capital projects in school districts.

The House resolved its differences a day later, stripped the extra money out and passed the bill.

The only major change that remained from the House action would direct $55 million to county road programs. That money had originally been designated by Haslam to begin tackling a $10 billion backlog in state highway and bridge projects.

The budget process had been delayed until the passage of Haslam’s plan to raise the gas tax to boost funding for infrastructure projects, while also cutting taxes on groceries, manufacturers and earnings from stocks and bonds. The proposal took months to clear the Republican-led legislature.

Tennessee’s constitution requires lawmakers to pass a balanced budget plan every year. The next budget year starts July 1.

Some noteworthy budget items include:

ROAD FUNDING: The plan includes $150 million in new road building and maintenance funds generated largely from a hike in the gas and diesel taxes. The tax increases – 6 cents per gallon over the next three years and 10 cents per gallon on diesel over the same period – anchored the roads funding package. Haslam argued the new road funding is needed to begin chipping away at a $10.5 billion backlog of road and bridge projects statewide.

TAX CUTS: The bill covers $257 million in tax cuts, featuring reductions in the sales tax on groceries; cuts to corporate taxes for manufacturers; and lower taxes on income from stocks and bonds. Haslam and fellow supporters of the roads funding package have said the tax cuts would help Tennesseans save more on groceries than they’ll pay in added costs at the pump.

STATE LIBRARY: A new building in Nashville for the Tennessee State Library and Archives would receive $40 million from the state and $10 million from the Secretary of State’s Office. The $50 million represents about half of the projected cost for the facility. The second half of the funding is expected to be included in next year’s spending plan.

ECONOMIC DEVELOPMENT: Grants totaling $22.3 million would be awarded to South Korean appliance maker LG Electronics Inc., which is building its first U.S. washing machine plant in Clarksville. The 829,000-square-foot facility is projected to cost $250 million and create 600 new jobs.

GATLINBURG FIRES: Gatlinburg and Sevierville would receive $10.7 million in disaster relief in the aftermath of the December wildfires that left 14 people dead.

PAY RAISES: The plan also includes $77 million for state employee pay increases and market rate adjustments.

(Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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