LEGISLATIVE ACTION ALERT: House Schedules Floor Vote on IMPROVE Act for Wednesday
This upcoming Wednesday, April 19th, the Tennessee House of Representatives is scheduled to consider the transportation infrastructure and single sales factor tax proposal contained in Gov. Haslam's IMPROVE Act.
Before Wednesday's vote, it is critical that your legislators hear from you, leaders in the business community, directly about the importance of the IMPROVE Act to local economies, job growth, and long-term transportation sustainability.
Please take a moment over the next five days to
call your House and Senate members
at their offices and in their home districts to voice your support for Gov. Haslam's proposal. Be sure to urge legislators to reject any amendment that would remove the much-needed single sales factor tax relief provision that is vital for expanding our state's manufacturing base and bringing high-paying manufacturing job opportunities to communities across Tennessee. If you cannot reach your representative directly, leave a voicemail or follow up with an email message.
As you talk with your elected officials, consider the following points:
- The IMPROVE Act will modernize Tennessee's road funding structure to compensate for rising fuel efficiency and highway construction costs and ensure our state's transportation infrastructure keeps pace with our growth. Tennessee has not raised its fuel tax for transportation improvements since 1989, when the average fuel efficiency for a new model-year passenger car was rated at roughly 28 miles per gallon. As of 2014, the average fuel efficiency for comparable new model-year passenger vehicles has grown to roughly 36.4 miles per gallon, accounting for potentially billions of dollars in lost highway funding revenue over time. Unlike diverting sales taxes from vehicle purchases, fuel taxes also more evenly capture revenue from out-of-state commuters and visitors who similarly use our roads and highways.
- The IMPROVE Act offers critical tax cuts designed to keep Tennessee economically competitive with our regional neighbors and grow jobs and business investments in our state. Specifically, the Single Sales Factor business tax cut for manufacturers will eliminate existing state tax penalties on local jobs and capital investments in the manufacturing sector. All but two of Tennessee's neighboring states, Alabama and Arkansas, currently offer either a single sales factor business tax apportionment or a lower overall tax rate, crippling our state's regional competitiveness. When combined with the 20% cut in grocery taxes and the reduction of the state Hall Tax on investments, the proposal will result in a net tax decrease for the average Tennessee family.
- By offering a more welcoming tax climate for one of the top business drivers of our state's economy, the Single Sales Factor contained in the IMPROVE Act will strengthen economic conditions for the over 331,000 Tennesseans currently employed in the manufacturing sector. Not only does this job growth offer more employment opportunities for Tennesseans and expand local tax bases, but with an average employee earning roughly $67,456 per year compared to $44,102 for all other non-farm businesses, the manufacturing industry is also elevating the standard of living for both urban and rural families.
Statewide Radio Campaign Promotes IMPROVE Act
A group of associations backing Gov. Bill Haslam's IMPROVE Act launched a statewide radio campaign with ads touting the legislation that raises fuel taxes for transportation while also cutting other taxes. Dubbed the "It's Smart" series, the ads say "it's smart to support better roads, safe bridges and tax cuts." Turn on your radio or
The Latest: Speaker Harwell's Alternative to Gas Tax Fizzles in House... For Now
House Speaker Beth Harwell's effort to strip any fuel tax increases from fellow Republican Gov. Bill Haslam's road funding proposal has fizzled - at least for now.
After a tense hearing this week in the House Finance Committee, legislators passed Gov. Haslam's IMPROVE Act through its final committee hurdle and scheduled the legislation for a full vote on the House floor for next Wednesday, April 19th a
t 9:00a.m.(CDT). The debate in committee grew heated at times, with Rep. David Hawk (R-Greenville) introducing, and then withdrawing, an amendment ostensibly authored by Speaker Beth Harwell seeking to replace the entire bill with a reallocation of sales tax revenues from new vehicle purchases. This alternate proposal would also remove the hundreds of millions of dollars in tax relief for both businesses and families contained in the current legislation, including much-needed franchise and excise tax cuts for manufacturers and a 20% reduction in the state grocery tax. After withdrawing his amendment, Rep. Hawk pledged to revive it again on the House floor, setting the stage for a potential legislative showdown between supporters of the comprehensive road funding and tax relief package and hardline obstructionists who have vowed to oppose the measure at every step.
Meanwhile, Haslam and his supporters are continuing to fight for the tax cuts contained within the fuel tax proposal. As reported by the
Times Free Press
the proposed alternative drew a frustrated rebuke from Senate Majority Leader Mark Norris (R- Collierville), who, like Harwell, is strongly considering a bid for governor next year. "We are actually returning money to the taxpayers. A tax cut is money in their pocket," Norris pointed out. "When they reshuffle the deck by raiding the general fund, the taxpayer never sees that."
"I've never seen a real Republican run from a tax cut like she is," Norris continued. He further contended that advancing a steeply divergent version the bill could cause the legislative session to drag out indefinitely. "It just prolongs the agony and keeps us here at loggerheads much longer, which doesn't serve the people of Tennessee well," he concluded.
The Governor's proposal seeks to raise an estimated $350 million annually that Haslam says is needed to begin tackling a $10.5 billion backlog of interstate, highway and bridge projects. The bill further provides new funds to cities and counties for their local road maintenance programs. A key feature of the Governor's plan also embraces a wide and diverse array of tax cuts, making the net impact of the bill a real, tangible tax reduction for both families and business. These cuts include reducing the grocery tax from 5 cents to 4 cents on every dollar spent on household food and grocery items (this tax cut alone will negate any increase to families), a 1% cut to the Hall income tax, and an optional single sales factor business tax apportionment cut for manufactures.
A note on single sales factor: This week, House leadership reportedly leaked information designed to undermine the single sales factor, calling it a special corporate "give-away" to big business. Unsurprisingly, this atypical attack from Republican leaders on a growth and jobs-driven tax cut omitted the real facts behind the proposal. In reality, the largest 1.6% of Tennessee businesses pay over 70% of the business franchise and excise taxes. These businesses also have the most pronounced positive impact on our state's economy, hiring the most workers in a community, purchasing the greatest market share of goods and services from local small businesses, and paying a considerable amount of local property taxes that fund our schools. In fact, the manufactures that are eligible to take advantage of the single sales factor tax cut employ over 331,000 Tennesseans and pay their workers, on average, $23,000
per year than all other private non-farm employers in the state. Rather than being left as one of the few remaining southern states refusing to offer single sales factor tax relief to manufacturers, we should be finding ways to attract more of them to our state and renew the competitiveness of Tennessee industry.
As the old adage says, "Don't kill the golden goose, just so you can have one fine meal."
Breaking Down the Plans- Haslam's IMPROVE vs. Harwell-Hawk Plan
There is a lot of one sided information being shared on social media.
We want you to have the facts.
Below is a quick comparison on the most discussed policies.
The Governor's plan.
Policy Objective 1: Tennessee has a backlog of over 950 road and bridge projects that are need to invest in our future. The cost of these projects are $10.5 billion.
Policy Solution: Proposal includes a modest increase in the fuel tax, which functions as a user fee for those people, including visitors, who drive on our roads and use our bridges (6 cents for gas, 10 cents for diesel - both phased in over 3 years).
Rationale: User fees collect revenue from people that directly use the service. Any increase should be long-term, sustainable and not easily diverted by future General Assemblies. By having a dedicated and reliable source of road funding, we also further safeguard our state's credit worthiness.
Consequence: Everyone will pay a few cents when they refill the fuel tank on their vehicle.
Policy Objective 2: Tennessee should concurrently extend tax relief to offset fuel tax increase and drive economic growth.
Policy Solution: The IMPROVE Act proposes a
20% reduction in the food tax, establishing a new food sales tax rate of 4% (this tax cut is immediate, as opposed to the 3-year phase-in above). The plan also includes a single sales factor tax apportionment cut for manufacturers.
Rationale: Conservative governance means allowing people to keep more of their own money. Tennessee has a budget surplus, and therefore can afford to do so. Cutting a main revenue source from the government will help keep our state budget lean and efficient. Adopting the single sales factor will keep Tennessee's business tax policies competitive with our regional neighbors and grow investment and job opportunities in one of the state's most critical economic sectors.
Consequence: The average family will see a
20% reduction in tax on their food purchases. Growth in the manufacturing sector will likely ensue as existing companies now have incentive to expand and new companies have a more welcoming tax climate to locate operations within the state.
Adding these 2 policies together the average family will see an overall tax cut. Additionally, the growth of government will be checked and the growth of jobs and investment will be encouraged.
The Harwell-Hawk Plan.
Political Objective 1: Find a solution that is attractive to legislators who are worried about the potential political optics of raising a tax
Policy Solution: Divert the sales tax collected from the sales of new and used cars to pay for road construction
Rationale: Find a less controversial proposal that allows representatives to evade a vote on a tax proposal, thereby avoiding short-term political concerns in the next election cycle
Consequence: Only Tennessee residents would pay this sales tax, insulating visitors and out-of-state commuters from any stake in road maintenance. Moreover, by diverting revenues away from the general fund to pay for roads, future General Assemblies would be faced with budget shortfalls and legislative battles to return those funds, stagnating ongoing road projects and injecting budgetary uncertainty in our credit worthiness ratings.
Note: Both the single sales factor and transit-dedicated local option provisions are excluded from the Harwell-Hawk plan. It also does NOT include efforts to slow the growth of government. There is no method to capture revenue from people outside the state who use our roads (non-Tennesseans). Predictably, fighting over these funds would become the primary focus of each legislature in the future.
TN Chamber-Supported Broadband Legislation Clears Legislature
As part of the Tennessee Chamber's 2017 legislative priorities, Governor Bill Haslam's "Tennessee Broadband Accessibility Act," has now passed both the House and Senate and will be headed to the Governor for his anticipated signature.
The compromised bill hammered out by interested parties over the past month will provide
$45 million over three years in grants and tax credits for service providers to help make broadband available to unserved homes and businesses. "More than 800,000 Tennesseans don't have access to broadband, and one in three businesses identified it as essential to selecting their location. Spurring deployment in our rural, unserved areas will open them up to economic investment and growth," Haslam said.
The legislation came after a year of study and stakeholder conversations by the administration. In July 2016, the Department of Economic and Community Development released a commissioned study assessing broadband in Tennessee and options for increasing access and utilization.
The Tennessee Broadband Accessibility Act is part of Haslam's NextTennessee legislative plan aimed at building and sustaining economic growth and the state's competitiveness for the next generation of Tennesseans.
Tennessee General Assembly: Weekly Calendars
Senate's weekly calendar click
House of Representative's weekly committee calendar click
House of Representative's subcommittees are closed.
Note: Many committees have closed. There are new times for the remaining committees. Additionally, the House has a floor session on Wednesday. The following adjustments were announced: House Finance subcommittee will meet 30 minutes after the floor adjourns and House Government Operations & House Criminal Justice will now meet at 1:30pm.
House and Senate Committees Legislative Updates:
Chamber Outlines Work on Bills Impacting Business and Industry
SB 1371 / HB 1405
Sen. Jack Johnson (R-Franklin) / Rep. Kelly Keisling (R-Byrdstown) Protection of Natural Gas Transmission
- As amended, this legislation clarifies that the State Air Control Board in Tennessee should make its determinations on air pollution control permits based on the scientific approaches established in law and rule.
Tennessee Chamber Supports: This bill is brought by the Tennessee Chamber. Recently, a local government pushed to include an additional standard to block a specific project and could have stopped future industrial and utility permitting. Their proposal was not based in the same scientific method as the current law and was rejected by the Air Board. We are certain the Air Board was correct and this legislation provides clarification for future attempts to circumvent the law and regulations governing air quality and potential emissions.
Status: PASSED full Senate,
PASSED in House Agriculture & Energy Committee this week and scheduled for the House floor Monday night (4/17)
TN / VA Manufacturers Town Hall Session
Save the Date: May 4th at Bristol Motor Speedway
The Tennessee Chamber and Tennessee Manufacturers Association is proud to announce a networking and issues discussion in partnership with our neighbors the Virginia Manufacturers Association and the Bristol Chamber of Commerce. A significant amount of manufacturing activity occurs in both Virginia and Tennessee and we want to coordinate and look for ways we can work together and interact with Manufacturers on important topics. There is no charge to attend the event and we ask that you
register by clicking here
, where you can also see the agenda.
In Win for Manufacturers, Trump Will Pursue Revival of Ex-Im Bank.
(4/12) reports that in "a victory for American manufacturers," President Donald Trump said Wednesday that he plans to fill two vacancies on the board of the Export-Import Bank. Reuters says the National Association of Manufacturers "cheered the move." NAM Vice President of International Economic Affairs Linda Dempsey is quoted saying, "Manufacturers are encouraged by President Trump's vocal support for the bank." Trump revealed his intention in an interview with the
Wall Street Journal
(4/12, subscription) following a meeting with former Boeing CEO Jim McNerney. If the appointments overcome opposition from some Republicans and are confirmed by the Senate, they would return the five-member board to a quorum, enabling it to once again make loans of more than $10 million. Boeing spokeswoman Kate Bernard called the news "an encouraging development on a key competitive issue for U.S manufacturers and their extensive supply chains."
Washington D.C. Fly-In
May 15-17, 2017
The Tennessee Chamber is proud to announce our inaugural Washington D.C. fly-in. We hope you can join us and make this event a great success. Planned activities include meetings with Tennessee's U.S. Senate and House delegation and staff and policy briefings at the U.S. Chamber and National Association of Manufacturers. Please consider sponsorship opportunities as well for your company to be recognized in our Nation's capital.
Hotel George - 15 E St NW, Washington, DC 20001; Phone: (202) 347-4200
*No room block, but we suggest staying here if possible (TN Chamber staff will be here)
Cost: $199/member (Hotel cost NOT included)
Deadline to book: April 17 (**Limited spots are available); Contact Carolyn Davis (
if you will attend
Sponsorship Opportunities: *Presenting Sponsor - $5,000
*Premier Sponsors - $2,500
American Health Care Act
Despite passing out of four committees in the House (Ways & Means, Energy & Commerce, Budget Committee, Rules Committee), the
Health Care Act
(H.R. 1628) was pulled from the House floor before a vote was held on March 24th. Over the next two weeks, while Congress is in recess and at home in their districts, it is imperative that they hear from the business community. We encourage you to contact your members in the U.S. House of Representatives and ask them to work together to pass meaningful health care reform as soon as they return to Washington. You can also share our
with your membership, and ask them to tell Congress to act NOW to lift the burden of Obamacare on employers.
While the legislative process was underway, the U.S. Chamber of Commerce
for congressional action to restore choice, flexibility and innovation to the nation's health care markets. The Chamber viewed passing the AHCA out of the House as a critical first step to
encourage further reform
and sent a
letter indicating our support for the process.
Obamacare's taxes and mandates have been hurting employers and individuals across the country - tell Congress to
on health care reform today.
The last fundamental rewrite of the Federal tax code occurred in 1986 when President Ronald Reagan and Speaker Tip O'Neill hashed out a bill that lowered rates and achieved key reforms. We think it's high time for
comprehensive tax reform for the 21st Century
While tax reform remains a top priority for the Congressional majority, the Trump administration, and the
, it is an extremely complicated process (despite what you may read in the press). Consider the following:
- The House GOP "Blueprint" released last June is still the only developed tax reform plan on the table, and it is not in legislative text;
- The Senate Finance Committee is waiting to see what happens in the House, but a number of instrumental Senators have been very public about the fact they have their own ideas; and
- The White House has been saying for a few weeks that they will also have a plan of their own, but nothing has emerged yet.
The House Blueprint includes a new revenue source that has become the focus of most of the early discussion on reform: a Border Adjustment Tax (BAT).
- Under the proposed BAT, exported goods are exempt from tax, while imported goods sold domestically are subject to the tax. Not surprisingly, industries that import goods are organizing in opposition to the BAT while those that export are lining up in support. Many others find themselves somewhere along the spectrum.
- The BAT is an integral part of the Blueprint because it raises more than a trillion dollars in revenue, which is required to finance other key provisions, specifically the full business expensing provision, and rate reductions
- The goal is a new, 20% corporate income tax rate, and a 25% rate for pass-through businesses (partnerships, s-corps, sole proprietorship(s), etc).
- Neither the White House nor the Senate Finance Committee has taken a clear position on the BAT, although individual Members of Congress have expressed reservations about it or opposition to it.
And this is just one provision- see, we told you it was complicated! Others in the House Blueprint, such as denying deductions for interest, are also receiving attention.
Still, we've come a long way since just last year, when President Obama released a budget that featured
over $3 trillion
in new taxes. So, we're making progress. Remember, it took over two years for the 1986 reform law to come together, depending on when you start counting (some say you should start when President Reagan took office!), so hang in there and stay tuned for more. For those curious about the 1986 reform law, we can recommend some
Administration Prepares For Upcoming NAFTA Talks
In a recent draft letter sent to congressional leaders, the Trump administration provided additional details on its plans to revisit the North American Free Trade Agreement (NAFTA). While NAFTA has delivered significant benefits for the vast majority of U.S. workers, farmers, and companies, the U.S. Chamber agrees it is due for modernization in a number of areas. Overall, we welcome the constructive and more nuanced tone of the administration's recent trade-related communications, and we eagerly await more details.
We expect the NAFTA negotiations to begin sometime this summer, and the Chamber will be fully engaged in these efforts, while continuing to remind all policymakers that its crucial to maintain and further open relationships with international markets that account for 95% of the world's consumers. We encourage you to join us in speaking to your Members of Congress about the importance of trade between your state and Canada and Mexico. To see how your state benefits from NAFTA, you can read the U.S. Chamber's recent report,
The Facts on NAFTA
Clean Power Plan Executive Order
President Trump signed an executive order in late March that calls on EPA head Scott Pruitt to begin dismantling the Clean Power Plan. With your help, the U.S. Chamber fought back against this overreaching set of rules and regulations since the outset. In a statement, Chamber President and CEO Tom Donohue said:
"The U.S. Chamber has long argued that EPA's power plant regulations are not only unlawful, they are a bad deal for American families and businesses....there is every reason to believe that the federal government will no longer seek to punish American consumers and businesses for using the energy resources that fuel our economy."
For a detailed explanation of this executive order, please click
, and we thank you for all your support on this issue over the past several years.
see Chamber is excited to announce that our members can now save up to 25% off base rates from Avis and Budget! These discounts are available on a wide selection of vehicles from eco-friendly and fuel efficient compacts and hybrids to stylish premium and luxury sedans. Plus, enjoy a complimentary membership in Avis Preferred® and Budget Fastbreak and get additional offers like dollars off, a complimentary upgrade, or a free weekend day.
For further information, please contact:
The Capitol Update is written by the Chamber's government affairs staff and is distributed statewide to all of our business, local chamber and economic development professionals. The Tennessee Chamber Capitol Update is a powerful grassroots communication tool and we encourage you to share this publication with your team members to provide crucial updates and engage your local elected officials on important issues.