Press Release from Rep. Jim Hackworth

Rep. Jim Hackworth - House District 33

IMMEDIATE RELEASE June 14, 2007
House Approves Reducing Food Sales Tax from 6 to 5.5 percent
Legislators Approve 2007-2008 Appropriations;
New Education Dollars, Property Tax Caps OK’d

NASHVILLE (June 14) – The House of Representatives passed the $27.9 billion appropriations bill for 2007-2008 this week after advancing important reforms to the Basic Education Plan (BEP) and allocating more money for fighting crime, according to Rep. Jim Hackworth, D-Anderson County.

“With adjournment imminent, legislators cut the sales tax on food and enabled property tax relief for certain elderly homeowners and veterans. We asserted our control over the government’s purse strings by approving a fiscally-conservative, balanced state budget,” said Hackworth.

Of the total budget, the state appropriation is $13.8 billion and federal appropriation $9.5 billion. Other revenue sources are projected at $3.3 billion, with tuition and fees generating $975 million and bonds $295 million. The total budget package represents an increase of 3.5 percent over the current fiscal year, which ends June 30.

“These numbers demonstrate the continuing strength of Tennessee’s economy. Just a few years ago, our state was in financial trouble. Now we are making substantial investments in the Volunteer State’s future while returning some money to taxpayers,” continued Hackworth.

An estimated $229.3 million in new money is raised by increasing the sales tax on cigarettes from 20 cents to 62 cents per pack. “This is only the third cigarette tax increase in 40 years. Even with 42 cents added, the state’s cigarette tax is well below the national average of $1.04 per pack,” explained Hackworth.

Education receives 90 percent of cigarette tax revenue, with $21 million earmarked for agricultural enhancement grants. Another $9.9 million of new money is allocated to the state’s trauma centers.

Remembering university students and their families, lawmakers included $48 million for higher education to keep tuition down.

“The cigarette tax hike holds down property taxes in the future because most local governments are receiving more dollars from the state for education, their most pressing financial obligation,” said Hackworth.

Another provision of the budget bill authorizes 3 percent across-the-board pay raises for state employees, including public school teachers and higher education staff. The budget adds another one-third compression pay installment for qualified state employees. Plus, matches to state employee 401(K) deposits are now $50 per month.

Appropriations for the Rainy Day Fund stand at $250 million. This is more than ever before, and increases the total reserves to $750 million by June 2008. As a result, state government will meet the five percent requirement for savings and keep the AA+ bond rating that gives officials greater financial leverage.

“Schools First,” or BEP 2.0
Education sees a record investment with $588.4 million. The state’s revised basic education plan, called “Schools First,” or BEP 2.0, costs $295.4 million under the enacted budget. About $100 million in recurring dollars is banked for second-year allocations.

“We want to raise high school graduation rates from 78 percent to 90 percent by 2012. The best strategy for accomplishing this goal is changing the complex basic education plan (BEP) formula that allocates state money to every local school systems. Funding is now based on a cost-differential factor that totaled each school system’s expected financial contribution.

“The BEP 2.0 plan, however, uses calculations of total assessed property and total local option sales tax collections from the state’s 95 counties. In turn for increasing state funding, lawmakers are demanding more accountability from our public schools,” explained Hackworth.

BEP 2.0 pays for 100 percent of student enrollment growth at local schools, plus at-risk student programs and English language-learner curricula. The state will now pick up 75 percent of teacher salary funding, with starting salaries raised incrementally from $36,700 to $40,000 annually.

Under the new accountability guidelines for public schools, the state Department of Education can take over failing schools at least two years earlier than present. Principals face stricter performance standards, but they also have more power over school budgets and administrative staffing. Teacher competency is assessed every two years, instead of twice every 10 years.

The “Schools First” program also augments the pre-graduation gateway examinations given to high school seniors with three new mandatory assessment examinations. Students in grades 8, 10 and 11 take the tests to evaluate their mathematics, reading and critical thinking skills.

“School systems may select ACT, SAT, WorkKeys or other approved examinations, but the state pays for administering the tests,” said Hackworth.

In addition, more than 250 new Pre-K classrooms added statewide at the cost of $25 million. This brings the total Pre-K investment to $95 million for 779 classrooms.

Higher Education
Higher education likewise wins under the enacted state budget. Board of Regents capital projects are allocated $113.7 million and University of Tennessee (UT) capital projects $185.4 million. The latter disbursements include $48 million one-time cash for a new library at UT Chattanooga and $20 million one-time cash for the UT Knoxville Music Center.

Lawmakers also increased HOPE lottery scholarships for four-year institutions from $3,800 to $4,000 annually, at a cost of $10 million. Students must continue earning a minimum 3.0 grade point average to maintain the state awards.

The HOPE scholarship for two-year institutions is increased from $1,900 to $2,000. Plus, the Wilder-Naifeh technical skills grant increases from $1,500 to $2,000. ASPIRE award amounts are unchanged at $1,500.

Sales Tax on Food
At the same time, residents of the state’s 95 counties will pay less at the supermarket since lawmakers permanently reduced the sales tax on food from 6 percent to 5.5 percent. The state’s cost is estimated at $41 million annually. The food sales tax reduction takes effect July 1.

Sales Tax Holiday
Tennesseans can also look forward to another 72-hour sales tax holiday during Easter weekend 2008, from March 21-23. As with the two prior events, consumers won’t pay sales taxes for certain school and art supplies and clothing with a retail price of $100 or less, and computers priced $1,500 or less.

Property Tax Relief
Many elderly homeowners may qualify for property tax relief authorized by legislators. In 2006, Tennessee voters amended the state constitution to specifically allow such tax breaks. According to the enabling legislation, local governments may voluntarily exempt certain homeowners who are 65 years of age or older from future property tax increases.

About 300,000 residents could be helped statewide by having their property taxes frozen at the amount paid the year such homeowners qualified.

“If an elderly taxpayer buys a primary residence after turning 65 years old, the property tax is capped at the rate assessed when the home is bought. Senior citizens must also earn less than the median income for elderly residents in the county in which they reside,” said Hackworth.

A related bill increases the income eligibility level from $20,000 to $24,000 annually for elderly residents who receive property tax rebates from the state.

Veterans who are 100 percent disabled from active duty-related activities may also apply for property tax rebates. Formerly, only veterans with combat-related disabilities qualified. An estimated 4,000 veterans could take advantage of this tax break. The cost for the state is $2 million.

Community Improvement Grants
Cities and counties throughout the state may also apply for a share of $20 million dedicated to community improvement grants. These one-time grants are paid through non-recurring state money, and awarded to nonprofit and neighborhood associations and local governments.

“Community improvement grants can be used for little league equipment, summer camps, city museums and other approved projects. Disbursements are expected in October,” explained Hackworth.

Public Safety
In addition, $38 million is set aside for a tough crime-fighting initiative that increases mandatory prison sentences for perpetrators who use guns in specific violent crimes. The new “Crooks with Guns” law imposes mandatory prison sentences from three to 10 years if guns are discharged during a criminal act and the offenders have prior convictions.

“The enhanced sentences are served in addition to sentences for the underlying crimes. At least 85 percent of the extra sentence must be served before parole is considered. It doesn’t matter if the weapon used is a handgun, machine gun, short-barreled rifle or short-barreled shotgun. We need to keep dangerous crooks off the streets,” said Hackworth.

Lawmakers subsequently approved funding for 32 new district attorneys and 19 public defenders statewide. The enacted budget also includes $3.7 million for additional parole and probation staff.

Other Budget Priorities
Other major initiatives in the successful budget bill include $92 million for conservation; $72.6 million for a comprehensive alternative fuels strategy; and, $45.1 million for business and infrastructure development.

Among these spending projects are:

$82 million for Upper Cumberland Land Acquisition;

$45 million for the Next Steps Job Package;

$10 million for the Heritage Conservation Trust Fund;

$10 million for incentive grants for film and television production; and,

$2.6 million for housing for very low income, elderly and special needs residents.

“This is one of the best budgets we’ve passed in the General Assembly. It’s a common sense plan that promises prosperity for every Tennessean,” concluded Hackworth.

CONTACT: Kenneth Townsend, Press Secretary, House Democratic Caucus, at
615-741-6620 or email kenneth.townsend@legislature.state.tn.us.