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Capitol View Commentary: Friday, May 13, 2011

Capitol View Commentary: Friday, May 13, 2011

CREATED May 13, 2011

CAPITOL VIEW

By Pat Nolan, Senior Vice-President, DVL Public Relations & Advertising

May 13, 2011

THE BOUNCE; TO BARGAIN A LITTLE OR NOT AT ALL; TAXES-AMAZON; TAXES-INCOME; TAXES-BOND RATING; INSIDE POLITICS; TVA

In last week's column, we mentioned we hadn't seen much of a political bounce in the public opinion polls for President Barack Obama in the wake of the killing of Osama Bin Laden by U.S. forces.

Now we have.

A new Associated Press-GfK poll (May 11) has the President's job approval rating shooting up to 60% (it has been down in 40s). And for the first time a majority of those responding say Mr. Obama deserves to be re-elected (53%).

The poll also shows that the president's standing with the public has improved across the board, not just in foreign policy but on the economy as well. That translates into 73% who say they have confidence in how President Obama can handle terrorist threats while a majority (52%) approve of his stewardship of the economy and how he is handling the problem of continued high unemployment.

Even the "right track-wrong track" question has improved for the President. It was just 35% right track in March, now it up to 45%. But 52% still think we are going the wrong way which indicates the challenges the President continues to faces.

There are those who question putting too much stock in the poll. First, it was taken of "adults" not registered voters or even likely voters. Others don't like the mix of respondents in terms of how many Democrats versus Republicans versus Independents.

Nevertheless it is more good news for an administration that has badly needed it in recent months. Bumps like these don't usually last that long, but if the economy continues to improve in terms of job creation and there's a continued (if slow) decline in unemployment, combined with that reported 50 cent per-gallon decrease in gas prices on the way, all that could give Mr. Obama's Republican opponents some political heartburn looking towards the 2012 elections.

TO BARGAIN A LITTLE OR NOT AT ALL

When State House Speaker Beth Harwell told reporters recently that the margin for support for repealing collective bargaining rights for state teachers was "razor thin," I wonder she knew she would have to take the rare action (for this second term this year) of going into one of her House committees (Finance Ways & Means) to keep such a bill alive. Well, that's what she had to do last Wednesday (May 11) and her tie breaking vote to approve a bill could well mean Tennessee teachers' ability to bargain with local school boards, even for pay and benefits, is about to come to an end.

What is ironic is that it didn't have to be that way. Speakers can only vote in committees to break a tie. One of the committee members, Republican Joe Coley, a school teacher from Bartlett abstained from voting because he thought it would be a conflict of interest since he belongs to the teacher's union. There's no legal requirement that he had to abstain, he could have voted if he wanted to do so.

Now it's a conflict and an abstention that could change the law in Tennessee. Representative Coley later told reporters that had he voted, he would have likely voted no. And if he had, the bill would have failed in committee, because Speaker Harwell would not have been able to vote to break a tie.

Now the matter goes to the House floor Monday night (May 16). The bill that came out of committee is less restrictive than what's already passed the full Senate. It still allows bargaining for pay and benefits. But there is a suspicion that the House sponsor, Representative Debra Maggart, may try to adopt the Senate bill in the House. That bill has a complete ban on collective bargaining. Adding to some lawmakers' suspicions, when asked in committee what she planned to do (according to THE CITY PAPER, May 12) "she repeatedly refused to predict what might happen. I'm not a prophet," she said."

Further complicating efforts to defeat or soften the collective bargaining bill, several Democratic members of the Shelby County delegation have indicated they may not be in attendance for the House session Monday night. They want to stay home to celebrate President Barack Obama's first visit to the state while he's been President. The President is coming visit flood victims and to deliver the commencement address to Booker T. Washington High School which is being nationally recognized for improving its graduation rates under the Race To The Top program.

For teachers however, if the Shelby County House Democrats don't attend the House session, it could signal a final race to the bottom for them and the end for the Tennessee Education Association, which has been the recognized teacher's union statewide for many years.

Some Democrats are taking about a possible Monday night boycott when the collective bargaining bill comes up on the floor, to force the matter to be deferred until later in the week. Let's see what happens.

With some prominent Republicans (including Governor Haslam and Senator Lamar Alexander) now also going to Memphis for the President's visit that may put even more pressure on the GOP leadership in the House to defer the matter, although as this is being written, nothing seems certain about what will happen to the collective bargaining bill Monday night.

TAXES-AMAZON

State legislative leaders are putting things on the fast track.

After first setting a goal of being done by Memorial Day weekend, now they are talking about wrapping up by the end of next week (Saturday May 21). That seems pretty ambitious, but perhaps not impossible to achieve.

May 21 is also the day that some Christian groups are predicting that the rapture will occur and Jesus will return (there are several outdoor boards here in Nashville and across the country about this).

As far as I know, there is no relationship with that and a possible legislative adjournment. Lawmakers are planning to go back to their homes in Tennessee I think, not somewhere else.

Meanwhile as we move closer to adjournment for the year (and final approval of a new state operating budget) I find it fascinating that the word TAXES keeps coming up on Capitol Hill.

Now don't misunderstand, nobody is talking about raising taxes to make the new budget work. But who will pay what taxes and when in the future is very much under discussion in a lot of different ways.

Take for example, Amazon.com, whose officials apparently negotiated a deal with the outgoing Bredesen administration to build two new facilities to Tennessee bringing thousands of new jobs to the state in return for not having to pay sales tax.

While the incoming Haslam administration has acted like it wasn't fully aware of the deal from the beginning, the Governor has said he will honor it and has reflected that in his budget. But wait a minute say some leading Republicans and some Democrats in the Legislature, along with several small and large businesses across the state. Why should Amazon be exempt when all other companies in the state have to pay sales taxes? It's not fair they claim.

It has created quite a political firestorm in these waning days of the session with lawmakers set for a key committee vote to block the deal this coming week (Tuesday). Amazon officials say federal law prohibits on-line companies from paying state taxes unless they have a retail facility in that state. They maintain what they plan to place in Tennessee would be more like warehouses, merely receiving on-line orders and shipping them out. So they should be exempt from paying sales taxes.

Baloney say opponents, who point out what a competitive cost advantage this sales tax exemption will give Amazon, particularly over many mom and pop operations who try to sell the same items. In newspaper ads (and now TV ads across the state according to a story in THE CHATTANOOGA TIMES FREE PRESS on May 12), opponents have questioned the fairness of this exemption?

Further clouding the picture is that lawmakers have not seen exactly what this deal says. State revenue officials have a policy of not discussing a particular business' or individual's tax status. So that lack of information just leaves lawmakers even more uncomfortable about exactly what is going on.

For a state that receives the lion-share of its annual funding from sales tax, this proposal for Amazon raises some serious questions. But one of them shouldn't be losing sales tax monies. We have a whole state code of laws approved by Legislatures, past and present, that exempt the sale of certain items from sales tax. So we've done this a lot of times before. Maybe not for companies, but we've sure done it for lots of items sold in Tennessee.

So just how much do we want these new jobs? Amazon must think a whole lot, especially since their recent counter-offer (delivered through the media) was to indicate they were willing to place up to four new facilities in Tennessee, creating even more jobs. And don't look for Amazon to compromise. They've already walked away from both Texas and South Carolina (and then came to Tennessee) after similar proposals were turned down, although there are late reports South Carolina is having second thoughts.

It's the kind of issue that could well keep lawmakers working harder and longer than they expected the next few weeks, especially if they plan to adjourn for the year next Saturday.

But here's another strong sign lawmakers need to take a break for the year.

Freshman GOP lawmaker Andy Holt of Dresden is clearly frustrated that legislation allowing guns-on-Tennessee college campuses (for faculty and staff) has been delayed in the House for further study this summer and so it's dead for the year. He took out his anger in an e-mail to fellow Republican Jim Coley of Bartlett who he blames for what happened. He calls Coley's actions "cowardly", "sophomoric and disappointing"…adding…"You made the (Republican) caucus, as a whole look dysfunctional and incompetent. You still don't seem to understand that this is not about YOU."

But Coley or someone apparently does know how to use the legislature's e-mail system, as Holt's tirade has been shared all over the Hill. Both representatives say they have now talked and made up but clearly, as often happens near the end of a session, things can get tense and very contentious quickly now.

TAXES—INCOME

The third rail of Tennessee politics…an income tax…is being discussed as well on Capitol Hill. First, there is an effort to pass a constitutional amendment to forever ban an income tax in Tennessee. It only needs a simple majority this session (2/3 in the next General Assembly), so look for rather easy approval (at least this session) as lawmakers continue to pile up a whole ballot full of constitutional questions for the 2014 elections (making us look a bit like California).

The other change being proposed concerning an income tax is the only actual tax on income Tennessee imposes (and has since the 1920s and ‘30s). It's the Hall Income Tax which places a (6%) levy on dividends from stocks and bonds of over $1,250 annually.

Now there is a move to change how the tax is assessed by exempting more seniors and retirees (who usually have lower incomes). The proposed law would raise the exemption on the Hall Tax so that those with incomes of $26,200 individually or $37,000 for a couple would not have to pay. Both Governor Haslam and legislative leaders have lined up in support of this change and the budget seems ready to absorb the likely revenue loss ($1 million) which will also impact many local governments too. No word on how they will make up their loss of income which is estimated at $650,000.

Regardless, any kind of income tax is not popular in Tennessee, and while it may be too expensive to get rid of the Hall Income Tax all together, lawmakers seem ready to do what they can to reduce it, and then to ban ever having one at all for any reason in Tennessee. Honk, honk!

TAXES—BOND RATING

Another sign of a recovering economy and how well Tennessee state government has handled the Great Recession came to light in recent days. The Standard & Poor ranking service has changed its outlook on Tennessee bonds to positive and said a prized triple-A rating "is achievable."

S&P is the only rating group that doesn't list Tennessee as AAA. Moody's & Fitch already do, so the change is a welcome one and assures the state a lower cost to issue future bonds.

Why the change by S&P? Tax revenues are finally beginning to increase and the state is continuing its strong fiscal management. Indeed, the latest April collections show "modest positive growth" says Finance Commissioner Mark Emkes, with revenues up 1.70% compared to this same time last year and overall revenues in April now at $1.264 billion which is $600,000 more than the state projected.

Let's hope it continues, and thanks to my daughter Kelly, who works for Dow Jones Newswires, for the tip about the S&P change on Tennessee's bonds.

INSIDE POLITICS

We'll talk about many of these Capitol Hill issues this weekend on INSIDE POLITICS. Our guests are Joe White of Nashville Public Radio and Andrea Zelinski of The Tennessee Report (www.TNReport.com).

That will include the State Senate all but completing legislative action to kill Metro's new anti-discrimination law which would have required anyone doing business with the city to refrain from discriminating due to sexual orientation or preference.

That's too broad says state lawmakers. It is also confusing for many businesses which operate in different areas across Tennessee. If Governor Haslam agrees about that and either signs the bill or lets it become law, the new Metro ordinance will be no more as the General Assembly once again this term exercises its authority to run both local and state governments if it so desires. Supporters of the Metro law say the real reason their proposal is being struck down is because lawmakers are anti-gay.

You can watch INSIDE POLITICS several times each weekend on THE NEWSCHANNEL5 NETWORK. That includes Sunday morning at 5:00 a.m. on the main channel, WTVF-TV, Newschannel5. You can also catch the show on NEWSCHANNEL5 PLUS, which airs on Comcast & Charter cable channels 250 and Channel 5's over-the-air digital channel 5.2. Our air times on THE PLUS are 7 p.m. Friday, 5:00 a.m. & 5:30 p.m. Saturday and 5:00 a.m. & 12:30 p.m. Sunday.

TVA

If timing is everything, the Tennessee Valley Authority (TVA) is sure having its problems surrounding the environment.

The latest misstep came to light just a few days ago when the Nuclear Regulatory Commission (NRC) issued a serious safety violation regarding a faulty water valve at TVA's Brown Ferry Nuclear Plant. Given what just happened with safety issues surrounding nuclear facilities in Japan (in the wake of the earthquake and tsunami there), timing of this violation called "of high safety significance" by the NRC could not have been worse.

But making matters worse is that even though TVA says it has now fixed the problem (which may be linked in part to a manufacturer's design), the defect may have gone undetected by TVA for several months despite required ongoing inspections and testing at the plant near Huntsville, Alabama.

According to an article in ENERGY DAILY by Jeff Beattie (May 11), "the NRC's decision will significantly hike the agency's scrutiny of the plant and will cost TVA money." This so-called "red flag violation… moves Browns Ferry on the NRC's list of operating reactors needing closest oversight (and)…will be costly to TVA because the plant will have to pay for NRC inspections, and incur their own additional costs to prepare for them." This is the first time the NRC has issued such a red-flag violation since 2003 and only the fifth time in the history of the NRC using this safety inspection system beginning in 2000.

This mistake just seems to amplify TVA's ongoing environmental problems from the sludge dam collapse in Rockwood a couple of years back that happened at the holiday season and put the agency in the national media spotlight for months. And there's also the recent major air pollution fine levied by EPA for which TVA (and rate payers) will be now be paying into the future as the agency changes its ongoing use of coal burning power plants.

Oh…and by the way…TVA rates go up June 1 for the next few months in order to discourage us from using too much power during the peak summer months when electricity usage is the always highest. THE NASHVILLE LEDGER (May 6-12) quotes Nashville Electric Service manager DeCosta Jenkins as saying the goal of the seasonal rate is "behavior modification."

Let's hope TVA soon finds a way to get back on its best behavior in terms of the environment.