Freshman state Rep. Cameron Sexton made progress on his goal of eliminating the Hall Income Tax on interest and dividends.
"We don't want to be a state that penalizes people for investments or for saving," Sexton told those gathered for the Crossville-Cumberland County Chamber of Commerce Legislative Breakfast held Monday.
The Hall Income Tax is a 6 percent tax on interest income, defined as dividends from stocks, interest on bonds over $1,250 a year.
Cumberland County works to recruit new residents from among the retiree population. Sexton said the Hall Income Tax made it difficult to recruit those individuals.
"It's also bad policy. We shouldn't penalize people for saving for the future," he said.
While he was unsuccessful in a move to eliminate the tax, it was rolled back. Beginning in 2013, new income thresholds will go into place, exempting the first $26,200 a single person over 65 earns before having to pay the tax. Couples could earn as much as $37,000 annually before the tax must be paid. This is an increase of $10,000 from the previous income limits.
Sexton said removing the tax was not just a matter of helping seniors but helping the entire community. He pointed to a study by the University of Tennessee on the impact of retirees on the economy in Cumberland County.
"They expanded our sales tax base. They expanded our property tax base without having to raise taxes," Sexton said. "As other communities were having to raise their property taxes, we were remaining constant because we had people moving in to Cumberland County."
It also helped to create new jobs in the hospitality, service or health care industries as the county was losing manufacturing jobs, helping to keep unemployment in the community level. The study estimated every senior moving into the community created half a job.
"Having retirees moving to Cumberland County is economic development," Sexton said. "It's more than just increasing your population. It also improves health care. I think you've seen health care in Cumberland County improve drastically over the past 10 years with more specialists, a new imaging center, the hospital has to upgrade. So the benefits are for everybody. That's why it's important to try to go after the Hall Income Tax."
Sexton also noted the legislature had cut the state budget by 3.7 percent from the year before. That amounted to a $1.2 billion reduction in state spending. Some of those savings came from adjourning five weeks early, saving $450,000. Also, scaling back state government and eliminating oversight committees saved another $850,000. Sexton noted those funds were used to off set the cost of raising the Hall Income Tax threshold.
State revenue collections have continued to be above estimated amounts, giving the state additional revenue that can be used next year.
In other action this past session, Sexton was one of 22 Republicans who voted against legislation to extend unemployment benefits by 20 weeks to 99 weeks total. The state's unemployment rate remains at 9 percent.
"Ninety-nine weeks of continuous unemployment, in my mind, is too much," Sexton said. "We're never going to have people wanting to go back to work if we allow them to go on unemployment for two years."
He also noted the legislature kept a deal negotiated with Amazon.com, which exempts the online retailer from sales tax though it will have a physical presence in the state.
"Whether you were for it or against it, the main issue was, it was probably a deal none of us would have made, but that's not what we were faced with in the legislature. That's not what the governor was faced with," Sexton said. "What the governor was faced with was a deal was struck. A handshake took place between the previous governor and the previous administration and Amazon. For us to go back and undo that deal after the fact, we would have problems years down the road when recruiting businesses."
Haslam did propose legislation in what the state could offer as incentives to new and existing businesses. That would allow the state to provide incentives for existing businesses to grow and prosper as new business is recruited to the state.
"My philosophy is government doesn't create jobs," Sexton said. "What government does is create an opportunity or climate for jobs to come in or for you to expand your business."
One part of that, Sexton said, is tort reform passed this past year which limits punitive damage awards in civil lawsuits to $500,000 and non-economic damages at $750,000. There is also a $1 million limit for awards in certain types of cases with catastrophic injury.
Other states which passed such reforms saw growth in investment and jobs, as well as reductions in medical malpractice insurance costs. That has led to more specialists locating to smaller, more rural areas.
The Equal Access to Intrastate Commerce Act prohibits local governments from enacting their own anti-discrimination policies. The bill was introduced after Metro Nashville passed rules requiring contractors with the city to agree to follow the government's rules barring discrimination against gay, lesbian and transgendered people.
Sexton said, "What we were trying to do is make sure the anti-discrimination laws are the same for everybody. What happens is, if you allow one city or county to do that, what would stop Williamson County from doing the exact opposite and another county from passing something different? So now, you have competing anti-discrimination laws. Especially for small businesses, that would be very hard to keep up with."
Sexton also applauded the passage of the bill that removed the cap on the number of charter schools in the state saying it would provide competition in public education.
"You have to be innovated to thrive," Sexton said. "That's what we need in education. If we have a school system that is failing, why should your child be sentenced to that school system without it being viable to go somewhere else."
While private schools offered some competition, many families could not afford tuition at private schools.
Sexton also said the changes to the collective bargaining system in the state to collaborative bargaining.
"It's a lot more good faith going back and forth," Sexton said.
He said school systems in Bledsoe and Knox counties were among counties that already used a collaborative bargaining system.
"What we're trying to do is make sure there is no hostility," he said.
Election laws were changed to require a driver's license or passport when voting, and the state will pay for those who are without either form of photo identification.
The state also passed the Health Freedom Act which challenges the right of the federal government to penalize residents of the state if they do not have health insurance coverage.
"If the federal version ever comes down, we'll probably have to go to court to battle it," Sexton said. "But it's the first step in the right direction."
Greater oversight was provided for pain clinics. Also, the state approved a real-time database to track pseudoephedrine purchases in Tennessee and surrounding states.
Also approved was a constitutional amendment that will be sent to the voters in the 2014 election that would add, "Nothing in this constitiution secures or protects the right to abortion or requires the funding of an abortion."