Bredesen gets bill repealing asphalt law

Also, Senate OKs delay of new sales tax rules

By TOM HUMPHREY KnoxNews.Com
May 20, 2005


NASHVILLE - The House approved 89-3 and sent to Gov. Phil Bredesen Thursday legislation that repeals a state law that since 1976 has blocked local governments from making their own asphalt.

The Senate approved the measure earlier by a 30-1 vote.

The votes came after the Tennessee County Highway Officials Association, which was pushing the bill, reached an agreement on terms of the legislation with the Tennessee Road Builders Association, which had previously opposed the measure.

The resulting bill generally follows recommendations in a study of the state's asphalt industry by the state comptroller's office.

As approved, the legislation provides that a county wishing to operate an asphalt plant or stone quarry must first conduct a "financial feasibility study," including a detailed analysis of capital and operational costs, then submit it to a three-member "oversight committee."

The committee will be composed of one representative of the highway officials association, one representative of the roadbuilders association and one person designated by state Comptroller John Morgan.

If the committee agrees that the operation is financially viable, the county commission would then have to approve by a two-thirds majority vote. That done, the plant could be built. When in operation, it would be subject to an annual audit by the comptroller's office.

The Senate also gave final legislative approval to a bill that delays until 2007 new sales tax rules that would mean more revenue for some local governments and less for others.

The "streamlined sales tax" law was enacted by the Legislature in 2003 and scheduled to take effect on July 1 this year. But organizations, including the National Federation of Business, or NFIB, and the Tennessee Municipal League, have raised questions about the impact.

Most of the concern dealt with a new rule on distributing local sales tax revenues. Under the current system, the sales tax collection goes to the city or county government having jurisdiction over the store where the sale is made.

Under the "streamlined sales tax," the revenue would instead go to where delivery of the purchased product is made.

Thus, if someone from Blount County drives to Knoxville and buys a new refrigerator to be delivered to his home, the sales tax revenue would now go to Knoxville. But with the change, the revenue would go to Blount County.

Rob Ikard, Tennessee NFIB director, said many business owners felt the law would increase their paperwork in keeping track of where to send tax money and, in some cases, require the purchase of new equipment or software.

The bill pushes back the effective date for most provisions to July 1, 2007. It was approved unanimously by the Senate on Thursday and had earlier been approved 89-3 by the House. The bill goes to Bredesen for his signature.

Bredesen has endorsed the bill and is expected to sign it next week.

Legislative staff projected that passage of the bill will mean that state government is foregoing $24.4 million in sales tax revenue that it would otherwise have received in the next fiscal year and that local governments will be forgoing $33 million in new revenues. In general, the staff projections track research in a study by the University of Tennessee Center for Business and Economic Research.

The bill also calls for state Revenue Commissioner Loren Chumley to conduct further study on the impact of implementing the streamlined sales tax in conjunction with a panel including representatives of the TML, the NFIB and the Tennessee Retail Federation. The results of the study are to be presented to legislative committees by Dec. 31, 2006.

Tom Humphrey may be reached at 615-242-7782.