Bredesen May Compromise On Cigarette Tax

MyFoxMemphis.com
March 29, 2007

NASHVILLE, Tenn. (WHBQ FOX13 myfoxmemphis.com) -- After weeks of threats and ultimatums, Gov. Phil Bredesen now acknowledges he may have to compromise with Senate Republicans over his proposal to increase the state's cigarette tax.

Bredesen, a Democrat, has spent much of the legislative session demanding that lawmakers agree to his 40-cents-per-pack increase in the cigarette tax.

But he now says there may have to be a trade-off to get the cigarette tax passed, and that may come in the form of a reduction in the state's 6 percent sales tax on groceries -- something long demanded by Republicans.

"I think he's realized that we're serious about tax relief," Senate Speaker Ron Ramsey, R-Blountville, said Thursday.

Senate Republican Leader Mark Norris, of Collierville, said he could sense "a softening" in the governor's attitude this week.

Neither administration officials nor Senate Republicans would say exactly what a compromise would entail. But Bredesen stressed: "I'm dead-set on getting my 40 cents for education."

The governor wants to use most of the projected $219 million in new cigarette tax revenues to increase state spending on K-12 and college education.

When asked by The Associated Press, Bredesen wouldn't say whether he would agree to reduce the sales tax on food by up to 1 percentage point, as some Republicans have suggested. But he didn't rule it out, either.

"I recognize the political realities of getting things done," Bredesen told the AP.

The governor angered Republicans last month when he called a GOP-sponsored plan to phase out the food tax over 12 years reckless, and speculated that if it became law, the proposal could lead to renewed calls for an income tax in Tennessee. The state currently does not tax most income.

Ramsey, who called Bredesen's comments "one of the most ridiculous statements I've ever heard," also has vowed to defeat the cigarette tax bill if Bredesen tried to ram it through the Senate too early in the session.

A vote on the bill was delayed in the Senate Finance Committee this week when it became clear there weren't enough votes to advance it to a full Senate vote.

Ramsey said Republicans would have a hard time voting for a tax increase in a budget year that is expected to yield higher-than-expected tax revenues for the state. But the cigarette tax hike could become more palatable with a corresponding decrease in other taxes.

"I think there is a feeling among people up there to do something that reads as a tax cut," Bredesen said. "I think they will find something to do. I'm just urging them to be responsible."

State Finance Commissioner Dave Goetz said any tax-break proposal would have to be careful not to throw a wrench into the state's recurring tax base.

Norris said the governor appears to be "more pragmatic and less dogmatic." As to his fellow Senate Republicans, Norris said, "I would have to say that members would want to explore any number of ideas with the administration."