While some GOP lawmakers are citing Tennessee’s $600 million budget surplus in 2014-105 as justification for doing away with the state’s tax on stock dividends and certain interest in 2016, Gov. Bill Haslam says the issue isn’t as simple as that.
“I’ve always said it’s easy to say let’s do away with this,” Haslam, a Republican, told reporters earlier today. “It’s a lot harder to say what are you going to do about that revenue going away.”
As he fashions his proposed budget for next year, Haslam said the state also faces pressures on all sides. They include two lawsuits from school districts, including one involving Hamilton County, charging the state is short-changing them on education. Meanwhile, costs for TennCare, the state’s Medicaid program for the poor, are increasing.
Moreover, Haslam said, “we need to pay some prison guards more. We need more frontline [Children’s Services] workers, I can go on and on.”
Last week, Senate Judiciary Committee Chairman Brian Kelsey, R-Germantown, announced he will renew his push to repeal the nearly 85-year-old Hall Income Tax come January. In doing so, Kelsey cited the state’s 2015-2016 fiscal year which ended with almost $606 million more than expected.
Most of the surplus came in the state’s general fund which funds most government functions except for a few areas, primarily transportation.
“This is a bad tax and it needs to go,” Kelsey told The Commercial Appeal in Memphis. “It especially hurts our seniors and those who have saved for retirement.
In 2014-2015, the Hall Tax generated $303 million. But because the state gets 5/8ths of that with the rest going to local governments of localities where the taxpayer resides, the state saw only about $189 million of that.
“Lawmakers who believe in limited government should commit to giving this money back to the taxpayers before it gets spent on pet projects,” Kelsey said.