Democrats Offer To Trade Gas Tax Votes For Support Of $250M K-12 Endowment

Apr 18, 2017

The Tennessee legislature is in horse trading mode as it nears final votes on Governor Bill Haslam's signature infrastructure funding bill, which includes a gas tax increase along with cuts to taxes on groceries and manufacturing. Passage will almost certainly require the help of Democrats. And minority party leaders have decided to offer their votes in exchange for support of an educational endowment.

The idea is to take $250 million that would otherwise be put into various state savings accounts, partly because of a massive tax revenue surplus, and use the earnings of an estimated $25 million a year to fund special projects. School districts might take the money to hire reading specialists, buy computers or help students prep for college entrance exams. And the principle of the fund would still be available to fund general operations of the state if the budget got tight.

"We think this is a positive, good idea, really with no downside," House Minority Leader Craig Fitzhugh says. "We have — what I believe — is a one-time opportunity in the budget to set aside this money."

More: A summary of the education block grant legislation

Fitzhugh envisions adding to the endowment in future years that also generate a tax surplus.

Democrats have been working to get the blessing of the governor, who is looking for enough votes to pass his infrastructure bill. They indicated a lack of enthusiasm for the gas tax increase last week. And some Republicans have signaled intense opposition to voting for a gas tax increase, especially as the state is running a surplus.

"The governor has said we're holding him hostage. I don't think 25 Democrats can hold this Republican governor hostage," Fitzhugh says.

Governor Haslam's office says he is aware of the endowment idea but not committed to it. The education grant proposal does have a recurring cost (see the full fiscal note) because the Department of Education would have to hire a couple of people to run the grant program. Haslam told reporters Tuesday morning that he wasn't deal-making to get the legislation approved.

"We're not horse trading," he said. "But I'm listening as people come with needs in their district."