Vaughn, Hawk say future of cigarette tax uncertain

Hank Hayes • Mar 25, 2007 at 12:54 PM

JOHNSON CITY - Gov. Phil Bredesen's proposed 40 cent cigarette tax increase to fund more than $200 million in education initiatives still faces an uncertain future in the Tennessee General Assembly, two Northeast Tennessee lawmakers said.

State Reps. Nathan Vaughn and David Hawk aired their concerns about the cigarette tax hike during a taping of "Legislative Chat," a public affairs talk show produced for public television by East Tennessee State University.

"There are many constituencies that really have a problem (with the tax hike) - I think farmers, retailers and individual consumers who believe that 40 cents is a very significant tax," said Vaughn, D-Kingsport. "The issue, though, really is are we going to be able to do what is necessary to maintain quality education in the state of Tennessee? And without that 40 cent tax or something extremely significant, I believe we will have some real struggles in trying to maintain quality education in this state, and hence, I think we will have some real budget woes as a result of trying to move forward."

Hawk, R-Greeneville, reiterated a GOP concern that the cigarette tax increase produces unstable revenue.

"You're going to be taxing a product you're trying to discourage," Hawk said. "It's going to create a declining source of revenue that may not fulfill the obligations three, four, five years down the road. We do need to fund our at-risk students more so. We do need to fund our growth that we're seeing across the state. This particular tax ... there is no guarantee that it is going to bring in several million dollars. As you increase taxes on products and as we try to discourage smoking across the state of Tennessee, more likely than not it will start a decline in the uses of tobacco which will start a decline in the tax revenue."

Vaughn noted larger growing school systems in the state are clamoring for new revenue.

"We will have to do something rather significant," Vaughn pointed out. "Right now we are about 45th in funding of education. We've got a real influx of lower socioeconomic at-risk students. We've got real struggles in certain pockets of this state where quality education is really a major factor. ... It's going take a bipartisan effort. It's going to take us being able to step up to the plate and do what's right. I believe the governor believes there are very little other choices if we are to move forward with quality education. ... We value education in this state, but at the same time people want to keep as much of their money as they possibly can."

Hawk responded the tax hike amount could be negotiated and lower than 40 cents per pack.

"I believe if we don't put a significant amount of money on the table, I believe we aren't going to be able to do the things we need to do, and we're going to be mandated to look at some other things, such as changing some of the other priorities we have on the table," Vaughn said. "We want a lot of service. We just don't want to pay for it. There are no free lunches."

Hawk said the flip side of the cigarette tax hike debate - a possible decrease in the sales tax on food - is also still on lawmakers' radar screen but far from being resolved.

"The tax on food has been one of the more stable forms of taxation," Hawk said. "We have chosen as a state to be predominantly funded through sales taxes. If we start reducing one tax we have to find someplace to make it up some way."

Vaughn related that he had a recent meeting "with some ladies from Belmont University" telling him that a sales tax on food was regressive.

"(But) how can you take the tax off food, add additional resources to education, and nobody pay for it? It just doesn't make sense," Vaughn stressed.

Hawk touted one of his bills - a proposal to use more than $250 million in excess lottery funds to be put in a special account to fund capital K-12 education projects statewide. Bredesen's administration has proposed establishing a $100 million school construction loan fund to be used as collateral for projects.

Vaughn said he "doubted very seriously" that Hawk's bill has a chance.

"When you spread that (excess lottery money) over 136 school systems in this state, it basically comes down to a drop in the bucket," Vaughn said.

Both lawmakers also responded to recent partisan actions in the legislature - including a challenge last Thursday from House Majority Leader Gary Odom to get Republican lawmakers to either consistently vote for Democratic local bills or expect retaliation.

"We are all asked to bring local bills from our local governing bodies, our cities and counties, and for the most part those bills pass through fine," Hawk said. "Over the last four years, some local bills have started to meet with resistance because whenever an elected official passes out a local bill, it may or may not have a tax implication or increased tax. ... The reality of the situation is that the vote goes down as a vote for a tax increase, and come election time those become political issues."

Vaughn called partisanship foolishness.

"This is the kind of thing that has gotten us in the weeds as we go about doing the people's business," he said. "And people need to hold us accountable. People need to not let us get caught up into this partisan foolishness. What happened Thursday was garbage. We've got huge issues on the table about how we're going to basically provide the services to provide the government that people of this state need us to afford them. And we're playing these foolish games."

"Legislative Chat" is scheduled to air tonight on WETP-TV, Channel 2, at 11 p.m.

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