Business and Economy NewsTracker

Push to Pump Up State Gas-Tax Lacks Political Octane

The latest Tennessee government tax collection tallies that came out last week suggest state government is, for the time being anyway, awash in unanticipated revenues.

While the budget year is still young, not yet three months old, early indications are that significantly more money is coming in than lawmakers and the governor were expecting when they plotted out the state’s spending plan last winter.

In September alone, the second month of the fiscal year, the state collected $113.4 million more than the budgeted estimate. That’s $82.2 million more than in September last year, according to a Department of Finance and Administration press release issued Oct. 14.

“Year-to date collections for two months were $132.5 million more than the budgeted estimate,” the administration reported. “The general fund was over collected by $116.8 million and the four other funds that share in state tax revenues were over collected by $15.7 million.”

The state also over-collected more than half a billion dollars last fiscal year.

For advocates of raising the state’s per-gallon taxes on gasoline and diesel — an idea Republican Gov. Bill Haslam has been test-driving around Tennessee — the fact that the government’s tank of revenue is overflowing will probably tend to make it tougher to convince skeptical lawmakers that it makes sense now to hit road-users with a tax hike.

High-ranking House Republicans like Speaker Beth Harwell, Majority Leader Gerald McCormick and GOP Caucus Chairman Glen Casada appear particularly unified in their opposition to raising fuel taxes in 2016.

Tennessee’s 21.4 cents per gallon tax on gasoline has been in place since 1989, as has the 18.4 cents per gallon diesel tax.

In a statement emailed to TNReport by her media spokeswoman on Friday, Harwell said she’s “encouraged by the revenue numbers, and believe(s) that we should use a portion of the surplus to replace the funds that were taken over the years from the highway fund.”

The speaker has for a while been indicating she’s more inclined to talk about putting “one-time money” toward transportation infrastructure than raising taxes on fuel.

Leader McCormick echoed that sentiment earlier this month.

Talking about the quality of Tennessee roads and transportation funding in general “is a legitimate discussion to have,” McCormick told TNReport on Oct. 6.

But when the conversation turns to widening revenue-collection avenues, his instinct is to hit the brakes.

“I am not convinced we need to raise taxes to fund the road program right now,” McCormick said. “We do have to pay for it, and at some point we will have to address that, and we want to study it very closely and make sure we are doing the right thing. A tax increase is a last resort, not a first resort.”

Rep. Casada said Friday that House Republican leadership is aligned behind the idea that “we need to take the excess (general fund) revenue and put it toward the Department of Transportation to meet those immediate needs.”

He said majority-party lawmakers who oppose raising the gas tax are not unsympathetic to Haslam administration transportation officials who’re arguing that road improvement ought to be prioritized. But raising any tax is a tough sell when the citizenry has already over-contributed resources for what state government budgeted, he said.

“We have a surplus now and we had a surplus last year,” Casada said. “Let’s deal with that first and not take more money from the taxpayers.”

Casada doubts there’s enough support even on the House Transportation Committee to move legislation that aims to take more money from truckers and motorists at Tennessee fuel pumps.

“This is not the year to raise the gas tax,” he said.

Shelbyville Republican Jim Tracy, the Senate’s Transportation Committee chairman, has been, like Haslam did earlier this year, touring the state to talk about issues related to road infrastructure needs and financing.

Political and public willingness to entertain a tax increase is simply lacking, he said recently.

“We are not ready to do it yet,” said Tracy, who was in Knoxville and Fentress County for road-funding roundtables last week. “I don’t think the legislators are convinced of the need yet. I don’t think the citizens are convinced of the need.”

Tracy said he does however sense “a big movement” in support of setting aside a minimum of $260,000 million from the state’s general fund next year for transportation spending. That’s the amount he and others, like Harwell, say was inappropriately drained from gas-tax collections a decade ago and spent on other government programs.

Five of the Senate Transportation Committee’s nine members are in fact on record in opposition to raising the gas tax. In total, 15 of the General Assembly’s 33 senators have pledged not to vote for a fuel-tax hike should the Haslam administration propose one next year.

Over in the House, Casada, McCormick and Harwell are joined by 40 other representatives who have made assurances to the Tennessee chapter of Americans for Prosperity that they won’t support raising the gas tax in 2016 — and perhaps even beyond. All but one are Republicans: Kevin Dunlap, D-Rock Island, who won election to an open General Assembly seat in 2014 by just 54 votes over his GOP competitor.

A nationwide organization that lobbies for lower taxes and smaller government, AFP has been challenging the Haslam administration’s road-funds-are-lacking narrative through their “Ax the Tax” initiative.

Fanning up grassroots opposition against increasing the cost of gas hasn’t been too difficult, said Tori Venable, the group’s communications director.

“You have Gov. Haslam trying to raise taxes on the state, you have Sen. (Bob) Corker trying to raise taxes on the federal level,” she said. “This is potentially a double-whammy for Tennessee taxpayers.”

One of the main themes the governor and proponents of raising the gas tax are using to try and convince people that revenues are lagging is that cars these days get appreciably better gas mileage than three decades ago. The state therefore gets less money per vehicle-mile driven on Tennessee roads, they say.

But Venable said that’s not a one-way argument.

“When it comes down to it, the middle class and the working poor are the ones who drive older cars and they also drive further to work,” she said. “People who live in rural areas, people who have a fixed income, they are the ones who are going to be hurt worst by raising the gas tax.”

In an op-ed published Friday by the national political news website, The Hill, AFPTN director Andrew Ogles wrote that with gas prices at their lowest in years, there’s a predictable trend among state and federal lawmakers across the country to push for raising gas taxes.

“That’s certainly been the case in my home state of Tennessee,” wrote Ogles. “Gov. Bill Haslam (R) is currently gallivanting across the state calling for an increase to our gas tax. Joining him are various special interests — including building and construction companies — that stand to gain handsomely if his plan goes through.”

Ogles, who garnered significant state and national media attention for his role in leading AFPTN’s successful campaign against Haslam’s “Insure Tennessee” Medicaid expansion plan last legislative session, contends that road-and-bridge decay wasn’t a key priority when the governor and lawmakers approved the state budget a few months back.

“(I)n April state legislators diverted $120 million in surplus funds to construct a new state museum,” wrote Ogles. “If infrastructure funding is truly in peril, this state-level ‘Smithsonian’—as (Lt. Gov. Ron Ramsey) characterized it — could certainly be put on hold. Other examples abound, as well.”

Haslam has said that while he’s amenable to using at least part of any state revenue surplus for transportation funding, there’s always ample political competition for government funding — and oftentimes in fat years more so than lean.

“It is interesting when you have a surplus how many people have an idea for how to spend it,” Haslam said at a Transportation Coalition of Tennessee conference in Murfreesboro earlier this month.

The governor said he’s “very willing to consider” pumping the $260 million back into the transportation budget that was siphoned off under the two previous governors, Republican Don Sundquist and Democrat Phil Bredesen.

But as with all sales-tax-driven general fund revenue, “that money needs to compete with a lot of other things that are raising their hands for that money,” said Haslam.

“We have about $4 billion worth of deferred maintenance on our buildings in the state, so we are trying to take a chunk out of that — because, literally, chunks have been falling out of our buildings. That is one of those very non-glamerous, non-sexy things, but we have to do those,” the governor said.

Haslam administration officials maintain that more than $6 billion dollars in “very seriously vetted” road projects around Tennessee are currently in a state of unfunded “backlog.”

The governor and state transportation officials, as well as the state comptroller, argue the current gas and diesel tax rates are insufficient to meet longterm transportation construction and maintenance needs.

Business and Economy Featured NewsTracker

Nashville’s ‘Local Hire’ Amendment May Come Under Legislative Fire

Tennessee GOP lawmakers who’ve in the past taken steps to thwart locally enacted economic regulations that exceed state and federal requirements say they’re undeniably rubbed the wrong way by Metro Nashville voters approving a “local hire” measure earlier this month.

And that may very well result in the General Assembly taking a vote of its own on Amendment 3 after the Legislature convenes for its 2016 session.

Jack Johnson, chairman of the state Senate Commerce and Labor Committee, told TNReport last week he basically loathes the ballot measure local voters approved by a large margin on Aug. 6.

“It’s awful. It’s awful,” the Williamson County lawmaker said of Amendment 3.

“It is a very, very bad and dangerous precedent for a political subdivision in the state of Tennessee like Metro Nashville to be enacting these types of policies that are hostile toward business, hostile toward economic growth,” said Johnson. “And so I do expect the General Assembly to take a good look at it when we reconvene.”

Amendment 3 earned 58 percent of the vote in the election, and it was the only question on the ballot to win consent.

Metro Nashville’s charter now requires that 40 percent of the labor performed on new building projects involving $100,000 or more of Metro financing be carried out by workers who reside in Davidson County.

Amendment 3 also tacked on new charter language requiring “that a significant effort be made to ensure that no less than Ten Percent (10%) of the Total Construction Worker Hours are performed by low income residents of Davidson County.”

Amendment 3’s supporters argued that it will help fight local poverty and alleviate joblessness. Opponents say it will expand government bureaucracy and balloon construction costs.

Gov. Bill Haslam indicated after the election that he, like outgoing Nashville Mayor Karl Dean, considers himself in the latter camp. Haslam told TNReport last week that he regards the measure as “problematic.”

“I just don’t think that there is any doubt that it will make projects more expensive and take them longer to get done,” said the governor, although he added that he is uncertain at this time what, if anything, the state will do in response.

Johnson noted that the Legislature under Republican leadership over the past several years has shown a willingness to thwart local regulatory efforts deemed damaging to the state’s pro-business reputation.

“I understand that the voters of Nashville approved it, but still, we have to look at the state in totality in terms of our economic progress, and we can’t have these bad policies being implemented, especially in our state capital,” said Johnson.

In 2013, Sen. Brian Kelsey of Germantown and Rep. Glen Casada of Franklin co-sponsored legislation — which ultimately became law — prohibiting local governments from mandating more stringent employee-benefit packages or higher minimum-wage requirements than already required by state or federal law.

Kelsey, who chairs the Senate Judiciary Committee, told TNReport after the Amendment 3 vote that he regards it as an attempt to “unfairly discriminate against citizens from other counties” in Middle Tennessee.

“There is a serious equal-protection constitutional question that needs to be investigated and I look forward to researching that question,” Kelsey said.

Casada, too, doubts the legality of Amendment 3. And like local opponents of the measure who spoke out against it during the campaign, he predicts the requirement “will drive up the costs of projects.”

“I don’t think it is prudent,” said Casada, who chairs the House Republican Caucus, which controls 73 of the lower chamber’s 99 seats.

The state’s attorney general hasn’t yet weighed in on the legality of Amendment 3, but could if asked to do so by the governor or a state lawmaker.

John Finch, a local building company executive who heads a business coalition opposed to Amendment 3, said the future now holds uncertainty for construction projects in Davidson County. Unless it is struck down by the courts or nullified by the Legislature, Middle Tennessee’s economy will suffer, he said.

“Nashville is part of the regional economy,” Finch told TNReport. “Nashville needs for General Motors to come and have a giant plant in Spring Hill. Nashville needs for manufacturing plants and other important developments to be in the surrounding counties. And we need the workers who live in the surrounding communities to be able to work on Nashville projects.”

Nashville’s two finalists for mayor — Metro Councilwoman Megan Barry and former Metro School Board Chairman David Fox — were on opposite sides of the Amendment 3 debate.

Barry told Nashville Public Radio that she supported Amendment 3, but won’t in fact be surprised if the state ultimately overturns it. Fox said he believes Amendment 3 was “well-intended,” but that Davidson County currently has “a huge labor shortage,” and the local-hire mandate will “kill projects.”

Business and Economy Featured Liberty and Justice NewsTracker

Palcohol Prohibited

The sale of crystalline powdered alcohol, which is used to make mixed drinks by just adding water, is now illegal in Tennessee.

The General Assembly voted overwhelmingly earlier this year to outlaw the product, which goes commercially by the name “Palcohol.” The product has won federal approval for sale but isn’t yet on the market. The U.S. Food and Drug Administration is so far taking a wait-and-see approach to determine if federal regulation appears warranted. But at least one powerful veteran U.S. lawmaker, New York Democrat Chuck Schumer, wants Palcohol banned nationwide because he thinks it “creates an immense danger to teens and others.”

Tennessee’s Senate Bill 374 passed 92-0 in the 99-member House, and 31-1 in the Senate. Gov. Bill Haslam signed the bill into law on April 28, and it became effective May 1.

Republican sponsors Sen. Bill Ketron of Murfreesboro and Rep. Sheila Butt of Columbia sponsored the measure to outlaw Palcohol. They argued that it makes better sense to ban it first and potentially ask questions about how the government might ease it into circulation with regulatory controls later. They claimed the ban was the only alternative to entirely unrestricted sales across the state because the state’s Alcoholic Beverage Commission only has authority to regulate “beverages” not powders.

Palcohol’s creator, Mark Phillips of Tempe, Ariz, has said he developed the product line, which he claims is “safer than liquid alcohol,” in order to provide outdoor recreationists a light and packable means of carrying adult beverage mixers. The controversy and consternation over Palcohol is misguided, he argues. His company, Lipsmark LLC, is expecting to start selling Palcohol in states where it isn’t illegal beginning this summer.

According to the National Conference on State Legislatures, powdered alcohol has been banned in Alaska, Indiana, Louisiana, North Dakota, South Carolina, Tennessee, Utah, Vermont and Virginia. Washington’s governor signed a ban into law Thursday. And Minnesota has a temporary ban in place.

On the other hand, Colorado, Delaware, Michigan and New Mexico have all passed laws to allow the regulation of sales of Palcohol within their borders.

Additionally, an attempt to ban Palcohol look unlikely to pass in Texas this year. Arizona’s Legislature passed a measure banning Palcohol but Republical Gov. Dough Ducey vetoed it, saying “there does not appear to be evidence that this bill is necessary.”

In Tennessee, violation of the law against selling Palcohol will be a Class A misdemeanor — punishable by less than a year in jail and a fine up to $2,500. State alcohol regulators also have authority to suspend or revoke any alcohol sale permits held by those found in violation.

Alex Harris can be contacted at

Business and Economy Education Featured NewsTracker

No In-State Tuition for Undocumented Immigrants in 2015

It’s all over but the finger-pointing.

On the last day of the Tennessee Legislature’s regular session, a bill to grant public university in-state tuition to Tennessee students brought into this country as children by undocumented immigrant parents has failed for the year in the House, 49-47. Fifty votes are needed in the 99-member body for a bill to pass.

The “tuition equality” bill has been in the legislative mix for three years. Sponsored by Chattanooga Republican Todd Gardenhire in the Senate, it passed the upper chamber last week, 21-12.

The loss in the House was especially troubling to supporters of the measure because two House Democrats were absent when the vote was taken — Nashville Reps. Darren Jernigan and Bo Mitchell. Speaker Beth Harwell also skipped the vote on SB612, but she later said she would have voted against the bill anyway. Neither Harwell nor Mitchell were listed as “excused” from the vote, although Jernigan was.

As a result of its failure to receive the necessary amount of votes to move forward, the bill was re-referred to the House Calendar and Rules Committee where it’ll likely see action at the beginning of 2016.

Mitchell told TNReport later that having missed such a key higher-education vote “rips me up.”

“It’s unfortunate, I wish I’d gotten the opportunity to vote on the bill,” he said.

Mitchell explained that as a “citizen” legislator, he’s forced to balance the legislative schedule with his job duties, and that he had to attend a “mandatory work meeting” which prevented him from being present in the chamber when the bill came up. He acknowledged that he made no effort to seek formal recognition for an excused absence.

On the other hand, he pointed blame at the Republican sponsor of the bill, Memphis Rep. Mark White, for bringing the measure to a vote Wednesday morning. “The sponsor knew I wasn’t in the room, and knew I would be back after 1 o’clock,” Mitchell said.

Likewise, House Democratic Caucus Chairman Mike Stewart told TNReport that Rep. White had been informed beforehand of Mitchell’s absence. White could have elected to postpone debate and a vote on the until the afternoon. “Everybody was aware that Bo Mitchell was going to be back to vote, and so we certainly could have taken this vote when he was here, people chose to go forward — it was probably a smart move, but it didn’t work out,” Stewart said.

But White denied that he was made aware of Mitchell’s absence. “I didn’t get that message,” he said. And he was surprised when the bill failed because beforehand he was confident it had the necessary support to win passage.

All the same, White is optimistic the measure is a can’t-miss next year, “sitting alive and well in Calendar and Rules.”

The Tennessee Immigrant and Refugee Rights Coalition, who have been lobbying in support of the bill, released a statement shortly after the bill stalled in the House, criticizing those who had pledged support for “faltering at the last minute.”

“We wish that members of the General Assembly had demonstrated as much courage and leadership as the immigrant students who have fought for this legislation, the same students who are now effectively denied access to an affordable college education for another year,” said Stephanie Teatro, the organization’s co-executive director.

Alex Harris can be contacted at

Business and Economy Featured NewsTracker

House Divided, But Signs Off on Holy Bible as ‘Official State Book’

After two days and hours of debate, the Tennessee House has voted to designate the Holy Bible as the official state book.

The General Assembly’s lower chamber approved House Bill 615, sponsored by Bean Station Republican Jerry Sexton, a retired minister, despite a deep, nonpartisan divide among members about what doing so would mean for the Volunteer State, and whether designating the ancient religious text as such will run afoul of clauses prohibiting religious establishment in the state and U.S. constitutions.

house vote on bible as state bookThe House voted 55-38 to approve the measure. Minority Leader Craig Fitzhugh, of Ripley, abstained from the vote, as did Republican Reps. John Forgety of Athens and Bill Sanderson of Kenton. East Tennessee Republicans Marc Gravitt of East Ridge and Ron Travis of Dayton were listed as not voting.

The hour-plus long Wednesday debate came after the measure got hung up Tuesday morning when calls for a vote kept getting rejected by lawmakers who wanted to keep deliberating.

In an attempt to address members’ issues with the bill, Oak Ridge Republican John Ragan on Wednesday morning proposed an amendment specifying the Andrew Jackson Bible as the official state book, but that amendment failed. Ragan argued that the former U.S. president’s bible was historically, culturally and economically significant to the state, and as it was given to Jackson as a gift in Connecticut at a time when the North and South were divided to help reconcile their differences, it had symbolic importance to the current debate.

Northeast Tennessee Republican brothers Matthew and Timothy Hill argued that Ragan’s amendment “muddies the waters” of the important debate. The House voted 48-41, with three abstentions, to table Ragan’s amendment.

Attention on the bill now shifts to the Senate, where it is sponsored by Steve Southerland, a pastor from Morristown. The upper chamber bill is scheduled for floor debate Thursday.

Lt. Gov. Ron Ramsey and Senate Majority Leader Mark Norris, both Republicans, have each voiced opposition to the bill.

A similar measure failed in the Mississippi Legislature earlier this year. And in 2014, a Louisiana lawmaker scrapped his own proposal to establish the Holy Bible as the official book of the Bayou State, saying it had become a distraction.

An opinion from Tennessee Attorney General Herb Slatery released Monday declared that designating the Bible as this state’s official book will likely be declared improper by the courts upon legal challenge.

Slatery wrote that such a move violates “the Establishment Clause of the First Amendment to the federal Constitution and…the Tennessee Constitution, which provides ‘that no preference shall ever be given, by law, to any religious establishment or mode of worship.'”

Alex Harris can be contacted at

Business and Economy Featured Liberty and Justice NewsTracker

Legislature Approves Protection Against Job Dismissal for Having Gun in Car

Both chambers of the General Assembly on Monday OK’d bills to grant private-sector workers legal ammunition to fight against being terminated for legally storing a firearm in their vehicle.

HB994/SB1058 passed the Senate 28-5 with all Democrats opposed. It passed the House 78-14, with two members present and not voting.

The legislation, sponsored by Sen. Mark Green of Clarksville and Rep. Curry Todd of Collierville, both Republicans, gives employees a legal cause of action against their employer if the worker is fired simply for having a gun in their vehicle, which is a right protected under Tennessee law.

The bills are designed to clear up any legal confusion surrounding a 2013 law approved by the General Assembly that allows handgun-carry permit holders to store their firearms in their vehicle while at work — even over the objections of their employers.

According to Todd, the measure is just enhancing the prior “guns-in-trunks” law, which was opposed by the Tennessee Chamber of Commerce for going too far and criticized by the Tennessee Firearms Association for not providing enough protections for an employee’s Second Amendment rights. An opinion from former Attorney General Robert Cooper said that under the 2013 law employees could still be terminated for violating workplace rules, including storing a gun in a vehicle on a company’s property.

The legislation passed Monday would provide a cause for an employee terminated for firearm possession to file a civil lawsuit against their employer for wrongful termination. Rep. Todd said, though, that the “burden of proof” would be on the employee to prove that having the weapon was the issue for dismissal, and not another work issue.

Todd said the Tennessee Chamber of Commerce was neutral on the legislation. But according to the AP, following the bill’s passage a state Chamber vice president said the organization had problems with the legislation, which “creates a protected class and erodes Tennessee as an employment at-will state.”

Todd also received pushback on the floor from Lawmakers expressing concern over violated private property rights and frivolous lawsuits by any employee fired for whatever reason, who may just have a firearm in their vehicle.

House Democratic Caucus Chairman Mike Stewart of Nashville questioned what was to stop any employee who’s been fired from using “this new cause of action against any business that they work for.”

He also saw some resistance from fellow Republicans, such as House Agriculture and Natural Resources Committee Vice Chairman Andy Holt of Dresden.

“I love firearms of all varieties,” Holt said. He added he loves that Tennessee is “an at-will state” even more, and that employers should have the ability to discharge any of their workers “for any reason.”

However, Todd received some support from Ooltewah Republican Mike Carter, a former Hamilton County Judge.

Carter said with Tennessee being a “right to work state,” he didn’t expect to be in support of any legislation that would tamper with that, but Todd’s bill was very well-written in that it “is a proper balancing” of employer and employee rights.

“It requires that person to prove that they were terminated for the sole purpose of carrying a gun in their car, locked up,” Carter said. He added that any other termination would still be lawful.

Following full passage by the General Assembly, the next stop for the measure is Gov. Bill Haslam’s desk, to await his signature.

Todd, sponsor of 2009’s “guns in bars” law, had his carry permit suspended for a year after failing a roadside sobriety test in 2011, and later pleading guilty to driving under the influence and possession of a gun under the influence.

Alex Harris can be contacted at

Business and Economy Featured Liberty and Justice NewsTracker

Palcohol Lacks Pals in TN Legislature

In tune with bipartisan consternation across the nation, the Tennessee Senate rushed to pass legislation Thursday to halt the sale of a product called “Palcohol”  before it’s even made it to the production stage.

In a noteworthy instance of common agreement with New York’s Democratic U.S. Sen. Chuck Schumer — who, to no avail, has called upon the Food and Drug Administration multiple times to block sales of the powder, and has introduced a measure to ban it federally — Tennessee’s Republican supermajority-controlled Senate voted near-unanimously for Senate Bill 374.

The anti-Palcohol proposal, sponsored by Bill Ketron of Murfreesboro, the Senate GOP Caucus chairman and champion of the wine-in-groceries movement, would make the sale of any crystalline or powdered spirits a Class A misdemeanor as of May 1. The bill would also allow the revocation or suspension of any alcohol license held by the seller, in addition to any criminal penalties assessed.

Earlier this week, the Alcohol and Tobacco Tax and Trade Bureau approved labeling for Palcohol. According to the Palcohol website, mass-marketing is planned for start-up by summer.

Mark Phillips, the Arizona man who invented Palcohol, argued in a recent video statement that the push for prohibition is misguided, resulting from unfounded fears and misconceptions about a product he developed as a convenient, easily transportable way to enjoy a drink after a day of backpacking or other outdoor activities.

Phillips told CNN on Friday that he’s really not surprised — and to a degree understands — some of the reaction to his product, although he hopes rational discourse will win out over hysteria.

“A lot of people are concerned about alcohol. I am concerned about the misuse and abuse of liquid alcohol, everyone is,” he said. “So , I am not going to sit here and say that my product will not be misused or abused, because it might be. But you don’t ban a product for that.”

“You don’t see any bans being introduced to ban liquid alcohol, because we know prohibition doesn’t work — it failed miserably,” Phillips added. As was demonstrated by America’s experience with outlawing liquid alcohol, banning powedered alcohol will result in the state “losing all control over its distribution,” which will in fact make it easier kids to get hold of, he said.

Nevertheless, already several other states have banned Palcohol, or like Tennessee are considering bans.

The Volunteer State measure passed the 33-member Tennessee Senate with 31 affirmative votes. Germantown Republican Brian Kelsey cast the only vote against the measure. Hohenwald Republican Joey Hensley did not cast a vote. Kelsey declined to comment to TNReport on why he voted no.

Ketron argued on the Senate floor Palcohol could become available anywhere to consumers of any age.

“There’s no way to tax it. There’s no way to control it, and we want to stop it before it gets here,” Ketron said.

Claiming palcohol has a high potential for abuse and could lead to more underage drinking, Ketron said young kids looking to experiment may snort it or disguise it in bottled water to drink in class.

Ketron told TNReport Friday that while the state perhaps should consider allowing Palcohol sales in the future, the abrupt approval by the federal government is forcing the Tennessee Legislature to spring into action with a declaration of illegality.

“I want to ban it first, and then we can sit down and take a look at it,” he said.

Keith Bell, executive director of Tennessee’s alcohol enforcement agency, confirmed that there’s no statutory authority to control non-liquid booze, and the prohibition was needed “because of the dangers as mentioned by Sen. Ketron.”

Bell said while he doesn’t have any research data on powdered alcohol’s dangers relative to liquid alcohol, he’s sure such studies exist.

Bell provided TNReport with a February 2015 National Association of Alcohol Beverage Commissions research paper on powdered alcohol — which can be found in full below — that indicates although the specter of crystalline alcohol has arisen in the past, previously no powdered alcohol products had been approved for sale in the U.S.

Phillips, the powdered-alcohol inventor, argues on his company’s website that legislators have no business playing “nanny” for constituents who are “big boys and girls” who should be able to decide “if we want to use alcohol.” According to Phillips, Palcohol is only intended to be sold to adults, and only wherever liquid alcohol is sold.

Similar to federal alcohol prohibition nearly 100 years ago, the website argues, banning powdered alcohol would likely create a black market where underage drinkers have easier access and the state expends “precious resources” enforcing, as well as missing out on potential tax revenue.

According to Phillips, the 4-inch by 6-inch pouch holds too much powder to make snorting worthwhile given the amount of alcohol it’s equivalent to — just one shot of liquor.

Additionally, Phillips points out that due to the amount of powder and how long it takes to dissolve, individuals looking to get drunk would find shots of liquid alcohol an easier option. Similarly, anyone looking to spike someone’s drink or looking to scam the entertainment and service industries would find it easier to use easily-concealable single-shot bottles of liquor.

The booze-sellers guild in Tennessee nonetheless fully supports outlawing powdered alcohol.

Thad Cox, president of the Wine and Spirits Retailers Association, said the association is “a hundred percent” in agreement with the ban. Cox said while he’s never seen the product, “it could get extremely dangerous where people could really, seriously impair themselves and endanger people, too.”

TWSRA exists “to protect the interests of the independent package store owners of Tennessee,” and represents more than 500 retailers across the state.

Cox questioned whether university students could be trusted not to brew up hitherto unknown methods of alcohol abuse with Palcohol.

“You know how college kids are,” said Cox. “They want to experiment, they want to challenge each other (to see how many Palcohol packets they can imbibe at once).”

“And then they get behind the wheel,” he said.

The House bill is sponsored by Columbia Republican Sheila Butt. It’s scheduled to be heard Wednesday in the House State Government Subcommittee.

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Business and Economy Featured Liberty and Justice NewsTracker

AG Pressed to File Suit Over FCC Broadband Ruling

A trio of prominent Tennessee House Republicans on Tuesday called for the state’s attorney general to challenge the Federal Communications Commission’s recent decision to strike down state restrictions on municipal broadband expansion.

Last week the FCC ruled in favor of the Electric Power Board of Chattanooga and their request to set aside a 1999 Tennessee law limiting municipal electric providers to offering internet services only within their electric footprint.

House Majority Whip Jeremy Durham and House GOP Caucus Chairman Glen Casada, both of Franklin, as well as Dresden Rep. Andy Holt, vice chairman of the House Agriculture and Natural Resources Committee, are urging state Attorney General Herbert Slatery to fight back against what they term the FCC’s “unconstitutional violation” of Tennessee’s sovereignty.

The three Republicans are accusing the FCC of having “usurped Tennessee law.”

In a press conference at the state Capitol Tuesday, Durham questioned the legality and appropriateness of “an unelected, federal body…overturn(ing) laws that have been made by the duly elected members of the Tennessee General Assembly.”

“I believe it’s another example of federal overreach. It doesn’t have to be the pen of Barack Obama and an executive order, sometimes it’s these unelected bodies like the FCC,” Durham said.

Whether or not the FCC ruling constitutes “good public policy or bad,” isn’t so much the issue as that the subverting of state laws sets “a very dangerous precedent,” said Durham.

According to FCC Chairman Tom Wheeler, the decision was made because “some states” have limited competition by designing “thickets of red tape,” and through its action, the commission is “cutting away that red tape consistent with Congress’s instructions to encourage the deployment of broadband.”

EPB officials, though cautious of possible pending litigation, praised the decision last week.

“Many neighbors have been struggling with the economic and educational disadvantages of not having access to broadband services. We are looking for the quickest path forward to help those neighbors join the 21st century information economy,” said Harold DePriest, EPB’s president and CEO, in a press release.

Gov. Bill Haslam told reporters Tuesday he’s still weighing options and mulling the FCC ruling and hadn’t made a decision on if he supports Tennessee appealing. “Before you decide to appeal something, you have to make certain that there’s a reasonable reason to do that,” Haslam said, adding that he’ll be looking to Slatery for guidance on the issue.

Haslam said he recognizes “value” in people gaining access to high-speed Internet if it is otherwise unavailable, but there are also concerns about “the local government subsidizing something that makes it hard for business to compete.”

The General Assembly’s Democrats issued a press release Tuesday afternoon criticizing the governor and lawmakers for working “to limit consumer choice,” instead of supporting the FCC’s decision to expand the choice for Tennesseans.

According to both chambers minority leaders — Memphis Sen. Lee Harris and Rep. Craig Fitzhugh of Ripley — Tennessee consumers “consider the matter settled” with the FCC ruling, and “don’t care so much about these technicalities,” if it means having access to high speed internet service.

Tullahoma Sen. Janice Bowling, a Republican, is pushing legislation this year to let municipal electric companies offer their services to what she called the “under-served or un-served” areas of the state.

Neither chamber has taken action on the bill.


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Bowling Looking to Ease Expansion Limits on Government-Owned ISPs

Calling high-speed internet “an essential utility for the 21st Century,” Sen. Janice Bowling wants to ensure rural Tennesseans have access to it.

Sponsored by Bowling and Rep. Kevin Brooks, R-Cleveland, SB1134/HB1303 would allow municipal broadband providers to expand if they “obtain the written consent” of electric co-ops serving the affected areas.

A Republican from Tullahoma, Bowling is pushing to repeal a 1999 state law that restricts municipal electric providers from offering Internet service beyond their designated boundaries.

The Federal Communications Commission also voted Thursday to override those state laws.

However, Bowling told TNReport she wasn’t sure when the ruling would take effect, and would prefer to “go ahead and do what we need to do in Tennessee.”

According to FCC Chairman Tom Wheeler, the federal body’s action cuts away the “bureaucratic red tape” put on municipal broadband networks by states, and fulfills their congressional mandate to expand broadband service. “It is a well established principle that state laws that inhibit the exercise of federal policy may be subject to preemption in appropriate circumstances,” Wheeler said.

Wheeler called the decision “pro-competition,” and said consumers shouldn’t be restricted to “second-rate broadband.”

The Electric Power Board of Chattanooga and other municipal providers want the leeway to provide their government-funded high-speed broadband to areas beyond their electric system’s borders.

However, Tennessee’s private sector broadband providers argue many rural residents do have access to broadband, and the high speeds touted by municipal providers, while fashionable, are unnecessary and shouldn’t be subsidized by local tax dollars.

Tennessee Telecommunications Association Executive Director Levoy Knowles told TNReport Thursday his organization is opposed to the federal government “taking that authority away from the states.” TTA opposes Bowling’s legislation as well.

“We don’t feel like it’s fair to be competing against government-owned facilities in these same areas that we’ve spent millions of dollars in to put forth a modern network and provide our customers high speed internet service,” Knowles said.

TTA is composed of 21 small Tennessee telephone and broadband companies that serve “approximately 30 percent” of rural Tennessee. Nearly all their customers “already have broadband capability available to them” and the Internet service packages they offer often include “the same speeds and services and products that you can get in the metropolitan areas,” said Knowles.

Bowling argues, however, that her measure removes “the regulatory restriction” government has imposed. She believes consumers should have choices of providers “so that the people, locally, can be self-determined.” Those choices should include the opportunity for a publicly funded “municipal electric provider to come in and negotiate a deal,” she said.

While she understands businesses have “a bottom line” to meet, Bowling posits that rural communities shouldn’t be “held hostage” by limited private-market choices. Furthermore, even if the Internet services that are currently available are sufficient, they often aren’t for commercial uses. “It doesn’t work for doctors and it doesn’t work for bankers, it doesn’t work for a lot of the commercial uses of fiber,” she said.

High-speed internet “is to the 21st century what electricity was to the 20th century,” Bowling said. She compared providing broadband service to rural communities to “what the 1937 Rural Electric Administration bill did nationally, to allow these co-operatives.”

“So essentially what I’m asking for is the ability to form these high-speed broadband cooperatives in areas that are under-served or un-served,” Bowling said.

The Tennessee Municipal Electric Power Association, which represents the state’s 60 municipal electric providers, favors Bowling’s bill.

In a recent press release, Jeremy Elrod, TMEPA’s director of government relations likened the issue to a city’s decision on how to best provide power and water and called Internet service “the next utility of the 21st century.”

“Municipal electric broadband should be allowed to be an option for more communities across Tennessee,” Elrod said.

But opponents of Bowling’s legislation contend if the goal is high-speed internet blanketing the state, government officials should get out of the way and facilitate free-market competition between existing providers by reducing regulations.

In December, Knowles said while he understands the desire to extend service to unserved areas, his organization is “opposed to allowing the expansion when there is already service available.”

“Because when my members compete with the municipals, then we’re also on their pole attachments and we’re paying taxes — ad valorem taxes and sales tax and other local taxes — and governmental agencies many times are exempt from those type of taxes,” Knowles said.

However, Bowling called that a “strawman” argument.

“There’s no advantage to being in the same utility group that owns the pole, because their business plan that is approved and checked by the comptroller has to show that that has been paid for,” Bowling said.

But while state-level Republicans seek to strike down the restriction, Rep. Marsha Blackburn, R-Tenn. 07, has introduced legislation to block the FCC decision at the federal level. Blackburn also criticized the FCC’s vote in support of regulating the internet as a “1930s era public utility” under “net neutrality.”

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Bitcoins-for-Candidates Bill in TN Legislature

Got any Bitcoin you can spare? If so, you might soon be able to use it to make a political contribution to a candidate running for elected office in Tennessee.

A couple of Volunteer State lawmakers want to clarify the law so there’s no question that candidates can use digital currency to fuel their political ambitions.

Sen. Steven Dickerson of Nashville and Rep. Jeremy Faison of Cosby, both Republicans, have filed a bill to ensure state law matches federal campaign finance regulations on the matter. In May 2014, the Federal Election Commission ruled unanimously to allow Bitcoin donations to political candidates.

“That ruling applies to federal elections. There was possible ambiguity as far as state races. This bill would remove any ambiguity,” Dickerson recently told CoinDesk, a website dedicated to news about Bitcoin and other digital currencies.

Senate Bill 674 would also require that any increase in the value of the digital currency be reported as interest in registry of election finance filings. Candidates would also be required to sell the alternative currency and deposit the proceeds before “spending the funds.” The legislation is HB701 in the lower chamber.

The bill has been assigned to the State & Local Government Committee in the Senate, and the Local Government Committee in the House.

Bitcoin, often described as the first of its kind in the realm of “virtual currency,” emerged in 2009. Bitcoins are “mined” using complex computer programs and are then entered into circulation through “peer-to-peer transfers” independent of traditional banks.