Members of the Tennessee General Assembly overwhelmingly passed a bill Thursday acknowledging that the growth in state government this year exceeds the growth of Tennessean’s income by $3 billion, or 16 percent.
The action by the legislature is mandated by the Tennessee Constitution in Article II, Section 24, when state spending grows faster than its economy.
The measure, commonly known as the Copeland Cap, was named for its House sponsor of the constitutional amendment, the late Republican State Representative David Copeland of Ooltewah, who passed away in 2019.
In 1978, the voters of Tennessee approved Copeland’s amendment to the Tennessee Constitution to limit the growth in state spending.
The constitutional provision states, “In no year shall the rate of growth of appropriations from state tax revenues exceed the estimated rate of growth of the state’s economy.”
The estimated growth of the state’s economy is based on the projected change in the personal income of Tennesseans. The estimated growth in Tennesseans’ personal income is sourced from the University of Tennessee Boyd Center for Business and Economic Research, and is included in the governor’s budget document each year.
The constitution further states, “No appropriation in excess of this limitation shall be made unless the General Assembly shall, by law containing no other subject matter, set forth the dollar amount and the rate by which the limit will be exceeded.”
But the constitutional amendment does not have the effect of stopping the growth of government. Instead, it forces legislators to acknowledge the imbalance of state spending in a separate piece of legislation, referred to as an “indexing bill.” A simple majority vote is all that is required to proceed with exceeding the Copeland Cap to spend the associated funds.
SB2899, which “authorizes the index of appropriations from state tax revenues for 2021-2022 fiscal year to exceed the index of estimated growth in the state’s economy by $2,997,600,000 or 16.08 percent,” passed the Senate unanimously with a 29-0 vote.
The House, which substituted and conformed to the Senate bill, passed the indexing bill with a vote of 88-3-7.
Another limit to the efficacy of the Copeland Cap is that legislators’ votes recognize revenue received in the current fiscal year, after tax revenues have already been collected by the state. Because Tennessee is sales-tax versus income-tax driven, it is virtually impossible for the state to issue refunds to its taxpayers.
As The Tennessee Star reported, the Copeland Cap hit a decade-long high in fiscal year 2019-2020, when the growth in government was $629 million, or 3.6 percent, greater than the personal income of its taxpaying citizens. This fiscal year, the growth in state government is more than four times that of the previous decade’s high, in terms of both dollars and percentage.
According to a compilation by longtime taxpayer advocate and government watchdog Ben Cunningham, this year’s excess governmental growth over Tennesseans’ personal income was only slightly less than the $3.6 billion in total over the 30-year period from the time of the passage of the Copeland Cap in 1977-1978 through 2009-2010.
In the presentation of the bill on the House floor as part of the appropriations calendar by Budget Committee Chairman Patsy Hazlewood (R-Signal Mountain), Hazlewood told her fellow House members that the growth in state government exceeded growth in personal income because of the unprecedented funds that have come into the state directly from federal sources.
However, the text of the bill states that the index of appropriations “from state tax revenues” for fiscal year 2021-2022 may exceed the index of estimated growth in the state’s economy.
In other words, the federal dollars that flowed into Tennessee through spending bills, starting with the $2 trillion CARES Act, are not counted in the Copeland Cap calculations that make up the indexing bill.
Tennessee’s Commissioner of Finance and Administration reports monthly on the state’s tax revenues. The most recent report, which covered March tax receipts, indicated that revenues through the eight months of the 2021-2022 fiscal year on an accrual basis, were $2.5 billion – or 18.62 percent – more than the budgeted estimates, The Star reported.
The monthly tax revenues report includes collections on the state’s franchise and excise, income, inheritance and estate, gasoline, petroleum special, tobacco, beer, motor vehicle registration, motor vehicle title, mixed drink, business, privilege, gross receipts, alcoholic beverage, sales and use, motor vehicle fuel, severance, coin-operated museum, and unauthorized substance taxes – in addition to TVA payments in lieu of taxes.
Senators voting Aye on SB2899 were: Raumesh Akbari (D-Memphis), Paul Bailey (R-Cookeville), Mike Bell (R-Riceville), Janice Bowling (R-Tullahoma), Richard Briggs (R-Knoxville), Heidi Campbell (D-Nashville), Rusty Crowe (R-Johnson City), Todd Gardenhire (R-Chattanooga), Ferrell Haile (R-Gallatin), Joey Hensley (R-Hohenwald), Ed Jackson (R-Jackson), Jack Johnson (R-Franklin), Sara Kyle (D-Memphis), Jon Lundberg (R-Bristol), Frank Niceley (R-Strawberry Plains), Mark Pody (R-Lebanon), Bill Powers (R-Clarksville), Shane Reeves (R-Murfreesboro), Kerry Roberts (R-Springfield), Paul Rose (R-Tipton and part of Shelby County), Steve Southerland (R-Morristown), John Stevens (R-Huntingdon), Art Swann (R-Maryville), Page Walley (R-Bolivar), Bo Watson (R-Hixson), Dawn White (R-Murfreesboro), Ken Yager (R-Kingston), Jeff Yarbro (D-Nashville), Speaker Randy McNally (R-Oak Ridge).
Representatives voting Aye on SB2899 were: Rebecca Alexander (R-Jonesborough), Charlie Baum (R-Murfreesboro), Bill Beck (D-Nashville), Clark Boyd (R-Lebanon), Rush Bricken (R-Tullahoma), Scotty Campbell (R-Mountain City), Karen Camper (D-Memphis), Dale Carr (R-Sevierville), Michele Carringer (R-Knoxville), Glen Casada (R-Franklin), Scott Cepicky (R-Culleoka), Jesse Chism (D-Memphis), John Ray Clemmons (D-Nashville), Mark Cochran (R-Englewood), Barbara Cooper (D-Memphis), John Crawford (R-Bristol/Kingsport), Michael Curcio (R-Dickson), Tandy Darby (R-Greenfield), Vincent Dixie (D-Nashville), Clay Doggett (R-Pulaski), Rick Eldridge (R-Morristown), Jeremy Faison (R-Cosby), Bob Freeman (D-Nashville), Ron Gant (R-Piperton), Johnny Garrett (R-Goodlettsville), John Gillespie (R-Memphis), Rusty Grills (R-Newbern), Yusuf Hakeem (D-Chattanooga), Curtis Halford (R-Dyer), Mark Hall (R-Cleveland), G.A. Hardaway (D-Memphis), Torrey Harris (D-Memphis), Kirk Haston (R-Lobelville), David Hawk (R-Greenville), Patsy Hazlewood (R-Signal Mountain), Esther Helton (R-East Ridge), Gary Hicks (R-Rogersville), Tim Hicks (R-Gray), Jason Hodges (D-Clarksville), Dan Howell (R-Cleveland), Bud Hulsey (R-Kingsport), Chris Hurt (R-Halls), Darren Jernigan (D-Nashville), Curtis Johnson (R-Clarksville), Gloria Johnson (D-Knoxville), Kelly Keisling (R-Byrdstown), Sabi Kumar (R-Springfield), Justin Lafferty (R-Knoxville), William Lamberth (R-Portland), Mary Littleton (R-Dickson), Harold Love (D-Nashville), Susan Lynn (R-Mt. Juliet), Eddie Mannis (R-Knoxville), Pat Marsh (R-Shelbyville), Greg Martin (R-part of Hamilton County), Sam McKenzie (D-Knoxville), Larry Miller (D-Memphis), Bo Mitchell (D-Nashville), Debra Moody (R-Covington), Jerome Moon (R-Maryville), Brand Ogles (R-Franklin), Antonio Parkinson (D-Memphis), Jason Potts (D-Nashville), Jason Powell (D-Nashville), Dennis Powers (R-Jacksboro), John Ragan (R-Oak Ridge), Bob Ramsey (R-Maryville), Jay Reedy (R-Erin), Iris Rudder (R-Winchester), Lowell Russell (R-Vonore), Johnny Shaw (D-Bolivar), Paul Sherrell (R-Sparta), Mike Sparks (R-Smyrna), Bryan Terry (R-Murfreesboro), Dwayne Thompson (D-Memphis), Chris Todd (R-Madison County), Joe Towns (D-Memphis), Ron Travis (R-Dayton), Kevin Vaughan (R-Collierville), Greg Vital (R-Harrison), Todd Warner (R-Chapel Hill), Terri Lynn Weaver (R-Lancaster), Mark White (R-Memphis), Sam Whitson (R-Franklin), Ryan Williams (R-Cookeville), David Wright (R-Corryton), Jason Zachary (R-Knoxville), Speaker Cameron Sexton (R-Crossville).
Representatives voting No on SB2899 were: David Byrd (R-Waynesboro), Jerry Sexton (R-Bean Station) and John Mark Windle (D-Livingston).
Although seven House members were Present and Not Voting, their names were not available by press time.
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Laura Baigert is a senior reporter at The Star News Network, where she covers stories for The Tennessee Star and The Georgia Star News.