Tennessee lawmakers are adjourning after finalizing the $1.9 billion tax cut and refund for businesses

NASHVILLE, Tenn. (AP) — Tennessee’s Republican Party-controlled General Assembly adjourned for a year Thursday, ending months of tense political infighting that ended Republican Gov. Bill Lee’s universal push to end the school vouchers. But a bill that would allow some teachers to carry firearms in public schools and a bill that would add nearly $2 billion in tax cuts and refunds for businesses were approved at the last minute.

For months, Lee stated that enacting universal school vouchers was his top priority for the legislature. At the same time, he warned that lawmakers must pass the big tax cut and refund for businesses to avoid a possible lawsuit as critics argued the state had violated the U.S. Constitution.

The ambitious pitches were addressed to a legislative body still harboring deep resentment from the past year, where lack of action on gun control and safety measures had caused deep divisions between the Senate and House of Representatives. Meanwhile, the explosive attention from the expulsion of two young black Democratic lawmakers resulted in retaliatory restrictions on how long certain members of the House of Representatives could speak during legislative debates and restrictions on the number of seats in the public galleries.

“This was a session of the good, the bad and the ugly,” said Democratic Senator Raumesh Akbari. “Unfortunately, some very bad bills have been passed.”

Although Lee failed to reach consensus on his voucher talk — an initiative he vowed to renew next year — he was able to strike a last-minute deal on the eye-watering $1.9 billion tax cut and refund for businesses. The amount amounts to nearly 4% of the state’s $52.8 billion budget, which largely does not include tax breaks for most Tennesseans.

“We have achieved things that will benefit the people of this state,” Lee told reporters after lawmakers adjourned. “And I am proud of the work of the men and women who have come together and worked together to make compromises and find the way forward to make life better for the people who live in this state.”

At issue are concerns that the state’s 90-year-old franchise tax violates the Commerce Clause of the U.S. Constitution, which prohibits states from passing laws that tax interstate commerce. The statute has not been formally challenged, but late last year a handful of companies sent a letter to lawmakers demanding the legislature change the law or risk a legal battle.

“The bottom line is that Tennessee pays its bills,” said Republican Sen. Rusty Crowe. “The state of Tennessee wrongfully took this money and we are going to pay these companies back.”

House and Senate leaders disagreed for months over details of how to resolve the legal issues surrounding the franchise tax. On the final day of the hearing, both sides agreed to offer companies to request retroactive refunds for the past three years, in exchange for temporarily disclosing the names of companies requesting refunds and the scope of the reimbursement amounts – a first in Tennessee history.

Still, the names of the companies will only be made public by the Treasury Department for 30 days in June 2025. Companies will have to apply for the refund this year.

“These transparency provisions are a joke,” said Democratic Sen. Jeff Yarbro, who argued that more could be done to disclose the exact amounts, even as Republicans responded that the agreed-upon disclosure was unprecedented.

The funding for three years of restitution is expected to cost taxpayers $1.5 billion. It will cost another $400 million annually for the ongoing franchise tax credit.

The final week of Tennessee’s nearly four-month legislative session also saw emotionally charged debates over the arming of public school teachers and staff, with hundreds of protesters flocking to the Capitol to chant “Blood on Your Hands” against Republicans who passed by. the bill.

The legislation specifically prohibits parents and other teachers from knowing who is armed on school grounds.

On Thursday. Lee promised that he would sign the bill into law. Once he does, it will be the largest expansion of gun access in the state after last year’s deadly shooting at a private elementary school in Nashville.

“There are people across the state who disagree on the path forward, but we all agree that we must keep our children safe,” Lee said, emphasizing that the decision to arm public school staff will be decided locally and not by a statewide mandate. .

With a Republican supermajority, Democratic members were unable to put up much of a fight against a long list of bills targeting the LGBTQ+ community, ranging from requiring public school employees to exclude transgender students from their parents and allowing ​​that LGBTQ+ foster children are placed with families. who harbor anti-LGBTQ+ beliefs.

According to the Human Rights Campaign, Tennessee has passed more anti-LGBTQ+ laws than any other state since 2015, identifying more than two dozen bills that have emerged from the legislature in recent months.

Republicans and Governor Lee also signed on to repeal police reforms in Memphis following the fatal beating of Tire Nichols by officers in January 2023, despite pleas from Nichols’ parents to give them a chance to find a compromise.

Around the same time, lawmakers removed administrators from Tennessee’s only publicly funded historically black university after Republicans argued it was necessary because of mismanagement found in audits. Democrats and others have countered that the increased scrutiny was largely the result of attention to the handling of Tennessee State University, which has been chronically underfunded by an estimated $2.1 billion over the past three decades.

As fallout surrounding the deportations grew, House lawmakers strengthened legislation that would have prohibited local governments from paying for college or providing money for slavery reparations. A rare rejection of a Republican Party-backed bill.

On abortion, lawmakers approved criminalizing adults who help minors get abortions without parental consent. That bill is currently awaiting Lee’s expected signature, after he already signed legislation requiring students to watch a video on fetal development produced by an anti-abortion group.

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