Tennessee Wine & Spirits Retailers Association

The State Funding Board reported this week that Tennessee could have about $700 million in unanticipated tax money that it can spend, a record amount of revenue that sets the stage for lawmakers to make final decisions on the state budget. Two different pots of money are combined to reach the $700 million, which can be spent in addition to Gov. Phil Bredesen’s $27.5 billion budget he proposed in February. State finance officials estimated that Tennessee would have a maximum of about $350 million in recurring new dollars, which are traditionally spent on repeating expenses like education. That maximum of $350 million is in addition to about $400 million that the funding board said the state had earlier this year in unexpected recurring tax dollars. Bredesen’s proposed budget targets spending that $400 million.

In a separate pot of money, finance officials estimated that the state would have about $344 million — the maximum amount — in unanticipated nonrecurring funds or one-time money that it usually uses to fund one-time expenses. Altogether, it is a record amount of unexpected revenue for Bredesen’s administration and the state. The unanticipated millions leave lawmakers with decisions to make on issues like how much they plan on — if at all – increasing the cigarette tax to fund education, cutting the sales tax in food, upping state employees’ pay raises and pining away in the state’s savings account. Bredesen recently proposed a $475 million education overhaul, which he would like to fund about $283 million worth of this year.

Bredesen has wanted to fund about half of that $283 million through the tripling of the state’s per pack cigarette tax, which would raise about $144 million for K-12 education. The other roughly $140 million would be funded through the unanticipated recurring dollars. With the new dollars, the proposed 40-cent per pack increase in the cigarette tax may not be needed immediately but will be “over time”, according to Commissioner Dave Goetz.

Members of the funding board, which include Commissioner of Finance and Administration Goetz, the state comptroller, treasurer and secretary of state, would like $250 million of the nonrecurring funds to be added to the state’s rainy day fund. That would increase the savings account to roughly $750 million with the ultimate goal to get it to 11 percent of state revenues, which would be about $1.1 billion. It is currently at a record high of about $497 million.

In other action, most of the House subcommittees have closed for the year and only standing committees are open. The Senate Committees are trying to finish up this week as well, leaving only the Finance Committees in both houses open to discuss the budget. The Administration will produce their supplemental appropriation this week in the Finance committees, where members will either agree or disagree with the funding priorities.

The AT&T cable bill will be voted on this week in both Houses. Both sides are still talking, but no agreement has been made on a compromise amendment. Medical Malpractice reform legislation took a hit yesterday on the House floor as the Tennessee Medical Association defeated Chairman Rob Briley’s compromise amendment on the bill by a very slim margin. Once that happened, Sponsor Doug Overbey moved to send the bill back to the House Judiciary committee, over the objections of House Republican leaders.

The Legislature is still looking at adjourning for the year by the end of May. Please call if you have questions.

Tennessee Legislation Service (c) 2007 M. Lee Smith Publishers Thursday, May 10, 2007
ALCOHOLIC BEVERAGES
SB 0634* HB 1750 (Full Text)	Allows sale of alcohol on Sundays that are certain holidays. Allows retailers to sell alcoholic beverages on Sundays between the hours of noon and eleven p.m. and on Labor Day, the Fourth of July, and New Year's Day. (S: Marrero; H: Jones U.) Senate Status: Failed in Senate State & Local Government 03/13/2007 for lack of a second. House Status: Referred to House Local Government Subcommittee.
SB 0680* HB 0787 (Full Text)	Cannot sell beer or alcohol near drug treatment facility. Authorizes counties and cities to adopt ordinance or resolution that prohibits sale of beer and alcoholic beverages within 2,000 feet of a drug or alcohol treatment facility. (S: Bunch; H: Campfield) Senate Status: Referred to Senate State & Local Government. House Status: Referred to House Local Government Subcommittee.
SB 0795* HB 1324 (Full Text)	ID tags on beer kegs. Requires retailers to place identification tag on kegs containing beer that identifies the seller. Requires purchaser to pay a minimum deposit of $75 and to sign a registration form. Directs department of revenue to prescribe and supply forms for keg identification so that buyers and sellers can be held accountable for unlawful purchases. Violation is a Class C misdemeanor. (S: Burchett; H: Briley) Senate Status: Referred to Senate State & Local Government. House Status: Taken off notice in House Local Government Subcommittee 04/18/2007.
SB 1221* HB 1194 (Full Text)	Special occasion license for certain events. Allows charitable, nonprofit, or political organization to obtain special occasion license for event in political subdivision that has approved sale of alcoholic beverages for consumption on the premises. Clarifies current law that specifies approval only of the sale of alcoholic beverages at retail on the premises. (S: Cooper J.; H: Harmon) House amendment 1 rewrites the bill to authorize the Swiss Colony in Gruetli-Lager to give samples of homemade wine at its annual festival. Senate Status: Senate passed 05/07/2007. House Status: House 04/09/2007 passed with amendment 1. Other Status: Sent to the speakers for signatures 05/07/2007.
SB 1223* HB 1529 (Full Text)	Special occasion license for charitable organization. Permits alcoholic beverage commission to issue a special occasion license to certain 501(c)(3) organizations for selling wine in closed containers for consumption on or off premises. Allows any resident of Tennessee to donate wine to such organizations. (S: Cooper J.; H: Odom) Senate amendment 1, House Local Government Subcommittee amendment 1 requires organization to have $1,000,000 annual budget. Also requires donated bottles of wine to be properly registered with the department of revenue. Senate Status: Senate 05/07/2007 passed with amendment 1. House Status: House State & Local Government deferred to 05/15/2007.
SB 1224* HB 1755 (Full Text)	Retail license holder may offer free samples of wine. Permits entities holding a retail license or a winery license to provide free samples of wine to consumers on the premises under certain circumstances. Subjects those who violate specified requirements while providing samples to suspension of license or a fine of up to $3,000. (S: Cooper J.; H: Jones U.) House Co-Sponsor: Tindell Senate Status: Taken off notice in Senate State & Local Government 05/01/2007. House Status: Taken off notice in House Local Government Subcommittee 05/09/2007.
SB 1807* HB 2120 (Full Text)	Any wine made from 50% TN fruit - unlimited sale. Allows any winery selling wine made from 50% of any Tennessee fruit to sell it on premises without restriction on number of gallons sold where grapes were previously the only fruit under this provision. (S: Ketron; H: Litz) Senate amendment 1 allows any winery selling wine made from 50% of any Tennessee agricultural product to sell it on premises without restriction on number of gallons sold. The bill is restricted to Tennessee fruit. Senate Status: Senate 05/07/2007 passed with amendment 1. House Status: House Local Government Subcommittee recommended 05/09/2007. Sent to House State & Local Government.
SB 1821* HB 1658 (Full Text)	Registration period for beer manufacturers, distributors. Increases time period from 20 to 25 days for manufacturer or distributor of beer to register at the office of the commissioner of revenue. Broadly captioned. (S: Bunch; H: Mumpower) Senate Status: Referred to Senate State & Local Government. House Status: Caption bill held on House clerk's desk.
SB 1879 HB 1119 (Full Text)	Beer distributors' registration. Increases time period during which beer distributors must register with commissioner of revenue from 20 to 25 days. (S: Jackson; H: Buck) Senate Status: Referred to Senate State & Local Government. House Status: Caption bill held on House clerk's desk.
SB 1977* HB 1850 (Full Text)	Wine direct shipper license. Creates wine direct shipper license to be issued through the alcoholic beverage commission that would allow an in-state or out-of-state entity to ship wine directly to consumers age 21 years or older in this state for personal use. (S: Stanley; H: Todd) Senate Status: Senate State & Local Government deferred to 2008. House Status: House Local Government Subcommittee deferred to 2008.
SB 2072 HB 1899* (Full Text)	Sales of wine by certain retail food stores. Prescribes the creation of an additional class of licenses allowing the sale of wine at retail food stores. (S: Marrero; H: Kernell) Senate Status: Failed in Senate State & Local Government 03/13/2007 for lack of a motion. House Status: Referred to House Local Government Subcommittee.
SB 2289 HB 1825* (Full Text)	Wholesaler's license expansion. Allows wholesaler's licenses to be granted in any municipality that has approved the sale of alcoholic beverages rather than only those with a minimum population of 100,000. (S: Burchett; H: Lundberg) Senate Status: Referred to Senate State & Local Government. House Status: House Local Government Subcommittee deferred to 04/18/2007.
COMMERCIAL LAW
SB 0850* HB 1019 (Full Text)	Processing fees charged for use of debit or credit card. Prohibits card issuer from charging a processing fee to retail merchants for the use of credit or debit cards that is more than seventy-five hundredths of one percent (0.75%) per transaction for all processing fees involving the use of a credit or debit card. (S: Kilby; H: Ferguson) Senate Status: Senate Commerce, Labor & Agriculture deferred to 05/01/2007. House Status: Taken off notice in House Utilities, Banking & Small Business Subcommittee 04/10/2007.
TAXES BUSINESS
SB 1394* HB 1193 (Full Text)	Increased tax on cigarettes and wine. Increases tax on spirits from $4.40 per gallon to $4.50 per gallon. Also increases tax on wine from $1.21 per gallon to $1.31 per gallon. Increases tax on cigarettes from 10 mills per cigarette to 1.5 cents per cigarette. (S: Crutchfield; H: Harmon) Senate Status: Taken off notice in Senate Finance Tax Subcommittee 03/20/2007. House Status: Referred to House Finance Budget Subcommittee.
TAXES SALES
SB 1802* HB 1296 (Full Text)	Exemptions for certain licensed wholesalers and retailers. Exempts certain sales of tangible personal property and services made by licensed wholesalers and retailers from a central warehouse or distribution point other than its principal place of business from sales and use tax. (S: Ketron; H: Sargent) Senate Status: Referred to Senate Finance, Ways & Means. House Status: Referred to House Finance Budget Subcommittee.
SB 1974* HB 2158 (Full Text)	Alcoholic beverages sold for consumption on premises. Specifies that the burden of proving that a taxpayer's records are inaccurate for the purpose of projecting taxpayer sales of alcoholic beverages for on-premises consumption from the taxpayer's wholesale purchases shall be on the department of revenue, (S: Haynes; H: Briley) Senate Status: Senate State & Local Government 04/17/2007 recommended. Sent to Senate Finance, Ways & Means. House Status: House Local Government Subcommittee recommended 05/09/2007. Sent to House State & Local Government.

State rakes in record amount of taxpayer dollars

Tennessee Legislation Service (c) 2007 M. Lee Smith Publishers Thursday, May 10, 2007

ALCOHOLIC BEVERAGES

COMMERCIAL LAW

TAXES BUSINESS

TAXES SALES

Tennessee Legislation Service (c) 2007 M. Lee Smith Publishers
Thursday, May 10, 2007