- [Voiceover]
Production funding for

Behind the Headlines is
made possible in part by

the WKNO Production Fund,
the WKNO Endowment Fund,

and by viewers like you.

Thank you.

- Speaker Beth Harwell on
the gas tax, the surplus

and more tonight on
Behind the Headlines.

(upbeat orchestral music)

I'm Eric Barnes, publisher
of The Memphis Daily News.

Thanks for joining us.

I am joined tonight by Beth
Harwell, Speaker of the House.

Thank you for being here.

- You bet, I enjoy it.

- And thanks for us letting
us use this great space

here at the capitol.

- Absolutely,
isn't it beautiful?

We have a beautiful
state capitol.

- Yes, it's great.

So, the session started.

It's a quiet week but things
really heat up next week.

You've got a $2 billion
surplus, a super majority,

federal government is
now all Republicans,

so this should be the easiest
session of your life, right?

Everyone's gonna be
totally in agreement.

- Well, maybe it's be
careful what you wish for,

because we do have a
lot of work ahead of us.

- Where are those
divisions, seriously?

Because you do have
that super majority,

and I think people who don't
follow the capitol closely

think, well, they'll
just be able to do

whatever they want real
simply, real quickly.

But there are divisions
even among Republicans.

- Sure, especially in a
body as large as the House.

When you have 74 Republicans
in the body of 99,

there's gonna be
differences of opinion.

This is a very beautiful
and diverse state,

and my members reflect that.

I mean, when you have
a $2 billion surplus,

that's argument number
one, how to spend it.

- In those divisions,
so in Memphis

people tend to think,
"Well, it's really,

"the legislature just cares
about the rest of the state."

Now, I imagine everybody
in the state thinks that.

You know, the people
in the east Tennessee,

the people in the
middle Tennessee.

But from your point of
view, the divisions,

do they tend to be regional?

Are they city versus rural?

Where are those divisions?

And I don't mean to
make too much of them,

but those differences
of opinions.

- Well, I'm very
proud of my members

because, ultimately
at the end of the day,

we put Tennessee first.

But there is division
between rural and urban guys,

that's the main
division that happens.

You're blessed in Memphis
to have a great delegation

representing you
in the state house,

and so I look forward
to working with them.

- The surplus, which people
have talked a lot about,

break down the surplus for me.

I mean, it's not a
recurring surplus.

- That's right.

- That's part of the
caution you have right now,

is you gotta plan for this
is not gonna be forever.

- Absolutely.

It's two billion, that's
true, but only one of that

is reoccurring money.

And we have been fiscally very
well managed in this state

in that we don't spend
non-reoccurring money

on reoccurring costs.

So, if you're gonna
put it in something

that you know is gonna
cost you again next year,

that's wrong, you
shouldn't do that.

- And some of the
biggest news right now

certainly is the proposal
that Governor Haslam

has put forward
for transportation
funding, and a gas tax.

It's been talked
about for years.

It goes back to the whole idea

that cars have gotten so
much more fuel efficient

and there's been no
change in the gas tax,

so it generates a
whole lot less money.

- Right.

- Where do you stand on
the governor's proposal?

- Well, I'm gonna
keep an open mind

as I've encouraged my
members to do, as well.

I mean, the Tennessee
General Assembly

does not raise taxes lightly.

I mean, this is a heavy lift.

But on the other hand,

we haven't raised the
gas tax in 28 years.

And, as you said, cars
are more fuel efficient

and we've got a lot
more road to maintain.

Part of, I believe in a
very limited government,

and we should perform
those limited roles well.

And one of those roles
is infrastructure.

- How about this whole, again
we talked about urban/rural

and again, just
thinking of Memphis,

the cities in Tennessee
have different needs

than suburban areas

and, certainly,
than rural areas.

- Memphis has different
needs than Nashville.

Is there a formula that
you, a way of doing this

that satisfies that?

That maybe Memphis wants
to put money in bike lanes,

and roads, and Lamar
Avenue, and all that,

but also bike lanes
and mass transit

in a way that other districts,
that's just not their issue.

- Well, the Department
of Transportation

prioritizes projects.

And it has at least one
project in all 95 counties

that they would
like to get started.

If we were able to successfully

push this through
the legislature,

we would begin all the
backlog projects in six years.

And you're right,
Memphis is different.

I know Lamar Parkway is
a huge deal for you all.

And my rural guys in Nashville,
it's a mass transit issue.

So, we give flexibility
somewhat to local governments,

but then we have an overall
strategy for the state.

- There was some
talk early, I mean,

again we're early
in the session,

but proposals with,
again, with that surplus,

of trying to figure out a way

to shift some of it back locally

and based on population,
and contributions,

so on and so forth.

For a place like Memphis,

I think the number one proposal

that I believe Senator Kelsey,

maybe Senator Norris
had on the other side,

was a 50 million dollars plus

that would be
returned to Memphis.

Other areas it'd be
more or less, whatever.

Your thoughts on
that kind of thing,

of getting the money
back to the local areas.

- Well, we definitely want
to, as much as possible,

give it to back to
its rightful owner,

which is the taxpayer.

- But to come up with
a formula like that,

I think would be very
complicated at this point.

And, you know, the state
continues to have needs.

- The cities also, in
Memphis there's a lot of talk

about the Hall income tax,

which is an income
tax not on payroll

but on investments and
savings, is being phased out.

I guess that's sort of
last year, am I right?

- Right.

- There's a lot of concern
among city government

that a lot of that money it's,

I can't remember how many
millions of dollars to the city,

where is that gonna come from?

Do you worry in this era of,

I mean, no one
likes to pay taxes.

I mean, we all know that,
we start with that premise.

But in this era of cutting
and reducing taxes,

that you almost go too far

because you deplete
the resources

and, as you said, at
the end of the day

the state does have needs,
it does have spending needs.

- Right, right.

And I would agree to that.

I've cautioned my members,

let's be fiscally
responsible about this.

Everyone likes to
vote for the projects,

nobody likes to vote
for the funding.

And that's lying to
people, that's dishonest.

So, I would say with
the Hall income tax,

it will be completely
phased out by 2022.

We tried to set it up so
that it's an incremental,

so it doesn't hit city
governments all at once.

But it is a legitimate concern.

It is here in
Nashville, as well.

- What's the Rainy Day Fund now?

What's in it and what
do you wanna see,

what would your goal
be for how much,

what's the appropriate amount
to go into the Rainy Day Fund?

- Well, every year
since I've been Speaker,

we have added to
the Rainy Day Fund.

We had to deplete it during
some economic hard times.

But we've got about enough
in the Rainy Day Fund

to keep state government
going for about 23 days

if everything went south.

So, we are building it back
up and that's a good thing.

It allows us to have a
Triple-A bond rating.

And when your financial
house is in order,

everything else
runs much smoother.

- Back to, again,
cities and urban,

we were talking about
the different needs

that transportation might have,
on the transportation front.

But there's, I think it
was the governor who said,

and I've paraphrased this
before, maybe last year,

that he was worried there
was this sort of decidedly

growing anti-city tone
in the legislature.

I think he says that as a
former mayor, of course,

and someone who's been
in Nashville, and so on.

Do you see that?

Do you see an anti-city tone

in some of the things
that happened last year?

And do you think that could
happen again this year?

- Well, I certainly hope not.

Our cities are
where people live.

This is a wonderful state.

But I do think that
when the cities go,

begin to encroach
on state government,

then you're gonna have to
have a little pushback,

just like state
government when the Feds,

when we encroach on the
Feds, they push back on us.

So, we have three levels
of government for a reason.

And each of them serves
a very valuable function

in our citizens' lives.

And we wanna keep that
distinction clear.

- One of those that,
some people, I mean,

de-annexation is a
huge issue in Memphis,

and it was a big
issue in Chattanooga.

Big issue last year, it
went to summer study,

and, you know, the
task force in Memphis

is about to make
its recommendations.

You guys have convened.

Is that an appropriate
place for the state

to get involved with how cities
have annexed or de-annexed?

I mean, in Memphis,

there are people
who will write me

ugly emails for saying this,

but there's a point of
view that de-annexation

may have been unpopular,
it may have been.

But it was litigated, it was
done according to the law,

and that's what
the proponents say.

If there's gonna be
some de-annexing,

it can happen through the
City Council and locally.

But last year it almost was
dictated by the legislature.

Is that an overreach
by the legislature?

To tell cities like Chattanooga,

like Memphis, and elsewhere,

how they should make up
their boundaries, and so on.

- Of course, you know what,
it depends on who you ask.

(both laugh)

- Well, I'm asking you.

- It's like most things.

It's hard for me
because I have to admit

I represent the Nashville area,

which is a metropolitan
form of government.

So, it's not, it's
not real to my world.

I do know that it
mattered tremendously

to my Memphis delegation.

And I tried to work with
them as best I could.

- Another local issue, and I
don't know, it's a local issue

but the state has laws
and so on in crime.

And crime, obviously,

nationwide there's been
a spike in violent crime.

Memphis had a terrible run-up

in the homicide rate last year.

Other crimes were level or down.

But that murder rates makes,

and I interchange
murder and homicide

and people criticize
me for that,

but they're horrible
either way you count it.

It was up, and what
can the state do?

Is that a priority
at the state level

to help the localities
fight crime?

- Well, we certainly
set the statue

as far as how much
penalty there is.

I think there's gonna
be a push this year

to re-evaluate the
laws that on the books.

Again, that's another
part of the code

we really haven't updated
in about 20 years.

So, there's some
inconsistencies there.

We'd like to get our
sentencing more consistent

across the board,
and be realistic.

Prison beds are a
valuable resource,

and there's only
so many of them.

And so, who's on our prison bed

should be the most
hardened criminals,

not the white collar crime.

So, we need to go
back through our books

and make some changes.

But, of course, the
state wants to work

with local governments in trying
to get the crime rate down.

And we know we have a
need there in Memphis.

- One thing there's been
a lot of discussion,

in Memphis there
was an ordinance

to minimize the fine for
small amounts of marijuana.

And there was a lot of fun

and a lot of joking about
that, you know, and so on.

But the people who
advocated for it,

Berlin Boyd, now the
head of the City Council,

for him it was a
criminal justice issue.

It wasn't about advocating
marijuana usage.

It was, look, let's
allow the police

to focus on violent
crime, gang crime,

serious level crime,

and not have to play
around with smaller ones.

And that, I think for people,

I don't wanna speak for Berlin,

but for people in that camp

that was just the
first of things

that they'd like to see fines

and overnight jail
terms come down.

Do you see that notion of
criminal justice reform,

of look, we're fining
people too much,

we're burdening them of
fines for minor offenses.

Some of that's state driven.

- Right.

- Is there a need
to bring that down,

that those petty crimes,
that are still infractions,

but are over penalized.

And set people into
a downward spiral

they can't seem to get out of.

- Right, and that is true.

When you set our fines
too high for some folks

that just means that you
put them into poverty

and it's an endless cycle.

You know, again, there's
always two sides to everything,

and there are those who argue
that we set the statute.

And when you give too much
discretion to the policemen

that can get you
in real trouble.

I mean, do you let a kid go

because he has good parents
and you know where he lives,

and this other kid
gets a higher sentence.

We can't let that,

there needs to be
consistency on the penalties.

If I went out to the Tennessee
Bureau of Investigation

and they're very
concerned with trying

to treat marijuana the way it
was back in the 1960s or '70s

when it was really
based on weight.

The reality is its potency now

that they're concerned
with and wanna look at.

So, they can show me
about that much marijuana

and it's more potent
than a whole bag of it.

So, it's a major
concern, it really is.

But we will look
at it this year.

And I'm sure that
there'll be legislation,

at least concerning
medical use for marijuana.

- There are some,
back to prisons,

I think I'm right in this,

there's around 10,000
people in the state prisons

or something like that.

Last year you all passed
a law that was targeted

at trying to reduce
the recidivism rate.

Because it was something like,

it was a staggering number,

40% plus of the people
who go into jail,

it's for relatively
minor, I mean,

we're talking about
crimes, still.

But relatively minor
violations of their probation,

not that they robbed a place
or they committed murder,

something that, of course,
they should go back to jail.

But they missed an appointment,
they didn't do something,

and that is not only, you
called it valuable prison bed,

it's very expensive.

- It is very expensive,
very expensive.

And, yes, we did go
back and say, okay,

it's wrong to miss
your parole deadline

but is it worth
sending you back in.

And, you know, these are people

that are trying to make a
new life for themselves,

and it's hard to live
under the parole system.

But, on the other hand, we've
gotta assure the citizens

that we're gonna try to
keep them publicly safe.

When you let someone
out of prison,

you need to follow them.

- Right, right.

I don't mean this cynically,

it's a politician's, it's
everyone's nightmare,

but politically you vote
to reduce the recidivism

or the return to jail,

and someone does
something horrible.

- Right, that's exactly right.

- And you've taken that
vote, and that's both,

it's gotta hurt and it's
bad politically, right?

- Right, right.

And so, we do have
that second check

of the border
paroles who reviews

all these individual cases.

And it really should be
done on an individual basis

because it's all different.

- How much, I mean,
a vote like that,

when you're voting
to reduce sentences,

in the reality of
electioning, of campaigning,

and reelection, I'll take
you out of it for a second,

but just your members.

Do they come to you and
say, "Look, I get this,

"I get this, Speaker Harwell,

"but I'll get killed.

"If I do this, my
constituents will eat me up

"and I'll get challenged."

You don't have to name
names, but does that happen?

- Oh, it does, I mean,
I have to tell you

one of the first
pieces of legislation

I introduced back when
I was a new member

was to increase the jail
time for repeat rapists

and lower the time
for possession

of small amounts of cocaine;
cocaine was the big drug then.

It would allow these
people that violate cocaine

to stay in the local jails,

and it would let us keep
the hardened rapists

in the main prison
for a longer time.

And it was controversial

because, as you know,
politics is a tough business.

So, they didn't want the
first brochure to go out

and say, well, they
lowered cocaine possession.

But, as I said, everything's
a give and take,

you gotta balance it.

We can't do anything
that's gonna cost the state

to go into not having
a balanced budget.

- Well, the same thing
with that pressure

on the votes and the challenges,

I mean, is that a fear
among your members?

That, look, I get it,

I get why we should
vote for this gas tax

but I will have people
campaigning to the right of me

that are saying he voted
for or she voted for

a gazillion dollar tax increase.

- Yes.

- I mean, that's gotta be the
fear, how do you pull it off.

- It is, it is.

But I will say, I'll
give my members,

they really care what
their constituents think.

And so, I encourage constituents
to call their members

And, if in your mind,

you really can't
justify a tax increase,

you don't want the
additional roads in Memphis,

then you need to let our
legislators know that.

But everything's
a give and take.

And I commend the governor
for presenting a problem,

and one that we should begin
to look at and addressing.

- We talked about the
federal government before

and the demands
that they put on,

obviously, a huge issue
over the last eight years,

or six or eight
years, was Obamacare.

- Yes.

- We've got a new
administration federally,

they're moving
towards, you know,

they're calling for a repeal.

It's not clear whether
they're gonna replace

Obamacare at the same time.

What's your take on that?

It's a huge amount of money

and I don't know what the
number of Tennesseeans,

I should have looked it up,

but it's tens of
thousands of Tennesseeans

are in the Obamacare exchanges.

So, however flawed they
may be or problematic,

they are all providing
insurance to individuals

and families across the state.

What's your concern
about how this plays out?

- I think it's an exciting
time to be in state government.

I also think it's gonna
be a difficult time.

Because I think if
President Trump does what

I hope he does do, which is
return these domestic issues

back to the state
and local governments

where they can efficiently
and effectively run.

we're gonna have our
work cut out for us.

It's kind of like, be
careful what you wish for.

Because if they say we're
giving your education dollars

back to you in a block grant,

well, we're gonna be able
to do some new things.

If they say we're giving
you your federal money

in a block grant on healthcare,

we're gonna have to really
put a pencil to the paper

and figure out how
it's gonna work for us.

You know I set up a
task force to look at,

while we didn't make
the vote to expand,

I asked them to--

- To expand Medicaid.

- Yeah, expand Medicaid.

They've come up, my task
force has come up with

I think some really good ideas.

And we may be able
to lead the nation

with breaker points
to control the costs

and still insure more people.

- Breaker costs, what is that?

- Well, just when you
reach a certain point

and it begins to cost
the state too much,

you pull back, so, it
doesn't get out of control.

- I gotcha.

A block grant,

for people that don't
understand what that is,

it gets thrown around,

it's getting throw
around a lot now

because the federal
government is talking about

shifting a lot of
things to block grant.

What is a block grant
from your point of view?

- Well, when you're taxed,

whether it be your gas tax or,

a portion of it goes to
the federal government,

state government and
local government.

And the portion that we send up

for domestic programs at
the federal government,

the idea was they'd equalize
at the states a little bit more

and give it back down to us.

The reality is I would
love to be able to

keep that money that's
taxed on Tennesseeans

and keep it here in Tennessee

to better meet the
needs of our students

and the consumers
here in the state.

- So, the income taxes
that are paid to the IRS,

your 1040, 1040 whatever,

that that number
would come back.

- Right.

- And that Tennessee
would then have

this discretion to spend it,

not be dictated to
in the way Obamacare

defined what had to
be done basically.

- Right, free us
up from a lot of

unfunded federal mandates.

- Governor Haslam very
publicly did not support Trump.

What did you do?

- I supported.

- You did?

- Yes.

- Are you cautious,
are you wary, I mean,

honestly, what
are your feelings?

I mean, there is such a range

it's hard to remember
in my lifetime

a president who's come
in with such a wide range

of expectations from very,
you know, the avid supporters

to the really fearful,
and everything in between.

Your take on this.

- Well, you know what it is,

it was a different
kind of election,

there's no doubt about that.

There were times
when President Trump

made me nervous by some
of the things he said.

But, ultimately, I think
it was the right choice

for our country.

I think you're gonna see
some exciting things happen.

He is beholden to no one,

and not even the
Washington establishment.

So, I think that certainly
he struck a nerve

with the majority
of Tennesseeans

and they're expecting, you know,

they really have no choice.

They have a Republican
congress, senate and president,

and we expect them
to get things done.

- Back to local
issues in Memphis.

And these are statewide things,

but in Memphis the
state played a big role

in terms of incentives
for St. Jude

and the billion dollar capital
investment they're doing

and the $10 billion in just
increased spending in Memphis,

which people in Memphis
are very excited about.

ServiceMaster which moved
corporate headquarters

into downtown, into
a vacant building.

Those state incentives,
I know they don't go

through a vote
through the House.

- Right.

- But you all set up the
parameters and so on.

It's a very controversial
thing in Memphis.

- It is.

- And maybe elsewhere, too.

- Yes.

- Is there from a
state point of view,

appropriate accountability
on those incentive dollars?

- I will tell you we didn't
use to have it in place.

But now the
legislature changed it

and put a clawback provision in.

If they don't produce the
number of jobs in our state

they say they would, they
lose their tax advantages.

It is a controversy.

Because, you know, we
really want to promote,

most jobs are created by
small business owners.

We wanna give them
the breaks, too,

not just the big companies

that we're trying to
recruit into our states.

So, it's hard to have
a level playing field.

- Yeah, cause we get that.

People come on the
show, and in the paper,

and say, look, I've
been here for 20 years,

I've got four plumbing trucks
and a little small business.

Where's my incentive?
- That's exactly right.

- Where's my break?
- That's right, that's right.

- People have talked about
whether you're interested

in running for governor.

It seems like everybody is.

But are you thinking about it?

- I'm thinking about it.

I really enjoy state government

and I think this is where
you can have the most impact

for good for people's lives,
so I will explore the option.

- Thank you, Speaker
Harwell, we appreciate it.

- Indeed, my pleasure.

- We're joined now by Bill
Dries back in the studio

to talk a little bit more
about the legislative session.

Bill, the reaction, obviously,

from other legislators to
the proposal for a gas tax,

Beth Harwell talked about
it being a heavy lift.

Talk about some of
the other reactions

across the state, and
especially locally.

- Well, the most
universal reaction

that we've had is
the realization

that the governor's
package on the fuel tax

and the tax rollbacks
that accompany it,

will be amended.

Probably in several
versions by legislators

because right now it
does not have the votes

it needs to pass.

And that's not a
slam on the bill,

it's just that this is
a very complex package

in which much of the attention
is on the fuel tax hikes

that the governor has proposed,

but the tax rollbacks are a
very important part of this.

And legislators are gonna
have very different ideas

about what should be rolled back

and how much it
should be rolled back.

- I wasn't able to get to
that with Speaker Harwell.

Some of the rollbacks
include what?

- Well, the one that's
getting the most attention

is the rollback on the state
sales tax on groceries,

on food, in effect,
that you buy,

not in a restaurant
but in a supermarket.

There's also an
acceleration of the rollback

in the Hall income tax,

which is the tax on dividends
and investment income

which the state has already said

they will phase out by
2020 or 2022, I believe.

So, you've got a
combination of that

that is designed to make
this basically a wash.

The tax is increased on fuel

and it creates a certain
amount of income.

That amount of income is
the total amount of revenue

that you lose with
the tax rollbacks.

- But you've got, and I
can't remember who it was,

you've got some
legislators saying,

look, if we've got a
$2 billion surplus,

and only a billion
of it is recurring,

that means our taxes
are just too high.

We just need to roll back taxes

so that we're revenue neutral.

And then we can talk
about a gas tax,

and then we can get
about other changes.

But that's the people's money

and it just needs to
be given back to them.

We shouldn't be playing games
with it, back and forth.

- Right, and the argument
on the other side

is going to be that that
surplus is one-time money.

These road projects,
one single road project

is typically going to be
done in several phases

starting with
right-of-way acquisition,

moving to architecture
and engineering,

or engineering and
design on a road project.

And that happens
over several years.

So, if you take
the surplus money

for one year, you are just,

no pun intended or
maybe pun intended,

you're only part
way down the road

to finishing that road project.

- Well, and people here,
obviously, are familiar

with the I-40, I-240 exchange

from Walnut Grove
and Covington Pike

and up into near
where the studio is

out towards Cordova.

I mean, it was a long,
multi-phase kind of a nightmare

some would say, and that's
how things have gone.

Just to localize some
of these projects

that are on the back list,
you know, Lamar Avenue alone,

which is a huge priority
for the business community

because there's so
much distribution,

there's just so much
activity down there

and the roads are inadequate.

You just have to drive down
there at any time of day

and you can tell they're
inadequate to the amount

of traffic and
shipping that goes on.

That's almost $250
million, give or take,

to widen, to put in overpasses,

to make that a more usable road.

And then there are other ones

from Austin Peay Highway,
I-40, to Germantown Road,

to Canada road, there are
$47 million proposed there.

Out near Arlington
another $40 million.

I-240 from I-55 to I-40 near
midtown, another $50 million.

Again, these would be
projects over 10 years,

but they've already
been approved by TDOT,

they just don't have
the money for them.

- Right, and one of the reasons

that they don't have
the money for them

is because our cars, our
vehicles that we drive

are marked fuel efficient.

So, you don't use as
much gas in driving that.

Well, there's a gas tax
on each gallon of gas

or on diesel that you use,

and that amount is declining.

- Has there been talk
by local legislators,

I mean, certainly advocacy
groups and interested citizens

want more bike lanes, they
want more mass transit

if there's going to
be an opening of money

into places like Memphis,

have you heard from any
legislators on that front

in terms of mass
transit, and bike lanes,

and some of the
alternative options?

- Not a whole lot.

The emphasis here in Memphis

is so completely focused
on the state road revenue

for the Lamar
Avenue part of this.

Just last year, the state
made one application

to the Feds for
Fast Track Funding,

that is essentially a
large amount of money,

and it was all supposed
to go for Lamar.

Now, the state and locally here,

we didn't get the
Lamar Avenue grant

that we applied for.

But that is the
overwhelming priority

in terms of road projects.

- It was interesting
to hear you say

that a little bit, you know,

you've got candidates
for, potential candidates,

no one's declared
for governor yet.

But people like Beth Harwell
talked about it a little bit,

this is a vote that could
back to help or hurt her.

Mark Norris, a lot
of talk about whether

he'll run for governor.

What has he said about
this gas tax proposal?

- Mark Norris in an
interviewer with Sam Stockard,

our Nashville
correspondent, has said

that he's fine
with the rollbacks

but he doesn't know yet
about the tax hike part

of the equation on this.

And Mark is running
for governor.

He will have a potential
rival in the senate

in the way of Mark Green,

who's a state senator from
another part of the state.

But the other thing is,

as the majority
leader in the senate,

Norris carries the legislation
for the administration

in most cases.

So, there is still a lot of
amendments to be made on this.

- Yeah, a lot more to come.

It was great to
be at the capitol.

Thank you, Bill, for giving
us some more insight.

And thank you for joining us.

Join us again next week.