Cable fees to be hot legislative issue
Education, smoking bans, new sales tax collection system also on '07 agenda

By ERIK SCHELZIG, Associated Press
December 30, 2006

NASHVILLE - The upcoming legislative session is likely to feature several education proposals from the governor's office, a push for wider indoor smoking bans and an attempt to keep the implementation of a new sales tax collection system on track.
But the most spirited fight may be over phone companies trying to jump into the statewide cable TV market.

Opposing legions of lobbyists are gearing up to do battle over whether companies should be able to bypass local cable TV permits. The measure could cut out the franchise fees - and control - coveted by local governments, while putting phone companies on equal footing with established cable providers around the state.

The "Competitive Cable Services Act" was introduced in the last session but did not progress out of committee. Lawmakers are expecting renewed efforts on the bill pushed by telecommunications giant BellSouth Corp.

BellSouth, which was bought out by AT&T Inc. for $84 billion after the deal received federal approval Friday, wants to be able to offer bundled services _ like voice, high-speed Internet and cable TV. It was not immediately known whether the buyout would affect the company's legislative agenda in Tennessee.

Chad Jenkins, deputy director of the Tennessee Municipal League, said cities would lose their leverage over cable companies if they are cut out of the franchising process. For example, cities would lose the power to require cable companies to connect to schools and less-lucrative parts of the community, Jenkins said.

Nothing prevents BellSouth from negotiating with the communities under current law.

"The issue is more of them trying to play catch-up by cutting corners and circumventing the legal and established process, just because they're behind," Jenkins said.

BellSouth spokesman Kenny Blackburn said immediate access to all state markets would lead to "provider competition, more consumer choices, better rates, better customer service and a significant capital investment.

"It's going to promote broadband deployment and usage," he said.

The company will work with local governments to try to quell their fears, he said.

State Sen. Jim Tracy said he sponsored the previous version of the bill in hopes that it would spur debate and an eventual compromise between the interested parties. But that didn't happen, and the Shelbyville Republican said he's unsure whether he will sponsor the bill again.

"I don't want to hurt the locals, so I'm still looking at it," said Tracy.

Gov. Phil Bredesen has said that he wants to focus on education issues in his second term and will likely get a start in the upcoming session.

Bredesen during his re-election campaign outlined plans to offer free community college tuition to students who score at least a 19 on the ACT, creating course work tailored to job-specific skills like retail management, and adding a fifth year of high school for students who want to earn an associate's degree. He also wants to remove the restrictions for enrollment in prekindergarten classes and to tweak the funding formula for K-12 schools.

Raising the minimum wage, one of last session's most contentious issues, might have lost some of its momentum in the Statehouse following November's general election. Democrats came close to raising Tennessee's minimum hourly wage but ultimately saw it killed in a Republican-led parliamentary maneuver in the Senate.

With Democrats taking control of the U.S. Congress, the issue is now more likely to be driven by federal action than on the state level.

Anti-tobacco advocates hope 2007 will see an expansion of Tennessee's first major move to ban smoking indoors when cigarettes were banned from state-owned buildings.

Anti-smoking bills have traditionally struggled in Tennessee, one of the nation's top tobacco-producing states. But a recent poll by Opinion Research Associates indicated that nearly three-fourths of Tennesseans favor smoke-free work places.

The tenor of the next session also will depend heavily on whether Senate Majority Leader Ron Ramsey is able to use his one-vote Republican edge in the Senate to make the leap to the speakership. Republicans would likely take a different tack on issues like caps on medical malpractice payouts than the Senate led by Democrat John Wilder.

Wilder has said he has the votes to win re-election as speaker.

Lawmakers will also have to decide whether to allow the much-feared, but little-understood, streamlined sales tax to take effect in July. Lawmakers have already passed a law to create the system that seeks to reassign sales tax collection to where an item is bought rather than from where it is ordered.

But lawmakers have delayed implementation, primarily because smaller retailers are concerned that it's too complicated, and some larger cities fear they will lose significant tax revenue to outlying areas.

The state must apply the sales tax to all transactions if it wants to tax items bought outside of Tennessee because of federal rules that prohibit preferential treatment for in-state commerce.

"They shouldn't be dreading it," Revenue Commissioner Loren L. Chumley said. "It's progressive, modernizing tax administration."

The state is working with merchants to better understand how the new tax system would work and how to implement payment systems, she said.

Still, the Municipal League's Jenkins said, the biggest losers of local tax revenue are likely to be the bigger cities in the state.

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