The Tennessee General Assembly

The Tennessee General Assembly

House of Representatives

CAPITOL HILL REVIEW

A weekly wrap-up of legislative news

Contact: Cade Cothren, (615) 741-5185

LawmakersCut Taxes, Adjourn In Timely Manner

Job growth a major focus of conservative majority

This week, House lawmakers wrapped up one of the most successful legislative sessions in Tennessee history. The first legislative session of the 108th General Assembly was focused on passing commonsense legislative initiatives to aid both immediate and long-term economic development in Tennessee’s private sector.

Measures to cut taxes, ensure employers find Tennessee an attractive destination for their businesses, and reinvigorate the state’s education system to better train the next generation of Tennessee workers were among the House's priorities. In addition, House legislators worked hard this year to ensure the state continues to foster an environment where new jobs are created and small business can thrive.

After adjournment of the legislature, House Speaker Beth Harwell (R–Nashville) remarked, “I am proud of what we have accomplished together this session, and adjourning this early reflects the legislature’s commitment to conducting its business in an efficient and effective manner. I have enjoyed working withGovernor Haslam and my colleagues in the General Assembly to help make Tennessee the number one location in the Southeast for high quality jobs. I look forward to building upon the progress we have made this session to make our state an even better place to live, work, and raise a family.”

With a successful year behind them, the House lawmakers are now ready to continue studying sound fiscal policy in order to carry forward this year’s efforts into the next session.

Fiscally Conservative Balanced Budget Passed by General Assembly

Budget cuts taxes, fully funds education, moves an additional $100 million to Rainy Day Fund

In the final week of the legislative session, the House of Representatives passed Tennessee’s annual budget with an 83 – 14 vote. The bill’s passage was the culmination of months of tireless work crafting a fiscally responsible and balanced budget. The $32.6 billion budget cuts taxes by $43 million, puts $100 million in the state’s Rainy Day Fund, improves our educational system, and provides an even better environment for businesses to grow and for jobs to flourish.

At the beginning of the year, lawmakers promised Tennesseans that fiscal responsibility would be a priority. The budget they crafted holds true to that principle while ensuring Tennesseans get the services they expect.

Following passage of the budget, Majority Leader Gerald McCormick (R–Chattanooga) stated, “I want to thank my colleagues for a job well done. With the help of Governor Haslam, House and Senate legislators worked seamlessly to pass a forward-thinking budget that embodies the principles and priorities of all Tennesseans.”

Budget highlights include:

Tax Cuts

At the beginning of this legislative session, House leaders promised they would do everything to maintain the state’s strong financial record, balance the budget, and return hard-earned tax dollars back to all Tennesseans. Over the last several months, they followed through on that promise, ensuring every Tennessean across the state will realize tax savings to the tune of $43 million this year, including:

• A drop in the state sales tax on groceries from 5.25% to a flat 5.00% rate which will save taxpayers approximately $25 million statewide. This tax reduction builds on efforts during the last legislative session which reduced the sales tax on food from 5.5% to 5.25%. Lawmakers hope to continue this trend in years to come;

• Implementation of the second phase to eliminate Tennessee’s death tax, which is set to be completely phased out by 2016. Lawmakers argue the death tax breaks up family farms and small businesses, forcing families to make tough decisions during what is often the most difficult times in their lives: the passing of a loved one. In many cases, families are faced with selling off parts of farms and land or closing a small, family-owned business in order to pay the tax bill. The full repeal of the death tax will represent a $94.6 million tax cut;

• A cut in the Hall tax for seniors 65 and older. The Hall tax is imposed on income derived from interest on bonds, notes, and stock dividends. Since enactment of the Hall tax in 1929, the use of investment savings has grown as a primary source of retirement income. Because of this fact, lawmakers argue the Hall tax is actually an income tax, especially for seniors living on a fixed income. The Hall tax cut approved in the budget raises the income exemption level from $26,200 to $33,000 for single filers and from $37,000 to $59,000 for joint filers. Lawmakers have promised to build on this tax cut in the future;

• And, a continuation of property tax relief efforts passed in previous years to help veterans, seniors, and the disabled population of Tennessee.

Education Improvements

The state’s Basic Education Program (BEP)—the mechanism for funding public schools—is fully funded in this year’s budget at $4 billion. In addition, the budget provides:

• Increased funding for information technology upgrades at K – 12 schools statewide;

• Increased funding for need-based financial aid;

• Funding for a new building at the TennesseeSchool for the Deaf;

• Continued funding for the state’s Science Alliance Museums, the Governor’s School and FamilyResourceCenters, the ArtsAcademy, and the Tennessee Holocaust Commission;

• Increased funding for statewide equipment upgrades at community and technical colleges;

• And over $300 million for capital outlay and maintenance projects at public colleges across the state.

Law and Safety

Earlier in the year, Governor Haslam announced his plan to address violent crime in Tennessee. Among the measures fully funded in this year’s budget are laws addressing gang violence, prescription drug abuse, repeat domestic violence offenders, and synthetic drugs. These measures include:

• Funding for increased sentencing for gang-related crimes;

• Funding for the expansion of the Southeastern Tennessee Regional Correctional Facility;

• Funding to address an increase in the number of felons in local jails;

• And an array of measures designed to battle the rise of human trafficking across the state.

Workforce Development

The 2013-2014 budget passed this year reflects a commitment by lawmakers to foster an environment for job growth across Tennessee. House legislators understand that in order for our economy to continue improving, government must stay out of the way of job creators and ensure it is not placing unnecessary burdens on business. The budget passed this session includes multiple programs to help business owners grow and thrive, including:

• A continuation in funding of the state’s FastTrack Infrastructure and Job Training program which aids businesses across the state in securing funding for expansion projects and ensuring employees are trained to their fullest potential;

• An increase in funding to Tennessee’s nine regional development districts to help local governments implement important infrastructure projects and recruit new business;

• And continued funding to recruit and develop the state’s film and television industry which has steadily grown in recent years and helped bring in millions of film and tourism dollars.

Since January 2011, nearly 80,000 new jobs have been created in Tennessee and the unemployment rate is the lowest it’s been since October 2008.

House Pleased with New Rules to Streamline Government, Save Taxpayer Dollars

For the first time since 1997, the Tennessee House of Representatives this year adopted permanent rules to govern the body. Following the landmark vote, House leaders emphasized the move would streamline House operations, limit government, and save taxpayer dollars.

Legislatorssaid it was important to follow through on promises made to voters by working toward a more efficient and effective state government. Lawmakers also hoped the move would make it easier to prioritize the issues important to voters, including a balanced budget, jobs, and lower taxes.

With the legislative session now concluded, lawmakers are pleasedthe rule changes did indeed lead to a successful overhaul of how government does business.

Among the successful rule changes implemented this yearis the first-ever limit on the number of bills a legislator may file. For each legislative session, members of the House are now limited to fifteen bills, meaning thirty total for the 108th General Assembly. Previously, the Assembly averaged over 4,000 bills per year while surrounding states considered roughly 2,500. This year, the Tennessee legislature considered only 1,365 pieces of legislation thanks to the new bill limit being in place.

Another major change was the restructuring of the House committee system. Now that this year's legislative session has concluded, it is easy to see the move aided in more efficient operations by better balancing the workload of each committee. In years past, some House committees considered less than 100 bills, while others were often bogged down with more than 800. Under the new system, lawmakers saw this disparity in bill workloads balance out, allowing legislators more time to give each and every bill the due diligence demanded by Tennessee taxpayers.

House leaders maintain the changes will continue to, in the long run,increase efficiency, save money, streamline operations, make the process easier for the public to understand, and limit government bureaucracy—all solid conservative principles.

Governor BillHaslam Announces Tennessee Will Not Expand Medicaid Rolls

In March, Governor BillHaslam announced to a Joint Session of the Tennessee General Assembly that he will not expand the state’s Medicaid rolls pursuant to the Patient Protection and Affordable Care Act, commonly referred to as ObamaCare.

Instead, Haslam plans to independently pursue a “Tennessee Plan” for expanding healthcare coverage to those truly in need.

“I believe Tennessee can be a model for what true health care reform looks like; reform that will take significant steps to save the state and the nation from the unsustainable path we are now on,” Haslam said.

The central premise of the “Tennessee Plan”, which includes helping insure an additional 175,000 Tennesseans currently in need of health insurance, would save the state millions of dollars by allowing the Department of Human Services to buy policies for the uninsured from private insurers, rather than adding them to the state’s TennCare rolls.

Following the announcement, lawmakers commended the Governor on his decision and praised Haslam for moving forward with a plan to ensure all Tennesseans have access to quality and affordable healthcare without being tied down by federal bureaucracy and mandates. They also praised the Governor for thoroughly researching the issue and approaching it in a thoughtful manner.

Haslam told lawmakers he had not received any assurances from the U.S. Department of Health and Human Services that the state could proceed with a "Tennessee Plan" under President Obama’s proposal and thus he would not be including the federal funding offered for expansion in his budget.

Constitutional Officers Tout Tennessee Financial Success

Earlier this year, State Treasurer David H. Lillard, Jr. and Comptroller of the Treasury Justin P. Wilson discussedthe positive financial position of Tennessee state government.

Both Constitutional Officers credit the financial success the state has experienced over the last two years to conservative fiscal policies implemented by Governor BillHaslam and the Tennessee General Assembly.

Despite a poor economy nationwide, both Lillard and Wilson believe Tennessee is on a clear path towards economic recovery, especially when compared to other states across the country.

"There have been numerous media reports over the last few years about serious financial problems experienced by governments elsewhere in our country and around the world. Tennessee stands in sharp contrast to those governments. Here, despite a fragile economy, our state government is managing its expenses and meeting its obligations quite well," stated Comptroller Wilson.

Indeed, despite the failure of some states to adequately manage their expenditures in a fiscally responsible way, Tennessee leads the nation in several key economic areas,including being named by Barron’s Magazine as the 3rd best-managed state in the country.

"Tennessee is in good financial shape – and that isn't just our assessment of our own situation. The bond rating agencies and other organizations that monitor government finances have given Tennessee strong marks for its financial practices. Tennessee's ability to control spending, manage debt, and adequately forecast revenues have all contributed to the state's strong financial condition," Treasurer Lillard continued.

Going forward, Lillard and Wilson agreed, Tennessee must continue itsfocus on providing essential services while still leaving room to cut unneeded expenses and keep debt costs low.

"I have confidence that Governor Haslam and the members of the Tennessee General Assembly will take the appropriate steps over the coming weeks and months to keep Tennessee moving on the trajectory of long-term financial success," Wilson concluded.

Anti-Income Tax Amendment PassesTN General Assembly

A constitutional amendment spearheaded by House members to clarify that Tennessee’s Constitution prohibits a statewide income tax was approved by lawmakers this year.

The amendment, Senate Joint Resolution 1, specifies that thelegislature as well as counties and citiesacross the state shall be prohibited from passing an income tax on the people of Tennessee.

Now that it has been approved by the legislature, the amendment will be placed on the 2014 statewide ballot for a referendum vote by the people of Tennessee. If passed by referendum, the Tennessee Constitution will then be amended to officially ban a state income tax from ever being implemented in Tennessee.

Landmark Annexation Legislation Wins Approval

Billwill give all citizens a voice in the annexation process

Landmark legislation designed to reform Tennessee’s outdated annexation laws passed the Tennessee House of Representatives in the closing days of the legislative session witha 59 – 32 vote. The bill was spearheaded by pro-property rights legislators from across the state.

As passed, the bill places a one-year moratorium on the annexation of any residential property or farmland across the state. In addition, the bill directs TACIR, the Tennessee Advisory Commission on Intergovernmental Affairs, to conduct a comprehensive study of the issue and make recommendations to the General Assembly on how to better improve the process statewide.

For years, legislators have been trying to change Tennessee’s abusive and antiquated annexation laws. With the passage of this legislation, this year's legislators become the first group of lawmakers in decades to achieve substantial annexation reform for Tennessee.

House Legislators Spearhead Effort to Cut Size of State Government

Houselegislators passed a new measure this year aimed at cutting the size of Tennessee government. The initiative, referred to as the Office of the Repealer, follows through on a promise to streamline state government, save taxpayer dollars, and make the legislative process more transparent to the general public.

The Office of the Repealer will be a one-time, four-year position with the sole responsibility of making recommendations to the legislature of areas of government waste, duplication, and out-of-date regulations that should be removed from the law books. The Repealer will take recommendations directly from the public, basing its decisions on input received from business-owners, educators, activists, and concerned citizens from across the state.

In addition to this measure, three bills that will eliminate dozens of unnecessary Tennessee laws were approved by the Tennessee General Assembly in the closing days of session this year. The bills are a result of a summer project that saw House research analysts and legal staff examine portions of the Tennessee Code Annotated relative to their expertise and draft proposals to eliminate laws that were determined to be antiquated or unnecessary.

“One thing we hear from our constituents consistently is that there are too many laws on the books,” said House Speaker Beth Harwell (R–Nashville). “I directed our staff to review our laws with the purpose of identifying archaic, unnecessary, and outdated language in an effort to ‘clean up the code.’ I sincerely appreciate the hard work of our House research team and legal staff. They spent several months poring over our laws and these three bills were the result.”

House Bills 325, 396, and 890 eliminate dozens of laws relating to transportation, finance, and commerce. In several cases, the bills also clarify certain language or delete repetitive or conflicting laws. Statutes pertaining to programs that have since been abolished by the federal government, reports that were assigned to come from entities that no longer exist, and several instances of repetitive language are examples of laws slated to be eliminated.