Capitol HIll Week: Governor Haslam presents budget proposal focusing on education and jobs

NASHVILLE, Tenn. —  Education and jobs were the focus on Capitol Hill this week as Governor Bill Haslam unveiled his proposal to fund state government for the 2013-2014 fiscal year.  The $32.6 billion balanced budget makes major investments in education and workforce development, while continuing a thoughtful approach to making government work more efficiently and effectively.  In addition, the proposal calls for continued efforts by Republicans to return money back to taxpayers by reducing taxes.

Several tax cut measures were approved by the General Assembly last year, including eliminating the gift tax, phasing out the inheritance tax and lowering the state’s portion of sales tax on food.  Those tax reduction measures followed a law passed in 2011 to provide Hall Tax relief to senior citizens.  The Governor’s 2013-2014 budget proposal calls for further reducing the state portion of the sales tax on grocery food from 5.25 percent to 5.0 percent; raises the inheritance tax exemption level from $1.25 million to $2 million; and raises the Hall Income Tax exemption level for citizens age 65 and older to $37,000 for single filers and $59,000 for joint filers.

In addition, the budget provides tax relief for low income seniors, veterans and the disabled by fully funding the growth of the property tax freeze program sponsored by Senate Majority Leader Mark Norris, R-Collierville, which was enacted in 2007.   A total of  $23.1 million will go back to taxpayers through the combination of tax relief proposals contained in the budget.

“I was very pleased to see a budget proposal that continues our tax relief efforts,” said Senate Republican Caucus Chairman Bill Ketron, R-Murfreesboro.  “While Washington talks about tax increases, Tennessee remains committed to balancing our budget while improving government efficiency, improving customer service and providing tax relief for our citizens.”
“I am delighted Governor Haslam has included Hall Tax relief for senior citizens in his budget plan,” said Senator Ken Yager, R-Harriman.  “More and more senior citizens depend on investments as their savings for retirement income.  We need to encourage retirement savings, not tax it.  The increase in the income exemption, along with inheritance tax relief, will make the state more competitive in attracting retirees.”

On education, the Governor’s budget fully funds the Basic Education Program, invests $51 million to assist local governments in paying for technology transition upgrades in schools across the state, and provides $34 million to address ongoing capital needs that can be used for increased security measures to protect students.  The budget proposes more than $35 million for K-12 teacher salary increases and provides $47 million over and above annual funding to help improve Tennessee’s lowest performing public schools.

Tennessee had the second largest increase in state K-12 expenditures in the nation in 2012.  While the national average increase was nearly 3%, Tennessee’s grew by 12%.  “We are literally putting our money where our mouth is,” said Governor Haslam.  “This administration is absolutely committed to public education and understands that the large majority of our students attend public schools and always will.”

Along with increased education spending, Governor Haslam also proposed enactment of a program to give low-income students in Tennessee’s lowest performing schools an opportunity scholarship to attend the school of their choice.
“The Governor laid out a solid plan to raise student achievement at both the K-12 and higher education levels,” said Senate Education Committee Chairman Dolores Gresham, R-Somerville.  “I was very pleased he emphasized the importance of the classroom teacher in our efforts to make student gains.  I am also pleased with the major investment this budget makes in higher education and workforce development, which are critical to attracting quality jobs to Tennessee and in giving our students more opportunities to succeed.”

The budget provides $307.3 million to fund capital outlay projects in higher education, $35 million to fund the state’s new outcome-based formula, $5 million to provide assistance to 2,675 needy students and $16.5 million for equipment for Tennessee’s Technical Centers and Community Colleges.

Currently, 32 percent of Tennesseans have earned an associates’ degree or higher.  Governor Haslam announced a strategic initiative to increase that number to 55% by 2025 called “Drive to 55,” with the goal of having the best trained workforce in America.

Other highlights of the budget include: 
• A 1.5 percent pay raise for state employees;
• Upgrading nearly 200 case manager positions in the Department of Children’s Services;
• $100 million to the Rainy Day Fund, bringing it to $456 million on June 30, 2014;
• $4.3 million for the Montgomery County veterans home;
• $8 million for a statewide tourism fund to support the work of the tourism commission

Senate Judiciary Committee approves Resolution to permanently ban state income tax

The Senate Judiciary Committee approved a resolution sponsored by Judiciary Committee Chairman Brian Kelsey, R-Germantown, this week to permanently ban an income tax in Tennessee.  The “No State Income Tax Amendment,” or Senate Joint Resolution 1, would allow Tennesseans to vote in 2014 to clarify the state constitutional prohibition on a personal income tax. 

“In these difficult economic times, the last thing Tennesseans need to be worrying about is having to pay a state income tax,” Sen. Kelsey added.  “This amendment will put the issue to rest once and for all.”

The resolution specifies that the legislature as well as Tennessee counties and cities shall be prohibited from passing either an income tax or a payroll tax, which is a tax on employers that is measured by the wages they pay their workers. 

The “No State Income Tax” Amendment begins step two of a three-step process of amending the state constitution.  Step one occurred when the resolution passed the Senate and the House with bipartisan support of over two-thirds of the members during the 2011-2012 General Assembly.  Step two will require a two-thirds vote of the Senate and House during the current General Assembly.  Step three is a ratification vote by the people on the November 2014 ballot.

Although many legal scholars argue that the state constitution already forbids an income tax, the state attorney general opined in 1999 that an income tax would be legal.  The opinion prompted elected officials to propose an income tax that failed by only five votes in the House of Representatives in 2002.  In recent years lawmakers have continued to propose bills to enact both an income tax and a payroll tax.

The bill is scheduled to be heard in the Senate Finance, Ways and Means Committee on February 5 for their approval before moving to the Senate floor for final consideration.

Senate Health Committee Briefed on 2012 Meningitis Outbreak

Dr. John Dreyzehner briefed members of the Senate Health and Welfare Committee this week regarding the state’s key role in addressing the multi-state fungal meningitis outbreak last summer and fall.  Dr. Dreyzehner was joined by Dr. Marion Kainer, an epidemiologist with the Department of Health who played a central role in identifying the cause of the outbreak and involving the Centers for Disease Control and Prevention. 

“This is an evolving situation,” said Dr. Dreyzehner.  “This was a major issue and a major tragedy for many patients and families in Tennessee.  We have 147 people who have been made ill by this preventable tragedy.  We have 14 Tennesseans that have died and our thoughts, prayers and hearts go out to those who have been impacted by this terrible tragedy.”

Dreyzehner credited all of the employees in the Department of Health, local health department workers and other health care professionals around the state for finding a resolution to the crisis.

The Commissioner said his Department launched an immediate investigation after receiving an email from a Vanderbilt infectious disease specialist.  Within 48 hours, the Department confirmed the exposure of the index patient; contacted the Centers for Disease Control (CDC); identified two additional patients in Tennessee; found the suspect medication methylprednisolone acetate; traced the drug to the New England Compounding Center (NECC) and sequestered supplies of the medication at the clinic.  The clinic involved voluntarily closed operations upon hearing of the contamination, pending further investigation.  Within 72 hours, the Department completed an on-site evaluation of the clinic, identified additional potential cases and notified the Tennessee medical community via the Health Alert Network.

“We are very proud of the role that Tennessee’s Department of Health and the health professional community played in minimizing the further effect of this tragedy for Tennesseans, as well as citizens across the nation,” said Senate Health and Welfare Committee Chairman Rusty Crowe, R-Johnson City.  “Their immediate reaction saved lives.  Dr. Dreyzehner’s testimony showed that the state had many of the right emergency protocols in place to react to such an outbreak.  I congratulate the Commissioner, Chief Medical Officer David Reagan, Dr. Kainer and their colleagues for their heroic efforts to protect the safety of our citizens.”

Within eight days, the Tennessee Department of Health was working with the CDC, the Massachusetts Board of Department of Health and the Massachusetts Board of Pharmacy, resulting in a nationwide recall of the three lots of the contaminated drug which caused the fungal meningitis.  State and federal inspections revealed significant problems with sterility at NECC’s site.

The Department then undertook a painstaking process of notifying patients who had received the medication.  Many state agencies were involved in that effort including the Department of Safety and Homeland Security, the Tennessee Emergency Management Agency (TEMA), TennCare and the Department of Mental Health.  They contacted over 1,000 patients and pursued active case findings, including laboratory testings and follow ups.  Dreyzehner said 180 employees assisted in that effort and that more than 7,000 hours were spent by local regional and state staff during the weeks that followed.

“We will continue to work with the Department of Health to identify areas we can improve to meet such challenges in the future,” added Crowe.

Increase in state fatalities attributed to a lack of safety belt use

Representatives from the American Automobile Association (AAA) on Wednesday reported on the safety status of Tennessee roadways in 2012 to the Senate Transportation Committee.  Speaking on behalf of the national organization, Tim Wright and Don Lindsey appeared before lawmakers, offering updated fatality rates from 2012 and comparing new information to both the previous year and the national averages. 

According to new figures, Tennessee suffered 1,019 fatalities in the past year, an 8.8% increase that is largely attributed to a lack of safety belt use among Tennessee drivers.  The disregard for safety belts, increasing by 4% from 2011, accounted for 53% of fatalities in 2012, which totaled 417 deaths.  Tennessee’s seat belt fatality trend contrasts increasing seat belt use nationally, which saw a 2% increase to 84% of drivers.   

“These statistics are very telling,” said Senate Transportation Committee Chairman Jim Tracy, R-Shelbyville.  “We need to step up our efforts in encouraging the use of safety belts, which are critical to preventing a tragedy.”

The committee was also informed that 25% of all fatalities resulted from alcohol-related accidents and 21% from motorcycle-involved accidents. 

With the state’s added focus on preventing cell phone use in the car, only 5% of fatalities were attributed directly to distracted driving.  Tennessee passed legislation sponsored by Tracy in 2009, banning the use of texting while driving, one of the most common reasons for crashes due to distracted driving.

“Texting is an extremely dangerous form of distracted driving,” Tracy added.  “When drivers take their eyes off the road to read or send messages, they pose a great danger to all who cross their path.  I am very pleased that this law has improved safety on Tennessee roads.”

In Brief…

School Safety Summit — Governor Bill Haslam, state law enforcement officials and homeland security experts met with education leaders from more than 120 school systems this week in Franklin, Tennessee to discuss school safety.   Mental health specialists and emergency management officials also joined the group to think through additional measures that school districts can put into place to avoid a tragedy like the one which occurred in Newtown, CT in December.   The group reviewed best practices and new ideas on school safety, noting that the right plan would likely vary district by district.  In his 2013 State of the State address on Monday, Governor Haslam proposed $34 million in state funding to address ongoing capital needs in K-12 schools across the state which can be used for school safety measures.

Good news on jobs front — Tennessee has created nearly 80,000 new jobs since 2011 according to Governor Bill Haslam.  The Governor made the announcement during his State of the State address to the General Assembly on Monday night.  Tennessee ranks first in the Southeast in new manufacturing jobs created in 2012.  

State Parks — Members of the Senate Energy, Agriculture and Natural Resources Committee heard a presentation on Wednesday from Fount Bertram, president of the Friends of Tennessee State Parks Coalition regarding their efforts to improve state parks across Tennessee. The coalition is composed of 37 individual organizations, 35 of which are 501(c)(3) charities. To date, coalition organizations have volunteered over 500,000 hours. These groups host periodic workdays and seek to provide services to the state parks that would otherwise be unavailable. A large portion of their activities are directed at fundraising, all of which stays with the parks. The Coalition’s latest fundraising project is a coffee table book featuring the state parks of Tennessee. Pulitzer prize-winning photographer, Robin Hood has agreed to complete the photography for the book. 

County Financial Management — On Tuesday, Comptroller of the Treasury, Justin Wilson, and Director of Local Government Audits Jim Arnette, gave a presentation to the Senate State and Local Government Committee regarding Senate Bill 85, named the County Financial Management Systems Act of 2013. The permissive bill, sponsored by Chairman Ken Yager, R-Harriman, has passed the first reading and is currently undergoing revisions. To date, there are 42 counties with non-centralized financial management systems within the state of Tennessee. The challenges of operating under a non-centralized county government include duplication of accounting, budgeting, and purchasing functions, in addition to a lack of cooperation among county leaders. “This bill will provide a local option for forward thinking counties to enter the 21st century,” said Comptroller Wilson.

State finances ranked top in the nation – Governor Haslam touted Tennessee’s top rankings in his State of the State Address on Monday saying, “Barron’s Magazine has named us the third best managed state in the country.  We are ranked among the lowest when it comes to the state and local tax burden on our citizens as well as the debt per capita.  We are a triple-A rated state, and our most recent bond sale was done at the lowest interest rates in recorded history.  The unemployment rate continues to fall, and family incomes continue to rise.  CNBC ranks us fourth in America for transportation and infrastructure and second in cost of living.  And we’ve been ranked the best place in the country to retire.”


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