February 13, 2009

Lawmakers hear “State of the State” and begin work of 2009 Legislative Session

With organizational tasks out of the way, state lawmakers returned to Capitol Hill this week to begin the work of the first regular week of the 106th General Assembly. The first order of business was a joint session of the House and Senate to hear Governor Phil Bredesen’s State of the State address. The governor had been scheduled to lay out his budget plans in the annual address, but due to the potential impact of the federal stimulus legislation, those details have been delayed until mid-March.

Tennessee could receive up to $4 billion under the federal spending package. Legislators, however, are waiting to see what federal mandates and restrictions will be attached to the final plan approved by Congress. That action could be coming soon if the President signs the bill into law next week as anticipated.

“We must remember that this package will only have a temporary impact and that we cannot fund recurring expenditures with non-recurring funds,” said Senate Majority Leader Mark Norris (R-Collierville). “We must also wait to see the fine print and what strings are attached in order to know the true impact of this legislation on our state budget.”

Many Tennesseans, like U.S. Senators Lamar Alexander and Bob Corker are wary of the package. “This is still mostly a spending bill, not a stimulus bill,” said Alexander after the vote was taken on Tuesday. “Even worse, it borrows an unprecedented amount of money – $1.2 trillion – spent mostly on projects that don’t create jobs in the near term.

The governor emphasized in his budget address that Tennessee has a rough road ahead with its state budget regardless of the stimulus package, due to declining revenues. That point was echoed by State Finance Commissioner Dave Goetz who told members of the Senate Finance Committee on Wednesday that Tennessee’s year-to-date collections were $522.1 million less than the budgeted estimate. The January revenues reflected dismal holiday retail sales and is the eleventh negative growth month in sales tax collections, starting with January 2008.

“The continued deterioration of our general fund tax trends us to the more severe end of the Funding Boards’ projection of being $1 billion short of our budgeted estimates,” said Senate Finance Chairman Randy McNally. “The Finance Committee will work with the governor and meet this challenge by bringing forward a fiscally responsible budget to help us weather this economic storm.”

The only new proposal called for by the governor in his speech was creation of a “Solar Institute” in Tennessee to position the state to be a research leader in making solar power practical. The governor said solar power is far too expensive, but is ripe for breakthroughs with scientific advancements that could be made through Tennessee’s leading energy research facilities, like the Oak Ridge Laboratory.

“I look forward to hearing more about the plan for a Solar Institute in Tenessee,” said Senator Steve Southerland (R-Morristown), Chairman of the Senate Environment, Conservation and Tourism Committee. “Tennessee has the potential to greatly expand the use of clean energy resources, while also creating jobs and strengthening energy security.”

“I was very pleased to hear of the interest in a Solar Institute,” said Senator Ken Yager (R-Harriman), Vice Chairman of the Committee and whose district encompasses the Energy Research division of the Oak Ridge Laboratory. “Such alternatives are vital to ensure the nation’s energy independence. Oak Ridge focuses on energy research and would be a natural for this Institute.”

Senate Committees hear variety of issues in first week

Senate committees began meeting this week to chart the course ahead for the 2009-2010 legislative sessions and to hear from state officials about a number of issues on the agenda this year.

State and Local Government Committee hears testimony on alcohol laws — The State and Local Government Committee heard testimony this week from Executive Director of the Tennessee Alcoholic Beverage Commission Danielle Elks who discussed Tennessee’s laws governing the sale of alcohol, including the distribution and sale of wine in Tennessee.

Legislation dealing with wine sales was deferred during the last legislative session for study until 2009. One proposal, would allow grocery stores to sell the wine in cities or counties that already allow permits for package liquor sales.

Currently, Tennessee law only allows liquor stores to sell wine, while they are banned from selling beer. On the other hand, liquor stores cannot sell other products that might be associated with alcoholic beverages like napkins, props, stirrers, or cups. Former U.S. Senator Harlan Matthews, who is a member of the Alcoholic Beverage Commission, encouraged members of the committee to look at a full range of laws which he deems antiquated and in need of review.

“Many of our laws go back to Prohibition, and have been on the books and have not changed since 1933,” said Senator Bill Ketron (R-Murfreesboro), sponsor of legislation to allow the sale of wine in grocery stores. “Many Tennesseans also don’t know they are committing a felony if they bring a bottle of wine across state lines.”

Another bill studied over the summer would allow the sale of fine wines through direct sales or on the Internet.

The committee also talked about the possibility of changing the law to allow individuals to sell “vintage” bottles of alcohol that are deemed collector items. The legislation comes after a Tennessee man was indicted in Moore County for the sale of a bottle of vintage alcohol. The man had a collection, estimated at $1 million, which was also seized. Elks asked the committee if they move forward with the legislation, to consider a license for those who sell and to provide a strict definition of what constitutes a “collector’s item” to prevent abuse.

Environment, Conservation and Tourism Committee hears testimony on Tourism – The recession has not spared the tourism industry across the state according to Tom Lightsey, Assistant Commissioner of Administration for the Department of Tourist Development. Lightsey spoke to members of the Environment, Conservation and Tourism Committee about the state’s efforts to reboot the industry, which had been gaining momentum before the economic decline last year.

“Tourism plays a large role in bringing revenues to the state,” said Senator Steve Southerland (R-Morristown). We need to find creative ways to draw more tourists to our state in these tough economic times.”

Tennessee had experienced billion dollar increases in the tourism industry for the past three years, boosting the state into the top 10 for “person stays” in the nation. The Department of Tourism is ramping up their website to reach more vacationers in the most cost efficient manner. Approximately 80 percent of those planning a vacation visit the Internet to help them plan their trip. The Department has now developed a news bureau to assist local places of interest in publicizing their events or unique appeal.

Commerce Committee told Banking in Tennessee remains sound — Greg Gonzales, Commissioner Department of Financial Institutions, told members of the Senate Commerce and Labor Committee this week that Tennessee’s state banking system remains sound “despite the increased number of problem assets that we are seeing in the system resulting from the current economic environment.” He said state banks remain profitable as a whole and capital averages far exceed national averages.

Gonzales noted, however, the non-bank mortgage industry has had a reduction of mortgage loan originators by half. Delinquencies have been most dramatic in construction and loans, particularly those in larger projects

“It is very important that we continue to monitor the condition of our state and community banks during this time of financial trouble in this industry,” said Senator Paul Stanley, Chairman of the Senate Commerce Committee. “Our committee will be working to see what help we can give to assure that our banking system remains sound in the future.”

Gonzales’ testimony was followed by several representatives of the state’s banking industry who echoed his statement by saying their banks were sound “but under stress.” About 40 state banks have applied for money under the Troubled Asset Relief Program (TARP) passed into law by Congress last fall. TARP made $250 billion available to invest directly into financial institutions. Although the time for applications has not ended, Gonzales said only a handful have been approved and have received money up to this point.

Transportation Committee looks at prospect of stimulus funds – The Senate Transportation Committee heard testimony from Tennessee’s Chief Road Engineer, Paul Degges regarding the potential to fund highway projects under Congress’ stimulus package. There are 339 transportation projects that are “shovel ready.” The department expects to get the first half of the money disbursed within the first 90 to 150 days after the bill is signed by the President.

State and local governments have been working to be “ready to go” when the money is received. This includes such preparations as environmental studies, right of ways, utility installation and other required paperwork. The money will not be a direct pass through to locals, with few exceptions. Degges said that although they will fund projects that are on their priority list, he expects the bill to contain language to direct some of the money to the four major cities, as well as localities with high unemployment rate.

The Department of Transportation is expected to come back to the committee to with a list of the projects to be funded, as well as their three-year plan for roads in Tennessee.

Senate Education Committee looks at Lottery Funds – In the Senate Education Committee this week, members were given the latest revenue figures on the state’s Education Lottery. The Lottery funds specific education programs, including college scholarships, pre-kindergarten and after-school programs. Since the Tennessee Lottery began selling tickets on Jan. 20, 2004, it has raised more than $1.3 billion for these programs. Net proceeds from sales of Lottery tickets, are currently averaging over $5 million per week.

When asked about the future of sales of lottery tickets in Tennessee, Rebecca Paul Hargrove, CEO of the Tennessee Lottery Corporation, told Education Committee Chairman Dolores Gresham (R-Somerville) that gas prices have a direct effect on the sale of tickets. To offset this, the Corporation is looking to expand the sale of tickets to certain retail outlets.

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