Legislature passes no tax budget

On June 7, 2010, in News from Nashville 2010, by Mark Norris

Legislature passes no tax budget

State Senators worked late hours and into the weekend, passing a state budget and approving several important bills as the 2010 legislative session draws closer to adjournment. The $28.6 billion no tax budget, which funds state government for the 2010-2011 fiscal year beginning July 1, prioritizes education, jobs, public health and safety, and makes provisions for recovering from one of the worst disasters in Tennessee history.

“This legislation follows the five-year plan passed last year to phase in economic recovery through these tough times, and does so without raising taxes,” said Senate Finance Chairman Randy McNally (R-Oak Ridge). “It also invests in education and job creation, provides funds for health and public safety, and helps the state recover from the floods which devastated many Tennessee counties.”

“This is a responsible budget that reduces spending, does not raise taxes and cuts pork barrel spending,” said Lt. Governor Ron Ramsey (R-Blountville). “I am very proud that Republicans led the effort to defeat the $128 million in new taxes proposed by the Governor and passed a balanced budget which focuses on the priorities of Tennessee citizens.”

“We are proud of the job Tennessee has done in weathering the great recession and the economic downturn,” said Senate Majority Leader Mark Norris who cited a national article regarding the impact of the recession on state finances nationwide. “This bill realistically addresses that situation and does so in an optimistic manner as we look to the future.”

“Over the last three years, we have aided in reducing the state budget by over $1.5 billion,” he added. “This budget reflects a 4.4 percent decrease in total spending. That is one of the reasons our house is in such good order; and we have done it this year by producing a no new tax budget. That is a significant challenge. This budget will do no harm to the economy, but rather enhances it as we rebound in the coming year.”

The budget allocates $100 million from the state’s Rainy Day Fund for flood relief to be used by cash-strapped county and city governments for recovery and to deter local tax hikes that might otherwise be proposed for that purpose. It also provides $19.95 million in flood relief for sales tax rebates on major appliances, furniture and building materials purchased by victims certified by FEMA for federal assistance. An additional $10 million was added to the state’s Agricultural Enhancement Grant funds to assist farmers who were especially hard it by flooding.

Under a plan submitted by Senate Republicans, the budget increases benefits, contingent upon growth in state revenue, to state employees for health care and other increased costs. The benefits are based on longevity at an additional $50 per year, capped at 25 years and $1,250. It provides a baseline longevity payment of $150 for those employees who have been employed 1 to 3 years.

Other highlights of the budget, Senate Bill 3919, include:

  • Maintains the Office of Children’s Care Coordination and perinatal outreach grants to address infant mortality and early childhood health
  • Funds Development District grants which promotes the renewal and revitalization of both rural and urban communities
  • Increases the Agricultural Enhancement grants to support farm development and Tennessee’s agricultural community
  • Provides $120 million, contingent on receiving FMAP funds, for community colleges to give them the space they need after passage of our Complete College Act of 2010
  • Maintains funding for career ladder teacher pay and fully funds BEP capital outlay.
  • Restores real estate transfer tax funds to the purposes for which originally dedicated including the Agricultural Resources Conservation Fund, Local Parks Acquisition Fund, State Lands Acquisition Fund, and Wetlands Acquisition Fund
  • Provides a combined Rainy Day Fund balance and TennCare Reserves of $429 million
  • Anticipates balancing recurring v. non-recurring funds next year, as originally planned
  • Cuts pork projects contained in the House budget bill, including a fish hatchery.

Budget passed despite complications with Administration’s
failure to close books on 2009 fiscal year

The budget bill was approved despite complications that have come as a result of the Bredesen Administration’s failure to close the books on the 2009 fiscal year and to have them audited as required by law. Article II, Section 24 of Tennessee’s Constitution prohibits expenditures that total more than the state’s revenues and reserves. Since no audit has been performed, there is no accurate account of the state’s reserves.

Earlier this week, the Legislature’s Fiscal Review Committee, headed by Chairman Bill Ketron (R-Murfreesboro), heard testimony from Administration officials regarding the possibility that various federal government department and agencies could hold back funds due to failure to meet their deadlines for submitting the audit.

“Our work has been made more difficult by the fact that the Administration has been unable to close the state’s books on the previous fiscal year,” said Leader Norris. “We are constitutionally bound to pass a budget based on revenues, reserves and debt. This is a very difficult task without the appropriate information being available to us. In a few weeks, it will be time to close the books on this year.”

The Administration went “live” with a new “Edison” system payroll module in September 2008, with departments phasing in the various financial components of the system. Information which used to be readily available has been difficult and sometimes not yet possible to obtain with the new system, thus creating problems with auditors and investigators. Edison has also been plagued with numerous problems for state employees in compensation and benefits in addition to the trouble experienced by not providing the audits needed to satisfy federal and state requirements. Finally, the new system has caused the state to lose money in late fees due to the untimely payment of bills.

“This has been a huge problem in ensuring adequate audit coverage of ARRA (American Recovery and Reinvestment Act) funded projects due to accountability requirements that Tennessee has not been able to meet,” said Chairman Ketron. “We got assurances this week from the Administration that they are working hard to fix the problems that have plagued this new system. We will continue to monitor their progress to ensure that we receive our fair share of taxpayer dollars sent to Washington.”

Senate passes legislation cracking down on violent criminals

The State Senate approved major anti-crime legislation to strengthen penalties against armed robbers. The legislation, co-sponsored by Senate Majority Leader Mark Norris (R-Collierville) would more than double the minimum amount of time served for aggravated robbery.

“This bill continues our ‘Crooks with Guns’ legislative efforts to crack down on violent crime,” said Leader Norris. “The bill focuses our resources on keeping violent criminals behind bars longer to protect the public.”

Presently, armed robbers convicted on a first offense can receive up to eight years in jail, but the 30 percent requirement places the actual sentence at less than three years. This legislation would increase the percentage of jail time for these armed offenders from 30 percent to 70 percent. To ensure there is prison space, the bill would sentence non-violent property to community corrections, with more intensive supervision, instead of jail time.

“The safety of our citizens should be a priority of state government,” added Norris. “These are not petty criminals. These are hardened criminals who use a firearm in the commission of a crime. This bill aims to make our communities safer by keeping these violent offenders off the street where they are no longer a danger to the public. I am very pleased this bill has been approved.”

The original “Crooks with Guns” legislation made it an additional offense to posses a firearm when committing a list of dangerous felonies like aggravated and especially aggravated kidnapping, burglary, stalking, carjacking, voluntary manslaughter, and certain drug crimes. Last year, the legislature passed the second phase by adding a minimum of three years to the sentence of a violator who possesses a firearm during the commission of attempted first-degree murder, to be served after the underlying offense. Another “Crooks with Guns” law passed last year requires all aggravated burglaries a defendant commits within a 24-hour period to be counted as separate prior convictions for purposes of determining whether the defendant is a multiple, persistent, or career offender under the Criminal Sentencing Reform Act.

This year’s legislation, Senate Bill 3431, now goes to the governor for his signature. The bill is set to take effect on July 1.

In Brief

State contracts — The Senate voted 24 to 6 to approve major legislation overhauling the way state government contracts for the purchase of up to $25 billion in goods and services. The legislation, Senate Bill 3598, sponsored by Senator Bill Ketron (R-Murfreesboro), is designed to implement cost saving strategies taken from the best practices implemented by procurement officials nationwide that could save Tennessee hundreds of millions of dollars over the long run. The legislation would combine procurement of goods and services for the state into one central office housed in a department to be chosen by the governor. The new statewide system could also take advantage of the government’s clout as a volume-buyer to leverage more competitive bidding. Other objectives of the legislation are to provide opportunity and fairness in state contracting and implementation of performance measures to make sure taxpayer dollars are used efficiently and effectively.  

Children in state custody — Legislation was approved sponsored by all members of the State Senate expanding foster care services for young people age 18 to 21. The measure, Senate Bill 3101, would authorize the Department of Children’s Services to help youth who were in the system on their 18th birthday, as long as they are continuing to work on their education or are engaged in seeking employment. Studies show that some young people who age out of foster care continue to face joblessness and homelessness after leaving state custody. This bill will give youth in state care more options and allow them to transition to independence rather than having to experience it abruptly and in a way that leads to a tragedy or a life of continued dependence on state services.

Military / Interstate Compact on Education Opportunity for Military Children – State Senators approved SB 1997 sponsored by Senate Majority Leader Mark Norris (R-Collierville) that aims to help children of military personnel transition from school to school when moving out-of-state. The legislation calls for Tennessee to join the Interstate Compact on Education Opportunity for Military Children which was implemented by the Council of State Governments (CSG) in partnership with the Department of Defense. The four areas addressed by the compact are enrollment, placement, eligibility, and graduation requirements. Most military children will be in six to nine different school systems during their lives from kindergarten through twelfth grade. Because of the numerous moves, usually during a school year, there are often problems with the transfer of records, graduation requirements being different, being excluded from extra-curricular activities, redundant or missed entrance/exit testing, and kindergarten and first grade entrance age variations. The Compact, which has already been adopted by 30 states, helps to address these issues.

DUI / repeat offenders The General Assembly has approved Senate Bill 844, sponsored by Senator Mae Beavers (R-Mt. Juliet), which seeks to prevent the incentive for offenders to delay their trials so that they fall outside of the 10-year DUI toll period that is in current law. Presently, the state calculates the time period for a drunk driver to be charged with a repeat offense from the date of conviction to the day the offender is convicted of the repeat offense. This bill adjust that calculation to make the 10-year period run from the date the offense was committed to the date of the commission of a repeated offense. The change prevents repeat offenders from delaying their trial to avoid stiffer penalties imposed upon a second DUI conviction.

Tax liens / lenders — The Senate passed legislation sponsored by Majority Leader Mark Norris (R-Collierville), to address a problem between the rights of purchase money security interest (PMSI) holders and the rights of city and county governments with tax liens on property. The bill stems from a Tennessee Court of Appeals decision arising out of Williamson County which threatened to have a chilling effect on companies extending credit for equipment purchases to Tennessee businesses. The legislation, Senate Bill 2809, requires secured parties to withhold the amount of taxes due when property is repossessed and sold. The bill requires local governments to notify secured parties of their responsibility to pay past-due taxes on the secured equipment. In addition, a secured party’s liability is limited to four tax years. A county official or assessor is required to respond to a secured party’s request for information within 15 days via certified mail. These protections remove uncertainty for lenders so they know their tax liability when a business defaults.

Domestic Violence / Counseling – Courts would be allowed to order domestic abuse perpetrators to attend counseling programs under legislation passed this week. The measure, Senate Bill 2709 sponsored by Senator Rusty Crowe (R-Johnson City), prescribes a list of counseling programs the judges can order if they choose, including, intervention programs that are certified by Domestic Violence State Coordinating Council. The bill increases the maximum penalty for those convicted of the crime from $200 to $225, with the proceeds going to grants for domestic violence shelter programs.

Workers’ compensation — The full Senate unanimously approved legislation sponsored by Senator Bill Ketron (R-Murfreesboro) that creates a procedure for sole proprietors, partners, officers of corporations, and members of limited liability companies engaged in the construction industry to file for an exemption from obtaining workers’ compensation insurance to cover themselves. The legislation, Senate Bill 3591, reinstates the requirement that sole proprietors and partners engaged in the construction industry carry workers’ compensation insurance on themselves, but provides a mechanism for exemption. The bill is supported by the National Federation of Independent Businessmen and the Homebuilders Association of Tennessee.

Construction Zones – Lawmakers voted to approve legislation which aims to curb the number of deaths in work zones due to reckless driving. The measure, Senate Bill 2882, adds to the list of charges that can be considered under the state’s vehicular homicide law, cases where the cause was the driver’s knowing failure to exercise due care resulted in the death of a construction worker or an employee of the Tennessee Department of Transportation in a work zone. There were 12 fatal crashes in construction zones last year. The crime would be punishable as a Class D felony. The bill is sponsored by Senator Rusty Crowe (R-Johnson City).

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