Update from the Hill

June 10, 2010

The 106^th General Assembly began chaotically and ended in similar fashion at 1:15 a.m. this morning. In January, the surprise election of Speaker Kent Williams created turmoil among House Democratic and Republican leaders and a 50/50 split on all committee assignments. That same turmoil was reflected in the closing hours, days, and weeks as the 106^th General Assembly dragged on much longer than expected.

In the end, the will of the Senate largely prevailed in the passage of the appropriations bill, the omnibus bill and the annual technical corrections bill, although Senate Republicans were forced to reinstate some funding originally targeted for elimination in the budget.

Thanks to its broad caption, the omnibus bill was the most controversial bill last night, serving as a “Christmas tree” for amendments by House members, who were frustrated about various pieces of legislation that had passed the House but stalled in the Senate.  Feelings were also running high because of the ongoing controversy around HB2622, the “Health Care Freedom Act” by Rep. Susan Lynn, which ultimately remained on the House Desk because 50 votes (a constitutional majority) were not present to adopt a conference committee report.

After hours of deliberation, the House recalled the heavily amended omnibus bill, removed all extra amendments and re-passed the bill in a form acceptable to the Senate Republican leadership. The House then went through the same process by removing two amendments to the technical corrections bill that had not been approved by the Senate.  This action led the way to final adjournment in the wee hours.

Having passed the appropriations bill last week, the passage of the omnibus and technical corrections legislation paved the way for a sine die adjournment to a tumultuous session.  Re-election is foremost on most members’ minds, and the campaigning will begin in earnest today.

Your team from Smith Harris & Carr was on the scene until the bitter end, and we are pleased to provide any additional information about specific legislation that you may require. Please do not hesitate to call us.

Our offices will be closed tomorrow to give the staff some much needed rest after many long nights, but we can always be reached by email or cell phone.

Thank you for the confidence you show in us by allowing us to represent your interests on Tennessee’s Capitol Hill.

June 4, 2010

Approximately five weeks after the expected adjournment of the 106^th General Assembly, the House and Senate have now passed a budget as well as a bond and an indexing bill.  The technical corrections and “omnibus” bills are still moving between the two bodies to resolve language differences, but are expected to be resolved this evening or tomorrow.

The most significant occurrence heralding the end of session is the passage of the appropriations bill or budget.  This $29.9 million spending plan has passed with bi-partisan support this year.  It is heralded as a “no new taxes” plan which recognizes the state’s priorities and makes some tough decisions.  The toughest sticking points were a fish hatchery/tourism magnet in Carter County and the Governor’s Office of Child Care Coordination.  The former was abandoned and the latter was funded after much haggling.

The Senate has run out of reimbursable days per the constitutional limit of 90 days every two years, so they are working for “free” today and the same is to be expected for tomorrow.  Unless there are major hiccups, the 106^th General Assembly could “sine die” sometime tomorrow.

Your Smith Harris & Carr team will be with them all the way, so please don’t hesitate to call on us if you have any questions about specific bills or need information on specific provisions in the appropriations bill.

Happy Summer!

May 28, 2010

There was progress toward the end of session this week, although not as much as hoped. In order for the 106^th General Assembly is to pass a budget and adjourn sine die next week, they will likely have to work well into the night and into the weekend. Returning the week of June 6^th to finish remains a distinct possibility.

The Senate voted on Thursday to, once again, override the Governor’s veto of the “guns in bars” bill. The House is expected to do the same when they reconvene next week.

The House Budget Subcommittee met on Tuesday and Finance Committee Chairman Craig Fitzhugh presented the house democrat (and some republicans) budget plan.  That meeting was the only House committee meeting all week.  No votes were taken.  The remainder of the week was spent in caucus meetings and with House finance leadership meeting with members of the Senate on a budget that both could agree on.  The House used two days for floor sessions this week and has three remaining days. 

The Senate Finance Committee had incredibly long meetings this week (yesterday’s was almost 8 hours long), culminating in passage of the appropriations bill after exhausting discussion of programs that were being “defunded.” There was limited discussion about the $340 million of “contingent” appropriations, including funding for critical access hospitals, community college capitol needs, and various Economic and Community Development initiatives, which are based on an assumption that the state will be able to shift spending due to an extension of enhanced federal funding (FMAP) by Congress.

The Senate approved budget includes none of the new fees or taxes recommended by the Bredesen administration, but relies on a combination of shifts to non-recurring funds, elimination of funding, and the use of state reserve funds to balance the budget.  Although there are no raises for state employees, it includes a one time longevity type payment for most state employees and teachers as well as and funds for a “layoff package” for any state employees who will be terminated. It leaves all the TennCare funding recommended by the administration intact, thanks, of course, to the earlier passage of the hospital coverage fee.  The budget the Senate approved last night does not have the backing of the House Finance Committee leadership, leading many to believe that a conference committee will be required to work out the differences.

When the Senate Finance Committee finally finished at about 10:30 p.m. last night, the full Senate went into session and worked through some 30 bills on their calendar, delaying anything that might require serious discussion until next week. They stopped at midnight and left the Capitol as drained as the group of 40 or so state employees and lobbyists who had stuck with them to the bitter end, out of either obligation or paranoia.

The Senate has one remaining session day, which will be next Wednesday (they will be meeting at 2:00 p.m.). They were warned last night to bring enough clothing to stay a while, even if it means they aren’t getting paid after their one day is used.

The Senate Finance Committee meets beginning at 2:00 p.m. on Tuesday, June 1, while House Budget Subcommittee has scheduled 11:30 a.m. on the same day (but that time is tentative).  The House has set only one floor session - 2:00 p.m. on Wednesday, June 2 (same as Senate). (Note to Smith Harris & Carr employees – don’t make any weekend plans!)

May 20, 2010

The 106^th continued the shuffle toward final adjournment this week, although it was shuffling more like Tim Conway on the old Carol Burnett Show, with meetings of the Senate Finance Committee on only Monday and Tuesday and no Senate floor sessions.

House committees (Finance and Calendar & Rules) met early in the week and again on Wednesday and the House had floor sessions on Monday evening and Thursday.

Despite near begging by Sen. Jim Kyle of Memphis, the Democratic Leader of the Senate, the Senate Finance Committee did not vote on the appropriations bill, preferring to wait for the House to act on a proposal. Sen. Kyle even offered the committee his own version of a budget, a derivation of the Senate Republican plan, with no new taxes.  He was assisted by Deputy Governor John Morgan, but assured everyone that this was not an administration plan. There were no takers.

The Thursday House session was a marathon, lasting from 9:00am until about 4:30pm. Based on their actions, the House is largely caught up on legislation other than the budget and bills that expend money.  The Senate is planning for a lengthy floor session on Monday and will hopefully join the House in being caught up on items other than the budget and related bills.

The House plans to go into session on Monday, May 24 at 4:00pm and there will more than likely be an announcement as to what time the Finance Ways and Means committee will be meeting. The Senate plans to meet on Monday, May 24 at 1:00pm for session.

Although the Governor was in China this week, he was able to veto the 2010 version of “guns in bars/restaurants” from overseas and the sponsors will likely call for a veto override vote on that next week as well.

Another major piece of legislation, the TNInvestco expansion, did not receive a vote in the House Finance Committee and awaits Senate floor action.  This program is strongly supported by Commissioner Reagan Farr and Commissioner Matt Kisber, but it has many in the General Assembly suspicious.  Add to that a lawsuit from a want-to-be recipient and you have the makings for long deliberations and significant debate in both the House and Senate.

Although the buzz in the halls this week was that next week will be the last, and the number of legislative days is ticking down like a time bomb, that is far from certain.

May 13, 2010 

We are happy to report that the General Assembly seems to be moving toward closure. This week saw marathon meetings of the Senate Finance Committee, a presentation by the Bredesen administration of their proposed appropriations bill amendment (based on more current revenue figures), and, at last, the unveiling of a budget proposal by the Senate Republican Caucus.  House members, both Republicans and Democrats, are caucusing frequently and are reportedly attempting to work out their own differences on the appropriations bill, although not much has happened publicly, as of yet.

The Senate Finance Committee will soon take up the administration’s “technical corrections” bill, which essentially determines how much new revenue the legislature will have available to work out a balanced budget. The myriad of technical changes in the code are projected to raise some $49 million in recurring state revenue, and a proposal to lift the cap on the sales tax charged for major purchases would raise an additional $85 million. It is widely believed that the Senate Republican majority will refuse to pass the lifting of the sales tax cap. They are also expected to propose a comprehensive amendment to the technical corrections bill, eliminating several of the other revenue raising components, including adding sales tax to the currently exempt first $15 of cable service.

The Senate plans to use none of their three remaining “session days” next week, so the focus will be on the Senate Finance Committee and the proposals approved there. There will also be plenty of off the record discussion with the House leadership as the House Finance Committee continues its work.

Currently, the 106^th General Assembly is expected to adjourn sometime around May 28 or 29, but, of course, we’ll see.

April 2, 2010

Elections

Qualification deadline for election in 2010 was noon today.  That deadline produced some surprise announcements!

Representative Jason Mumpower (R – Bristol) announced last Thursday that, after 14 years of legislative life, he will not seek reelection after this term.  The Republican majority leader has kept a low profile since losing the Speaker of the House position to Kent Williams last year and says he is “looking forward to new challenges”.  Those considering a run for Jason’s house seat include Speaker Kent Williams’ aide, Scotty Campbell and Representative Matthew Hill’s brother, Timothy.

Today, Rep. Donna Rowland (R – Murfreesboro) announced she too would not be seeking reelection this year.  She has served in the House for 10 years and states that she never did “intend to be a career politician”.

Additionally, Representative Susan Lynn (R-Mt Juliet); Representative Mike Bell (R-Riceville) and Rep. Stacey Campfield (R-Knoxville) are giving up their house seat to run for the Senate.

Sub-committees Closing

As this hectic week on the hill came to an end, so did some more of the House sub committees and next week is expected to be the final meeting of several more, including Civil Practice Sub; Local Government Sub and Employee Affairs Sub.  It’s a great sign of progress but even though there are committees closing, we’re still thinking that the legislature will not be adjourning until May.

Budget

Commissioner Dave Goetz reported Monday that the state’s general fund revenue could fall short as much as $75 million in this fiscal year. In additional to the poorly performing sales tax, the tobacco tax is not producing as much as years past and that revenue is expected to keep falling next year. 

February 5, 2010

The Governor presented his FY 2010/11 budget this week at his annual State of the State Address on Monday night.

For the complete text of the address, go to:

Bredesen_2010_State_of_the_State_Address.pdf

To view the proposed budget and/or the compilation of base budget reductions go to:

Fiscal Year 2010-2011 Budget Publications

Generally, the legislative reaction to the budget the Governor referred to as a “commonsense family budget” has been positive.  Governor Bredesen proposed significant cuts but used reserves to “buy back” some of the cuts to social services for the next two years.  He also proposed significant cuts to state employees but used reserves to “buy back” some of those positions as well.

He suggested an increase in the drivers’ license fee to fund some services in the Department of Safety but no other fee increases were recommended.

He also suggested a few tax increases, including some cable and telecommunications taxation and REIT taxation.  These new taxes have not been warmly received by House or Senate republicans who may cause some friction and thus a potential $49 million recurring hole before final passage.

The budget was the main topic of conversation this week and will remain the hot topic throughout this session.  The Funding Board is scheduled to meet in early April and is expected to provide revenue estimates at that time.  Most legislators agree that the budget picture is not going to improve, and they should go ahead and act on the budget.  Then they can return to their districts to protect their seats during the upcoming elections.

The standing committees are also starting to schedule bills and take votes, and are even talking about shutting down in late March and early April.  This talk bodes well for an early adjournment, but we shan’t hold our breaths!

February 1, 2010

In his speech the Governor is expected to acknowledge one of the most serious financial crises to face the state in recent memory.  He will recognize that the revenue collections for the last 19 months have been lower than expected, and that the loss of federal stimulus dollars, which “bought back” several cuts last year, will make this the most difficult budget of his tenure.

However, he will also acknowledge that he will not cut every state program.  He is expected to pay special attention to K-12 education by attempting to provide additional dollars for the state’s portion of the Better Education Program.  He has also announced publicly that he will not ask for massive cuts from the Department of Corrections, which would have necessitated releasing state prisoners.  It is expected that he will address the need for additional dollars to keep the state’s pension program whole and to address increased costs for state employee health benefits.

However, the rest of state government can expect significant cuts under his proposed budget. 

He is not expected to ask for any broad general increase in state taxes, but he may suggest some increases in certain state fees to offset losses to state programs.  Further, he is expected to recommend state employee layoffs, although the exact number of layoffs is unknown.

He is also likely to recommend the use of limited amounts of the state’s reserve funds to offset some of the cuts.  Overall he must present a budget that balances.

His speech tonight will not provide all the details that everyone will be wondering about.  Tuesday morning at 8:30 am CST, Finance and Administration Commissioner Dave Goetz will make a more detailed presentation to the Senate Finance Committee and many questions will begin to be answered there.  Commissioner Goetz will make a similar presentation to the House Finance Committee at 2:00 pm on Tuesday and either can be watched via streaming video at www.capitol.tn.gov.

As the committees begin deliberations of the Governor’s proposed budget, there will be further and much more detailed presentations about individual agency budgets where more questions will be answered and facts will be gleaned. 

Tonight is just the beginning of the process, and it will be a long and arduous process to be sure!

January 11, 2010

Special Session

The 106^th General Assembly convenes in Nashville tomorrow at noon and will move into a special session, officially known as the “First Extraordinary Session,” at 4:00 p.m. Governor Phil Bredesen will address the joint legislature at 5:00 p.m. to detail the reasons for the special session.

Governor Bredesen issued the formal call for a special session of the legislature last Friday. It was crafted with 17 very specific provisions, mostly related to K-12 education and higher education in the state, but it also included a provision related to a troublesome workers comp issue affecting subcontractors in the construction industry. A copy of the call is posted on our website, at www.smithharriscarr.com .

The workers comp problem surfaced after passage of a bill last year requiring general contractors to ensure that subcontractors have workers comp coverage. Many subcontractors are sole proprietors, who have complained that the cost of coverage is prohibitive, and the fact that the construction industry is so depressed is an additional factor. The requirement became effective on January 1, but the legislature is expected to repeal it as soon as possible.

The primary purpose of the special session is to enable the state to apply for its share of the federal “Race to the Top” funding to augment our BEP funds in K-12. The degree to which teachers should be accountable for improvement in student test scores will be a source of major debate for legislators. Although the Governor will reportedly not push for a merger of the Board of Regents and the University of Tennessee system, he is also proposing a number of measures aimed at increasing the efficiency and cooperation between the two systems of public higher education.

Theoretically, the special session will last about a week, but that is not a sure thing. When the special session ends, the legislature will resume the regular session. The Governor is expected to present his proposed 2010-2011 budget to them by February 1.

SHC News

We are very excited to announce that our partner Meagan Frazier Grosvenor and her husband Jerry are expecting their first child on July 10. (Good timing, guys – thank you!)

And, last, but not least, we welcome our 2010 intern, Justin Benjamin, who is a Memphis native, a graduate of the University of Memphis, and a former intern at the state legislature.