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GOP Week in Review

The House GOP Review is a weekly feature that gives Tennesseans an in-depth look at what our Republican state legislators have been working on this week, and a glimpse into what’s planned for the coming week at our state house. This week’s highlights:

  • Revised State Budget
  • StateEmployee cuts
  • Higher education under the budget knife
  • Brick and mortar projects for K-12 schools
  • House approves changes to HOPE scholarship

Governor, Commissioner of Finance speak on revised budget plans

The Governor addressed a Joint Convention of the General Assembly this week to lay out his revised budget proposal to members of both chambers. As the state continues to learn more accurate numbers of revenue projections, lawmakers took time to examine where the most conservative and fiscally responsible cuts in growth could be made. Governor Bredesen, in his speech Monday night, advised the legislature that the state would need to “tighten our belt,” and reminded them that tough decisions lay ahead.

April 2008 was the worst month on record for revenue growth in Tennessee, and the third quarter of this fiscal year was the second worst quarter on record. Projections show that the fourth quarter—of which the state is halfway through—could be the worst on record. Two dozen states are currently facing budget shortfalls, some of which began last year. The total proposed budget is $27.4 billion, approximately half a billion less than last year’s $27.9 billion budget. Although the proposed budget forgoes any additions to the Rainy Day Fund, the state will not be dipping into the reserves for cash. The Rainy Day Fund is projected to reach $750 million by July.

State Employee cuts

The Administration is still proposing that 2,011 jobs—roughly 5 percent—in the executive branch be eliminated through voluntary buy-outs, which is expected to have a price tag of approximately $50 million. The one-time money would be taken from departmental reserve accounts, and will save the state about $64 million annually. The Governor has added
approximately 5,000 jobs in his tenure, meaning the cuts make up 42 percent of Bredesen hires. From the beginning, the Administration has been optimistic that those employees who will be targeted for the buy-outs will voluntarily take them. It was reported by the Tennessee Consolidated Retirement System earlier this week that many state workers were interested in the buy-out plan, although they wanted to hear more details before committing to anything concrete.

Basic Education funding safe; higher education faces cuts

The current proposed budget protects education, and continues to fund the Basic Education Program, the plan by which the state disperses dollars to local school systems at last year’s same percentage of funding. Although there is no increase in the state’s percentage BEP funds as was anticipated for this year, there is a required increase of $59 million to cover inflationary costs for the school systems. For higher education, however, the Administration is proposing to cut 4.1 percent, or about $56 million. The Tennessee Higher Education Commission is expected to work with the two systems, the Tennessee Board of Regents andUniversity of Tennessee system, to distribute the cuts. Republicans are hopeful that the schools can make cuts wherever possible instead of simply passing thereductions along via tuition increases.

House reaches agreement on “technical corrections” bill

In 2000, the legislature passed a law that set up family-owned non-corporate entities (FONCEs). These entities have enabled thousands of Tennessee families to pool their resources and purchase commercial property for the purpose of
long-term investing and receiving passing income. Families use FONCEs for covering a wide array of costs, such as college tuition, retirement or estate- planning purposes. Many families have utilized these LLCs and LPs because of their unique tax advantages and liability protection. The Governor’s debated “technical corrections” bill, House Bill 4129, contained a provision that would remove the franchise and excise tax exemption for family LLCs and LPs. The state’s franchise and excise tax is imposed on businesses for the privilege of doing business in Tennessee. General partnerships and sole proprietorships are not subject to the tax. Republicans expressed their concern that many Tennessee families who are simply trying to make ends meet in this difficult economy would be disproportionately impacted by requiring FONCEs to pay franchise and excise taxes. They argued that the provision is not “closing a loophole,” but a tax increase that would cost Tennessee families a substantial amount of money, making it very difficult to run a “mom and pop” business. Due to such objections, the FONCE provision was ultimately stripped from the bill, passing with a vote of 62-29.

House approves lottery legislation

With a vote of 92-1, the House approved the comprehensive lottery plan on Thursday night. The legislation, which the House addressed last year in the final hours of session without a final decision, changes the eligibility
requirements for Tennessee’s HOPE scholarship, which is funded through the Tennessee Lottery. Under present law, in order to retain the scholarship, the student must have at least achieved a 2.75 GPA, and then a 3.0 for each semester following. The legislation passed on Thursday by the House would keep the GPA requirement at a 2.75 GPA. Additionally, the bill allows students to drop from full-time to part- time without losing their scholarship. Currently, students who enroll as full-time and drop to part-time lose the scholarship. The changes are expected to cost $17.5 million in lottery revenue. The Senate version, however, would give students an extra year to bring up their GPA. It stipulates that if after the first and second year the student has maintained a 2.75, they must achieve a 3.0 by their junior to keep the scholarship. The Senate plan is projected to cost $7.2 million.

Brick and mortar projects for K-12 schools

With many local governments facing the same budgetary woes as the state, House Republicans fought for lottery reserve money to be sent back to local school districts in the form of capital outlay projects, as the state constitution requires. Republicans emphasized the need for K-12 school construction, as many school systems across the state struggle. The GOP plan called for setting a $250 million threshold to secure the lottery scholarship fund, making all the reserve money above that available for K-12 school construction. The money would be available through a dollar-for-dollar matching grant, and the amount given toeach school system would be granted on a per pupil basis. House Republicans proposed the plan last year, and garnered 69 votes on the House floor in the final days of last year’s session. Ultimately, however, the legislation was put on hold until 2008. The provision narrowly failed. Instead, a proposal that aims to make schools more energy efficient through both grants and loans won approval. Many Republicans argued that the plan does not put dollars where they are so desperately needed, pointing out that energy efficient windows were not a priority for schools with leaky roofs and children in portables.

Weekly Wrap In Brief…

House Bill 0583 was passed by the House of Representatives on Tuesday with a vote of 97-1, and will create a criminal offense for communicating a death threat to a school employee or a student.

The House also approved House Bill 4089 / Senate Bill 4104 with a nearly unanimous vote. The legislation authorizes, but doesn’t require, school systems to develop and offer an elective course that would study the Bible’s influence on art, music, culture, and history.

House Bill 1442 has successfully passed both chambers of the General Assembly and prohibits all members of county election commissions and the state election commissions from participating in the management or leadership of a political party of political campaign. In addition, commission members will not be allowed to publicly endorse a candidate for office.

Legislation passed in the House on Thursday will give even more opportunities to Tennessee students to learn through the creation of a Virtual Education Program. The program, established through House Bill 1872 / Senate Bill 2008, allows local school systems to create “virtual schools” which delivers a significant portion of instruction to its students via the Internet in a virtual or remote setting.

Next Week [*Times are subject to change]

Monday: Budget Subcommittee, Legislative Plaza Room 16, 9:30 a.m.
Finance, Ways, & Means Committee, Legislative Plaza Room 16, following
Calendar and Rules Committee, Legislative Plaza Room 16, following

House Floor Session, House Chambers, 9 a.m.

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The House GOP Review is written by Kara Watkins the press secetary for the House Republican caucus. Kara was an administrative assistant for Marsha Blackburn for Congress, and she also has worked for the National Republican Senatorial Committee.

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