Tennessee House Of Representatives pass Fiscally Conservative Balanced Budget

Budget cuts taxes, fully funds education, moves an additional $73.5 million to Rainy Day Fund

Nashville, TN – In the final few days of this year’s legislative session, the House of Representatives passed Tennessee’s annual budget with an 80 – 12 vote. The bill’s passage was the culmination of months of tireless work crafting a fiscally responsible and balanced budget.

The $33.3 billion budget cuts taxes, puts $73.5 million in the state’s Rainy Day Fund, improves our educational system, and provides an even better environment for businesses to grow and for jobs to flourish.

When Republicans became the General Assembly’s majority party in 2010, Tennesseans asked for fiscal responsibility to be a priority looking forward. The 2015-2016 budget holds true to that principle while ensuring Tennesseans get the services they expect from state government.

As Washington, D.C. and other states are mired in partisan gridlock and out-of-control spending, Republicans in Tennessee have made responsible decisions that will continue to ensure the state is positioned to be a top leader in the country on jobs. Since January of 2011, over 225,000 new private sector jobs have been created in Tennessee.

Highlights of the 2015-2016 budget include:

K-12 and Higher Education Investment

A large portion of this year’s budget focuses on education, including funding for K-12, higher education, and proposals designed to build on the Drive to 55 program—an effort to raise the percentage of Tennesseans with a degree or certificate beyond high school from 32 to 55 by the year 2025.

For K-12 education, the budget includes nearly $200 million, including:

• Funding of the Basic Education Program (BEP) formula;
• $100 million dollars for increasing teacher salaries, which amounts to a 4% pool that education associations will have available as they make local decisions to increase teacher pay;
• Funding to begin the process of repealing and replacing current Common Core educational standards in the state with a system based solely on Tennessee values and ideas;
• And $5 million to create the Educators’ Liability Trust Fund to offer liability insurance to Tennessee teachers at no cost to them

Notable higher education investments include:

• $260 million for capital projects, including new science facilities at Jackson State Community College and the University of Tennessee, nearly $25 million for improvements to colleges of applied technology across the state, and funding for a fine arts classroom building at East Tennessee State University;
• $25 million to fully fund the Complete College Act formula;
• And $10 million for need-based scholarships for students.

The budget also includes specific workforce development investments geared toward moving forward with the state’s Drive to 55 efforts, including:

• $2.5 million for statewide outreach efforts for adult students and technical assistance to local communities that are finding ways to support adult learners;
• $2.5 million to support the success of the SAILS (Seamless Alignment and Integrated Learning Support) program which addresses remediation in high school;
• $1.5 million to establish the Community College Reconnect Grant pilot program to provide last dollar scholarships for adults with some post-secondary credit to attend community college
• $1 million to establish competitive grants to two-year and four-year institutions to develop initiatives specifically designed for veterans;
• And $400,000 to establish the Tennessee Promise Bridge Program (TPBP), which will bring first-generation college students to campus prior to fall enrollment, which is one more step in making sure they have the best chance possible to succeed. The TPBP will work in conjunction with the main Tennessee Promise plan.

The main Tennessee Promise Program, set to being this fall with the class of 2015, provides high school graduates the opportunity to attend a community or technical college free of tuition and fees.

It is both a scholarship and mentoring program that provides last-dollar scholarship dollars that cover costs not met from the Pell, HOPE, or TSAA scholarship programs.

While removing the financial burden is key, a critical component of the Tennessee Promise is the individual guidance each participant will receive from a volunteer mentor who provides guidance and assistance as the student enters higher education.

In addition, under the program, students are required to complete eight hours of community service per enrolled term, as well as maintain at least a 2.0 GPA.

Job Recruitment, Workforce Development & Tax Cuts

Building on the success of other job-related legislation passed during the 108^th General Assembly, the budget this year again makes investments in job recruitment and tax reforms.

Notable items include:

• A cut in the Hall tax for seniors 65 and older. The Hall tax is imposed on income derived from interest on bonds, notes, and stock dividends. Since enactment of the Hall tax in 1929, the use of investment savings has grown as a primary source of retirement income. Because of this fact, Republican lawmakers argue the Hall tax is actually an income tax, especially for seniors living on a fixed income. The Hall tax cut approved in the budget raises the income exemption level from $33,000 to $37,000 for single filers and from $59,000 to $68,000 for joint filers. Lawmakers hope to continue building on this tax cut in the future, eventually eliminating it completely;
• Making Tennessee’s tax structure more competitive with surrounding states by changing the way a multi-state company’s income and net worth is taxed for franchise and excise purposes;
• A continuation in funding of the state’s FastTrack Infrastructure and Job Training Program which aids businesses across the state in securing funding for expansion projects and ensuring employees are trained to their fullest potential;
• An increase in funding to Tennessee’s nine regional development districts to help local governments implement important infrastructure projects and recruit new business;
• And continued funding to recruit and develop the state’s film and television industry which has steadily grown in recent years and helped bring in millions of film and tourism dollars.

In addition, the 2015-2016 budget includes other strategic capital investments statewide that will help fund programs to ensure Tennesseans have the skills needed to obtain well-paying, 21^st century jobs after graduation.

Other Budget Highlights

Other highlights of Governor Bill Haslam’s 2015-2016 budget include:

• $73.5 million dollars for the Rainy Day Fund to bring it to $568 million total in the account
• $250,000 for regional food banks in the state;
• $1 million for capital improvements to the state’s accredited zoos in Knoxville, Chattanooga, Memphis, and Nashville, as well as the Tennessee Aquarium;
• $500,000 for statewide methamphetamine cleanup programs;
• And, a continuation of property tax relief efforts passed in previous years to help veterans, seniors, and the disabled population of Tennessee.