Monthly Archives: November 2019

About that whole voucher tax thing…

Gov. Bill Lee speaks to reporters on March 19, 2019, about his proposal to introduce an education savings account program in Tennessee. (Erik Schelzig, Tennessee Journal)

The revelation that Tennessee’s new school vouchers could well be considered taxable income by the IRS set off a furor at the statehouse among both supporters and opponents of the “education savings account” law.

Education Commissioner Penny Schwinn’s statement to the House Finance Committee appeared fairly unequivocal when asked during a Monday hearing: “My understanding is this is taxable, yes.”

Voucher supporters were quick to pounce, noting that the law includes a provision that states the more than $7,300 vouchers would not be considered income. But the caveat there is the state can only write legislation affecting Tennessee law. The IRS might have different ideas.

Schwinn told reporters she had come to that determination in consultation with state Attorney General Herbert Slatery’s office. But a spokeswoman for the AG said his office would not be in a position to weigh in on federal tax matters.

Schwinn’s spokeswoman later issued a new statement seeking to clarify matters:

The Commissioner’s comments at the budget hearing today were intended to reflect the possible need for the program’s filing and issuance of federal information reporting returns rather than taxability. We are continuing to work through the details of what will be required for ESA program implementation.

So where does that leave things for parents concerned about being hit with a big tax bill if they take the vouchers? It remains unclear. And now Democratic lawmakers are (perhaps inevitably) asking for a delay in the bill’s implementation so it can all be figured out.

Lee administration records show dozens of grant ‘commitments’

Gov. Bill Lee, second from left, holds a budget hearing with the Department of Economic and Community Development on Nov. 4, 2019. (Erik Schelzig/Tennessee Journal)

Gov. Bill Lee has sought to chalk up disagreements about a local grant fund to a “misunderstanding” among lawmakers about the application process the money would be distributed. But emails The Tennessean obtained under state open records laws the show the Lee administration had committed to 60 projects around the state before the grant application process was formally established.

Critics have derided the $4 million grant pool as a “slush fund” and raised questions about whether the money was designed to reward lawmakers who voted for Lee’s controversial school voucher bill. Not so, said Lee, but the governor nevertheless halted distribution of the money until the next budget year.

The finger-pointing spree erupted when Rep. Matthew Hill (R-Jonesborough), a top ally of former House Speaker Glen Casada, announced in September that a favored nonprofit in his district would be receiving an extra $75,000 grant. Nobody in the executive branch claimed to know anything about it.

But the Tennessean records request shows Economic and Community Development Commissioner Bobby Rolfe sent a July 26 email to Finance Commissioner Stuart McWhorter saying dozens of commitments had already been identified.

“This morning I met with our ECD Grant Team to develop a plan to administer the $4 million Rural and Community Development Grant Program that was approved by the General Assembly,” Rolfe said in the email.

“Assuming the individual grants will not be large amounts, it is quite conceivable that the total number of grants could exceed 100,” VanderMeer wrote.

Rolfe told the paper on Monday he had no knowledge of specific projects.

“We at ECD saw our role only as the grantor of the program,” he said. “Which means as this legislation was written, (the) commissioner of F&A would be making the decision and would be approving the grants, commitments, whatever you want to call them.”

“We at ECD — nobody’s ever seen a list,” he said. “We to this day don’t know that a list exists. We’ve just been told that there was a list somewhere.”

McWhorter declined to comment to the paper through a spokeswoman. But he denied having a role in devising the additional grant pool funds with state lawmakers at the end of last session.

“I’m not part of the legislative negations,” McWorter told reporters on Nov. 4. “That was their amendment, they added the money. You’ll have to ask them how it was added.

“We submitted a $3M request as part of the admirative amendment. They added $1M additional and they unanimously approved the budget. So you’ll have to ask them how it occurred,” he said.

Lee said he hasn’t spoken to Hill about why he thought the $75,000 was funded for the project in his district. The governor said during budget hearings earlier this month that he doesn’t know why there’s so much confusion surrounding the grant program.

“You’ll have to ask those who don’t understand it and have said they don’t understand it,” Lee said. “We understood exactly what the process was. But there have been a number of lawmakers who have expressed uncertainty about how the funds would be distributed, what that process would be.

“Because of that lack of clarity and their lack of understanding about the process, we said let’s just hold up, we won’t spend it until we make sure everyone knows how it will be done,” Lee said.

Lee communications director Walker to leave adminstration

Chris Walker, the chief spokesman for Republican Bill Lee’s gubernatorial campaign and for his first year in office, is stepping down at the end of the year.

Walker plans to return to political consulting after he leaves the administration.

Walker joined the Lee campaign when few gave the Franklin businessman much of a chance in the GOP primary featuring the better-known U.S. Rep. Diane Black, former Economic and Community Development Commissioner Randy Boyd, and then-House Speaker Beth Harwell. As Black and Boyd went negative in the race, the Lee camp maintained a positive message. Lee went on to win the nomination with 37% of the vote, compared with 24% for Boyd, 23% for Black, and 15% for Harwell. Lee went on to blow out Democrat Karl Dean in the general election.

Walker shifted over to the the state Capitol after the election, crafting Lee’s speeches and managing the new administration’s message through the new governor’s first session and in response to the scandal surrounding then-House Speaker Glen Casada (R-Franklin) and close all on the controversial school voucher legislation.

Feds could consider school vouchers taxable income

Gov. Bill Lee speaks at the state Capitol on Sept. 16, 2019. (Erik Schelzig, Tennessee Journal)

Education Commissioner Penny Schwinn told lawmakers Monday that the federal government may consider money families receive under the Gov. Bill Lee’s school voucher program as taxable income.

(Update: There may be some backtracking going on.)

That may come as a surprise to lawmakers who voted for the bill that includes a provision stating that: “Funds received pursuant to this part …. do not constitute income of a parent of a participating student under title 67, chapter 2 or any other state law.”

As enacted, families in the Metro Nashville and Shelby County school districts earning up to 2.6 times the federal poverty level will be eligible for the program offering debit cards worth $7,376 — the equivalent of the average amount provided per student under the state’s school funding formula — to spend on expenses related to private school education. For a family of five, the income limit would be set at $76,500.

Schwinn told reporters after a House budget hearing that the tax determination was reached in consultation with the state Attorney General’s office.

6 Tennessee minor league baseball teams on ‘hit list’

Randy Boyd’s minor league baseball teams. (Source: RandyBoyd.com)

Major League Baseball wants to sever 42 minor league teams’ ties with parent clubs, including six in Tennessee, the New York Times reports.

The Tennessee teams on the so-called “hit list” are:

  • Chattanooga Lookouts, Double-A, Cincinnati Reds.
  • Elizabethton Twins, Rookie, Minnesota Twins.
  • Greeneville Reds, Rookie, Cincinnati Reds.
  • Jackson Generals, Double-A, Arizona Diamondbacks.
  • Johnson City Cardinals, Rookie, St. Louis Cardinals.
  • Kingsport Mets, Rookie, New York Mets.

Instead of being stocked with players and coaches from their respective parent clubs, those teams would become part of a lower-tier “Dream League” made up of mostly undrafted or released players.

Greenville, Johnson City, and Kingsport, three teams playing in the Appalachian League, are owned by interim University of Tennessee President Randy Boyd. A four team, the Double-A Tennessee Smokies of Sevierville, would be unaffected by the change. The team is affiliated with the Chicago Cubs.

Also avoiding the overhaul are the state’s two Triple-A team, the Memphis Redbirds (St. Louis Cardinals) and the Nashville Sounds (Texas Rangers).

The Times reports notes that many of the the affected teams have long baseball histories and traditions. The story includes this detail:

Officials in Elizabethton, Tenn., population 14,000, faced a choice a couple of years ago. They could either renovate the police station or meet a condition of the Minnesota Twins: to spend more than $1 million modernizing the clubhouse at the city-owned ballpark, home to its beloved minor league affiliate.

They deferred the police station renovation, and now the Elizabethton Twins have a huge locker room, an upgraded kitchen, a training room, and space to relax and study game video.

House Speaker Sexton won’t pursue Byrd ouster following AG opinion (UPDATED)

Rep. David Byrd (R-Waynesboro) and Rep. Sheila Butt (R-Columbia) attend a committee meeting in Nashville on March 28, 2018. (Erik Schelzig, Tennessee Journal)

House Speaker Cameron Sexton says he won’t move to oust a Republican state lawmaker following an attorney general’s opinion advising against it.

“After consulting with House leadership and our committee chairmen, we will heed Attorney General Slatery’s advice and not move forward,” Sexton said in a release.

State lawmakers may have the power to oust Rep. David Byrd (R-Waynesboro) for allegations of sexual misconduct with teenage basketball players before he was elected to office, but “historical practice, sound policy considerations, and constitutional restraints counsel against” such a move, Attorney General Herbert Slatery said in a legal opinion released Wednesday.

The state constitution provides for each chamber of the General Assembly to “determine the rules of its proceedings, punish its members for disorderly behavior, and with the concurrence of two-thirds, expel a member.”

That language has been unchanged since the adoption of the 1796 constitution, but Slatery notes that state courts “yet to construe the meaning of ‘disorderly behavior’ or the scope of the expulsion clause more generally.”

Much of the opinion appears to hinge on whether lawmakers need to find their colleagues guilty of disorderly behavior in order to expel them. Others have argued that the provisions dealing with punishment for disorderly conduct and expelling members are not linked, and that the House and Senate can oust any of their members for any reason the choose so long as they can get a two-thirds vote.

Slatery concludes:

  1. There is no federal or Tennessee historical precedent of expelling a member other than for conduct that occurred while the member was in office. Historically, the power of expulsion has been used very sparingly and then only to punish a member for “disorderly conduct” that occurred during the member’s current term in office.
  2. Sound policy considerations counsel that the power of expulsion should rarely if ever be exercised when the misconduct complained of occurred before the member’s election and was generally known to the public at the time of the member’s election. Because expulsion under those circumstances essentially negates the choice of the electorate, the House must weigh its interests in safeguarding the public trust in its institutional integrity against the deference and respect owed to the choice of the electorate before it expels the member. That is, in light of the particular facts and circumstances of each case “the [House] must balance its interest in ‘assur[ing] the integrity of its legislative performance and its institutional acceptability to the people at large as a serious and responsible instrument of government,’
    with a respect for the electoral decisions of the voting public and deference traditionally paid to the popular will and choice of the people.” Expulsion of Members of Congress, CRS Report 7-5700 at 13 (quoting Powell v. McCormack, 395 F.2d 577, 607 (D.C. Cir. 1968)  (McGowan, J., concurring)).
  3. In any event, since even the broadest legislative power is subject to state and federal constitutional restraints, the expulsion power may be exercised only to the extent consistent with the voters’ constitutional right to choose their representatives and with the member’s state and federal constitutional rights, such as the right to due process and equal protection.

Legislators seek law change over recruiting flap at University of Memphis

State Sen. Brian Kelsey (R-Germantown) and Rep. Antoni Parkinson (D-Memphis) want to change state law to address a college basketball recruiting crisis brewing at the University of Memphis.

Here’s the full release:

Nashville, Tenn. – Senator Brian Kelsey’s (R-Germantown) bipartisan bill to allow college athletes to profit from their likeness will also prohibit public universities from discriminating against players based on coach donations to universities.

“We want to encourage our former players to donate to our public universities to help keep college tuition affordable,” Sen. Kelsey said. “Discouraging these donations is not worth appeasing an organization that does nothing but take down banners from our rafters. The NCAA is an archaic organization whose time has come and gone. It is up to the athletic conferences to create a new paradigm, as they did with the college football championship.”

In May, the Senate unanimously approved Sen. Kelsey’s resolution calling for the state’s public universities to oppose the NCAA prohibition on compensation for college athletes and instructing Tennessee’s nine public universities to work with their respective athletic conferences in opposition to the rules and to implement a system which is fair to college athletes. 

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Sethi names veterans coalition

Vanderbilt surgeon Manny Sethi has named a veterans coalition supporting his bid for the Republican nomination in the U.S. Senate race.

“This group of distinguished Tennessee leaders represent generations of Tennesseans who have dedicated themselves in service to us and our great nation. I am so grateful to have these heroes on my team,” Sethi said in a statement.

The chairmen of the coation are retired Army Gen. Gary Harrell, retired Air Force Maj. Gen. Carl Schneider, and retired Army Maj. Gen. Jackie Dan Wood.

Sethi’s military platform includes:

  1. Fixing our broken Veterans Affairs system, and ensure that veterans are able to obtain healthcare without fighting through bureaucracy.
  2. Improving rapid access to mental health treatment for our veterans.
  3. Protecting Millington Naval Base, Arnold Air Force Base, Fort Campbell, and other military facilities from cuts or closures.

The membership list of Sethi’s coalition follows:

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Map shows stark divisions in Knoxville mayor’s race

Check out this map of election results in Knoxville’s mayoral runoff. It illustrates the stark partisan divisions within the city, with Democrat Indya Kincannon taking most of the core of the city, and Republican Eddie Mannis capturing most in outlying areas.

Lee announces $25M in vocational education grants

Gov. Bill Lee’s administration is announcing $25 million in grants under his vocational education initiative, a major part of the Republican’s campaign platform last year

Here’s the release:

NASHVILLE, Tenn. – Today, Tennessee Governor Bill Lee announced projects receiving funding through the Governor’s Investment in Vocational Education (GIVE) program which prioritizes learning opportunities in rural counties and enhances career and technical education statewide.

“We are proud to work with the General Assembly to pass the GIVE initiative and expand career and technical education for Tennessee students,” said Lee. “These funds directly support our workforce development efforts in distressed and at-risk counties and are a key component of our strategy to prioritize rural Tennessee.”

Earlier this year, the General Assembly approved $25 million in the governor’s budget to incentivize collaboration at the local level among stakeholders such as higher education institutions, K-12 and economic development partners.

The award process began in June when the Tennessee Higher Education Commission issued a competitive Request for Proposals (RFP). Each proposal was required to show local data that clearly identified both workforce needs and a sustainable plan utilizing equipment, work-based learning experiences, or recognized industry certifications to increase the state’s competitiveness and postsecondary attainment goals.

The program prioritized economically distressed and at-risk counties in the RFP process. The 28 funded projects will serve all economically distressed counties and 18 of the 24 at-risk counties.

The Appalachian Regional Commission index of economic status categorizes counties as at-risk or distressed based upon their three-year average unemployment rate, per capita market income, and poverty rates. Distressed counties rank among the 10% most economically distressed in the nation while at-risk counties rank between the bottom 10% and 25% of the nation’s counties.

The full list of GIVE projects and recipients:

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