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State Rep. Mike Carter passes away

Rep Mike Carter is sworn in to the 111th General Assembly in Nashville on Jan. 8, 2019. (Erik Schelzig, Tennessee Journal)

State Rep. Mike Carter, whose refusal to sign what he called a “predetermined” ethics report helped hasten Rep. Glen Casada’s departure as House speaker, has died of pancreatic cancer.

Carter, an Ooltewah Republican, made his own bid for speaker after Casada announced he would step down in 2019, but the contest was won by Rep. Cameron Sexton (R-Crossville).

Carter’s cancer was discovered after he was hit by a heavy bout of COVID-19 last year. He missed most of the recently-completed legislative session while undergoing treatment.

Tennessee revenue collections obliterate estimates by $600M in April

The state Capitol on March 16, 2020. (Erik Schelzig, Tennessee Journal)

Tennessee’s general fund revenue collections were nearly $600 million above estimates in April, bringing the state’s surplus to $1.9 billion through the first nine months of the budget year.

Sales tax revenues beat projections by $285 million in April and were 32% higher than the same month last year. Collections reflect economic activity in the previous month.

Online sales tax collections represent 46.5% of all sales tax growth in the state since the beginning of the budget year.

Corporate franchise and excise taxes were $346 million more than expected in April, with a growth rate of 320% compared with last April.

Here’s the full release from the Department of Finance:

Tennessee Department of Finance and Administration Commissioner Butch Eley today announced that revenues for April exceeded the monthly revenues from the same month last year, which was at the beginning of the pandemic’s impact in Tennessee. Overall state revenues for April were $2.5 billion, which is $1.3 billion more than April 2020, and $596.7 million more than the budgeted estimates. The growth rate for all taxes in April was 90.90 percent.

“It’s important to remember that March and April of 2020 were the only two months where the state experienced a negative growth rate for collections during the pandemic, so in an effort to make realistic analysis, we’ve looked at collections for April 2019,” Eley said. “When we compare April of this year to 2020, the growth is 90.90 percent but compared to April 2019, the April growth rate for all taxes is 15.01 percent.

“Sales tax collections continue to reflect strong consumer activity and increased inflationary pressures that are beginning to appear in the cost of goods sold, as reflected in the latest CPI report. State corporate tax revenues greatly outperformed budgeted expectations as well, with many local companies experiencing a growth in earnings despite difficult circumstances. We should also keep in mind that April income tax receipts were lower than budgeted estimates due to a filing extension that moves the tax deadline into next month.

“Prior year month-to-month tax receipt comparisons for this month and the remainder of the year will appear distorted as periods of economic stoppage from the pandemic and the movement of multiple tax filing dates affect reported growth rates.”

On an accrual basis, April is the ninth month in the 2020-2021 fiscal year.

General fund revenues exceeded budgeted estimates by $599.9 million, while the four other funds that share in state tax revenues were $3.2 million less than the estimates.

Sales tax revenues were $284.9 million more than the estimate for April, 40.20 percent more than April 2020, and 31.78% more than April 2019. April sales tax revenues reflect retail business activity that occurred in March. For nine months, revenues are $1.2 billion higher than estimated. The year-to-date growth rate for nine months is 10.60 percent. Remote sales and marketplace facilitator laws contributed $54.9 million to sales tax receipts in the month of April. For nine months, online sales tax revenues represent 46.5 percent of all sales tax growth to the state.

Franchise and excise tax revenues combined were $346 million higher than the budgeted estimate in April, and the growth rate compared to April 2020 was positive 319.30 percent. For nine months, revenues are $765 million more than the estimate and the year-to-date growth rate is 47.22 percent.

Gasoline and motor fuel revenues for April decreased by 0.75 percent compared to April 2020 and they were $2.4 million less than the budgeted estimate of $104.7 million. For nine months revenues are less than estimated by $18.8 million.

Motor vehicle registration revenues were $4.7 million more than the April estimate, and on a year-to-date basis they are $13.6 million more than estimates.

Tobacco tax revenues were $1.5 million more than the April budgeted estimate of $17.5 million. For nine months, they are $9.5 million less than the budgeted estimate.

Hall income tax revenues for April were $58.5 million less than the budgeted estimate. A filing extension was granted for income taxes moving the filing date from April 15, 2021 to May 17, 2021.  (See: https://www.tn.gov/content/dam/tn/revenue/documents/notices/general/gen2102.pdf)

Privilege tax revenues were $14.2 million more than the April estimate, and on a year-to-date basis, August through April, revenues are $72.4 million more than the estimate.

Business tax revenues were $7.9 million more than the April estimate. For nine months, revenues are $35 million more than the budgeted estimate.

Mixed drink, or liquor-by-the-drink, taxes were $1.2 million less than the April estimate, and on a year-to-date basis, revenues are $24.7 million less than the budgeted estimate.

All other taxes were less than budgeted estimates by a net of $0.4 million.

Year-to-date revenues, August through April, are $2 billion more than the budgeted estimate. The growth rate for eight months is 14.72 percent. General fund revenues are $1.9 billion more than the budgeted estimate and the four other funds are $66.2 million more than estimated.

The budgeted revenue estimates for 2020-2021 are based on the State Funding Board’s consensus recommendation of November 26, 2019 and adopted by the second session of the 111th General Assembly in June 2020. Also incorporated in the estimates are any changes in revenue enacted during the 2020 session of the General Assembly. These estimates are available on the state’s website at https://www.tn.gov/content/tn/finance/fa/fa-budget-information/fa-budget-rev.html.

Lottery: Disciplinary action against Action 24/7 is ‘null and void’

The Tennessee Education Lottery Corp. has written a letter declaring its unprecedented suspension of the Action 24/7 sports gaming license to be “null and void.”

The letter comes after a judge in April reversed the Lottery board’s decision to halt all betting with Action 24/7 after it self-reported instances of debit card fraud on its platform. The sportsbook is run by executives of short-term loan company Advance Financial.

The letter acknowledges Action 24/7 has proper internal controls and that there is no active investigation being conducted into its practices. Action 24/7’s license is unrestricted, and it can freely transact with vendors and parties, according to the letter.

“The temporary suspension of Action 24/7’s License, and the disciplinary action undertaken… related to the allegations presented by the TEL Staff to the Board at the Board’s March 19, 2021 meeting, are null and void,” the letter says.

Read the whole letter here:

May 12, 2021

RE: Status of the Sports Gaming Operator License of Tennessee Action 24/7, LLC

To whom it may concern:

This letter concerns the status of the Sports Gaming Operator License (“License”) of Tennessee Action 24/7, LLC (“Action 24/7”). On March 18, 2021, Action 24/7’s License was temporarily suspended on the basis of alleged deficiencies involving Action 24/7 internal controls. On March 19, 2021, at an emergency meeting of the TEL Board (“Board”), the Board ratified the temporary suspension of Action 24/7’s License. On March 26, 2021, the Chancery Court of Davidson County, Tennessee, ordered TEL to reinstate Action 24/7’s License, and TEL reinstated Action 24/7’s License that same day.

By this letter, the Board, the Spo1is Wagering Committee of the Board (“SWC”), and the TEL Staff hereby represent and confirm that, as of the date of this letter:

1. There is currently no active investigation of Action 24/7 being conducted by any of the Board, the SWC, or the TEL Staff regarding the allegations presented by the TEL Staff to the Board at the Board’s March 19, 2021 meeting or the adequacy of Action 24/7’s internal controls.

2. Action 24/7’s internal controls and Action 24/7’s implementation thereof meet the requirements found in the Minimum Internal Control Standards.

3. Action 24/7’s License is fully effective; there are no restrictions on Action 24/7’s License; and Action 24/7 is in good standing with TEL.

4. The temporary suspension of Action 24/7’s License, and the disciplinary action undertaken by any of the Board, the SWC, or the TEL Staff related to the allegations presented by the TEL Staff to the Board at the Board’s March 19, 2021 meeting, are null and void.

5. Action 24/7 is entitled to the full use and benefits of its License, including, but not limited to, the ability to freely transact with other TEL licensees and vendors or other parties.

Sincerely,
/signed/
Alonda W. McCutcheon
Executive Vice President & General Counsel

Gov. Lee announces withdrawal from feds’ pandemic unemployment programs

Gov. Bill Lee speaks to reporters outside the War Memorial Auditorium in Nashville on Jan. 19, 2021. (Erik Schelzig, Tennessee Journal)

Gov. Bill Lee announced Tuesday that Tennessee will withdraw from the federal government’s enhanced unemployment benefit program during the pandemic, citing the more than 250,000 unfilled positions in the state.

Democrats are panning the decision as unfair to people who have lost their jobs.

“More than 200,000 Tennesseans have been laid off since Jan. 1 and the Lee administration just made the irresponsible decision to punish their families in a time of need,” said Senate Democratic Caucus Chair Raumesh Akbari. “That’s not leadership, it’s legislative violence. This callous decision highlights just how out of touch this administration is with the lives of everyday Tennesseans.”

Here’s the full release from the governor’s office:

NASHVILLE, Tenn. – Today, Tennessee Governor Bill Lee announced the end of all federally funded pandemic unemployment compensation programs in Tennessee, effective July 3.

“We will no longer participate in federal pandemic unemployment programs because Tennesseans have access to more than 250,000 jobs in our state,” said Gov. Lee. “Families, businesses and our economy thrive when we focus on meaningful employment and move on from short-term, federal fixes.”

Gov. Lee’s letter to the U.S. Department of Labor can be viewed here.

Federal pandemic unemployment programs set to end on July 3 include the following:

·         Federal Pandemic Unemployment Compensation (FPUC), which provides for an additional $300 weekly payment to recipients of unemployment compensation

·         Pandemic Unemployment Assistance (PUA), which provides benefits for those who would not usually qualify, such as the self-employed, gig workers and part-time workers

·         Pandemic Emergency Unemployment Compensation (PEUC), which provides for an extension of benefits once regular benefits have been exhausted

·         Mixed Earner Unemployment Compensation (MEUC), which provides an additional $100 benefit to certain people with mixed earnings

Unemployment claimants in Tennessee have been required to complete three weekly job searches in order to remain eligible for benefits since Oct. 4, 2020.

Any weeks filed before July 3 that are eligible under federal program requirements will continue to be processed.

The Tennessee Workforce Development System stands ready to help Tennesseans return to the workforce. Career specialists are available to help job seekers match with new employment opportunities at more than 80 American Job Centers across the state. They can work to identify possible training programs that can help an individual change their career pathway or enter an apprenticeship program so they can earn a competitive wage, while they learn a new trade.

The Tennessee Virtual American Job Center, www.TNVirtualAJC.com, allows Tennesseans to research different programs that can help remove barriers to employment so they can more easily reenter Tennessee’s workforce.

As federal pandemic unemployment compensation ends in Tennessee, the state encourages claimants to search for work at www.Jobs4TN.gov, which currently has over 250,000 active job postings of all skill levels. 

Democrat Potts won’t run for state House again next year

House members attend a floor session in Nashville on Jan. 12, 2021. (Erik Schelzig, Tennessee Journal)

State Rep. Jason Potts (D-Nashville) won’t seek another term in the General Assembly next year, The Tennesseans Natalie Allison reports. Potts missed 21 of 34 legislative days this session, telling the paper the job doesn’t pay enough, that he wants to spend more time with his young family, and that he was “discriminated against” by the Republican supermajority.

Potts is the second lawmaker to say he won’t be returning next year. Republican Rep. Bruce Griffey of Paris has said he wants to run for a judicial seat or district attorney general in 2022. Several other lawmakers are expected to step aside with redistricting looming.

“I’m not going to run again when I’m discriminated against every day,” Potts told the paper about his inability to get legislation passed.

House Speaker Cameron Sexton (R-Crossville) rejected Potts’ assertion as “utter nonsense.”

“In order to pass legislation, you should be in the General Assembly to actually run a bill,” Sexton said.

FBI agents interviewed lawmakers throughout session, Zachary says Casada promoted Phoenix

Federal agents meet with legislative staffers outside the office of Rep. Glen Casada (R-Franklin) in Nashville on Jan. 8, 2021. (Erik Schelzig, Tennessee Journal)

As first reported in the print edition of The Tennessee Journal, federal agents have been conducting interviews throughout the legislative session of lawmakers who engaged Republican Reps. Glen Casada of Franklin and Robin Smith of Hixson for political consulting work.

As recently as the last day of the session, state Rep. Jason Zachary (R-Knoxville) told colleagues he had spoken to federal agents in his office. Zachary spent $4,408 with vendor Phoenix Solutions (though he misspelled it as “Phenoix Solutions” on his disclosures), the outfit believed to be at the center of the FBI probe.

Several colleagues have said Smith was a vocal advocate for steering more political work to Phoenix Solutions. She and Casada have both declined to say whether they have an ownership stake in the business.

“They did not tell me I couldn’t disclose the information that we discussed,” Zachary explained to Chattanooga Times Free Press reporter Andy Sher following the Journal report, adding “even with my colleagues, I’ve still tried to be very careful about disclosing what we discussed.”

“Everything centered around the investigation with my colleagues, specifically Rep. Casada, Rep. Smith… I did a survey with Glen and it went through the Phoenix Solutions,” Zachary told the paper.

It’s the first time Phoenix Solutions has been publicly linked to Casada, a former House speaker. Others have said they were told to bill the vendor for work done at the behest of his former chief of staff, Cade Cothren, or at the urging of Smith.

Zachary said he didn’t feel he provided any new information to agents “because Glen never pressured me, he didn’t hound me” to use the firm.

Registered in New Mexico in December 2019, Phoenix Solutions ended up receiving $231,000 from Tennessee Republicans in 2020. According to federal tax documents filed with the state, the company was run by a Matthew Phoenix, who at least one state lawmaker said he spoke to on the phone, but none has said to have met in person.

Smith’s attorney, Ben Rose, told the Times Free Press it was “news to us that Zachary, No. 1, has been talking to the FBI and that Zachary was, No. 2, a client of Phoenix. And it certainly didn’t have anything to do with [Smith].” He added, “Our position has been we continue to cooperate with the FBI.”

White House details American Families Plan impact in Tennessee

Democratic President Joe Biden’s administration is breaking down how its American Families Plan would affect each state.

Here is the White House report on Tennessee:

The Need for Action in Tennessee

The American Families Plan is an investment in Tennessee’s children and families – because when American families do well, our nation thrives. The American Families Plan is a once-in-a-generation investment in the foundations of middle-class prosperity: education, health care, and child care. It will help families cover the basic expenses that so many struggle with now, lower health insurance premiums, and continue the American Rescue Plan’s historic reductions in child poverty. It will yield significant economic returns – boosting productivity and economic growth, supporting a larger, more productive, and healthier workforce on a sustained basis, and generating savings to states and the federal government.

HIGHER EDUCATION: Higher education is key to unlocking opportunity in the new economy, but the average cost of a 2-year degree in Tennessee is $4,600 per year. High costs are part of the reason just 60 percent of students in Tennessee are able to complete a postsecondary degree of any kind within 6 years of enrolling, and across the United States, high-minority and high-poverty high schools have seen 9 percent and 11 percent declines in college enrollment, respectively. To make higher education more accessible, the American Families Plan will provide at least two years of free community college to all students, including DREAMers. It will also increase the maximum Pell Grant awards by approximately $1,400 to support the 124,000 students in Tennessee who rely on Pell for their education, and provide grants to increase college retention and completion. In addition, the American Families Plan will provide support to
minority-serving institutions (MSIs) and the students they serve across the country, like Historically Black Colleges and Universities (HBCUs), Tribal Colleges and Universities (TCUs), and Hispanic-serving institutions (HSIs). This includes 12 MSIs in Tennessee.

UNIVERSAL PRE-SCHOOL: Pre-school is critical to ensuring that children start kindergarten with the skills and supports that set them up for success in school. But today, only 40,900 or 25 percent of the 166,000 3- and 4-year-olds in Tennessee are enrolled in publicly-funded pre-school. The American Families Plan will provide access to free, high-quality pre-school to all 3- and 4-year-olds in Tennessee, boosting their educational outcomes and allowing more parents to go back to work. In addition, the American Families Plan will ensure that all employees in funded pre-school programs are paid a $15 minimum wage and provide compensation and benefits comparable to kindergarten educators to those with similar qualifications.

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Gov. Lee declares victory in legislative session

Gov. Bill Lee speaks at a press conference on Tennessee’s coronavirus response in Nashville on March 16, 2020. (Erik Schelzig, Tennessee Journal)

Lawmakers wrapped up their business for the year last night, and Gov. Bill Lee is lauding fellow Republicans who run the General Assembly for their accomplishments.

Here’s the release from the governor’s office:

NASHVILLE, Tenn. – Today, Tennessee Governor Bill Lee marked the close of the 2021 legislative session, which includes the passage of his $42.6 billion budget and full agenda as outlined during his State of the State address in February.

“Lieutenant Governor McNally, Speaker Sexton and the members of the General Assembly have been key partners in reducing crime, supporting strong families and strengthening our economy, especially in rural Tennessee,” said Gov. Lee. “I commend the legislature for their work this session to pass measures that will benefit Tennesseans and continue our reputation for conservative fiscal management.”

“We were presented with many challenges this session and we met each and every one,” said Lt. Gov. McNally (R-Oak Ridge). “We invested in education and kept taxes and debt low. Most importantly, we ensured our state pension system remains fully funded for years to come. This protects our fiscal stability and our state credit rating. I am thankful to Gov. Lee, Speaker Sexton and every member of the General Assembly for their tremendous work on behalf of the people of Tennessee this session.”

“I greatly appreciate Gov. Lee, his administration, Lt. Gov. McNally, the House and the Senate for their continued partnership, which has led to a smooth and incredibly successful legislative session,” said Tennessee House Speaker Cameron Sexton (R-Crossville). “Solutions to improve childhood literacy, our debt-free balanced budget, permitless handgun carry, criminal justice and truth in sentencing reform and preserving our election integrity will continue to move this state forward in a conservative direction. I am proud of these and other achievements that will allow Tennessee to maintain its status as a national leader for all others to follow.”

Gov. Lee’s slate of budget and legislative priorities included initiatives to address criminal justice reform, invest in rural communities, enhance public safety, support families and build on the successes of the special session on education.

Highlights from Gov. Lee’s agenda include the following:

Investing in Rural Tennessee
• Investing a historic $100 million to provide underserved areas across the state with high-speed broadband, which is part of a public-private partnership to incentivize broadband providers to match public dollars
• Dedicating $100 million for local infrastructure grants

Strengthening Tennessee Families
• Providing higher education supports for youth aging out of the foster care system
• Extending coverage for adopted youth to retain TennCare eligibility up to age 18
• Expanding postpartum care for the TennCare population from 60 days to a full year
• Reforming the TANF program to promote economic mobility and improve outcomes for recipients

Supporting Tennessee Students
• Increasing transparency for any foreign investment activity on college campuses
• Expanding access and improving quality of apprenticeship programs
• Investing $250 million in the Mental Health Trust Fund
• Increasing the teacher salary component of the BEP by 4%

Enhancing Public Safety
• Protecting the Second Amendment by extending law-abiding Tennesseans’ constitutional right to carry a handgun
• Stiffening penalties for criminals who steal or illegally possess firearms

Prioritizing Conservative Criminal Justice Reform
• Improving outcomes for formerly incarcerated individuals by increasing transparency in the parole process
• Enhancing practices that support success post-release
• Expanding treatment services and community-based supervision for offenders as alternatives to incarceration

What’s next for the proposed super chancery court?

The state Capitol on March 16, 2020. (Erik Schelzig, Tennessee Journal)

The two chambers of the General Assembly are advancing competing versions of a bill seeking to bypass the chancery court in Nashville as the venue for constitutional challenges. The Senate version, which passed 27-6, would create a new super chancery court made up of three judges elected statewide. The House voted 68-23 on Wednesday to establish a special court of appeals comprised of three judges who would stand for retention elections.

The differing approaches appear destined for a conference committee to try to work out the differences. But it’s unclear where the twain might meet.

The Senate measure is sponsored by Judiciary Chair Mike Bell (R-Riceville), a longtime advocate of popular elections for judges. As is Speaker Randy McNally (R-Oak Ridge) and Finance Chair Bo Watson (R-Hixson). So backing off of the contested election element would be a tough bill to swallow. But after the House decided to go with the appeals court concept, the lower chamber appears locked into the idea replace-retain elections for members of the new bench.

A layer of unease about the bill is that the governor would appoint the members of both versions of the new court, which has led to criticism that he would be able to stack the bench to favor his own legislative initiatives that have either already run into trouble in court, or could do so in the future.

One way to lift that concern would be hold open races for the judicial seats in August 2022 rather than have the new chancellors first be appointed by the governor. But that would only work for the Senate bill, as the House measure by definition involves the appointment of judges.

UPDATE: After extensive closed-door huddling, the Senate has retreated on its demand for electing statewide judges. Under a compromise, the chancellor who lands a legal challenge of constitutional or redistricting matters would be joined by two other chancellors from the remaining two grand divisions to preside over the case.

Coming soon to a political ad near you? Lawmakers approve pay hike for themselves

The House meets on June 1, 2020. (Erik Schelzig, Tennessee Journal)

Tennessee lawmakers have approved a bill to give each of them an extra $3,000 per year. Officially, the money is meant to cover members’ home office expenses. But in practice, there’s no requirement for legislators to document how they spend the money.

The measure was given final approval in the House on Thursday on a 70-12 vote.

“We just cut Tennesseans’ unemployment and now we’re essentially going to give ourselves a pay raise,” said Rep. Jason Hodges (D-Clarksville), who voted against the bill. “Guys, I just don’t think that looks good.”

The measure, which takes effect after the 2022 elections, also ties future increases to the Consumer Price Index, which generally increases about 2% per year. The bill also allows lawmakers to be reimbursed for unlimited round trips to the Capitol and to opt for a higher daily lodging allowance than supplied under the federal government rate of $234 per night.

Legislators are often hesitant about voting to increase their compensation because it makes for easy fodder for challengers’ campaign ads.  

Voting for the bill were Reps. Alexander, Baum, Boyd, Bricken, Calfee, Campbell, Camper, Carr, Carringer, Casada, Cepicky, Cochran, Crawford, Curcio, Darby, Doggett, Eldridge, Faison, Farmer, Gant, Gillespie, Grills, Halford, Hall, Haston, Hawk, Hazlewood, Helton, Hicks G, Holsclaw, Howell, Hurt, Curtis Johnson, Keisling, Lafferty, Lamberth, Leatherwood, Littleton, Love, Lynn, Mannis, Marsh, McKenzie, Miller, Moody, Moon, Ogles, Parkinson, Potts, Powers, Ragan, Ramsey, Reedy, Rudd, Rudder, Cameron Sexton, Jerry Sexton, Shaw, Sherrell, Smith, Terry, Todd, Vaughan, Warner, Weaver, White, Whitson, Williams, Wright and Zachary.

Voting against were Reps. Clemmons, Dixie, Freeman, Hakeem, Hardaway, Harris, Hodges, Gloria Johnson, Mitchell, Powell, Thompson, and Windle.

The Senate version passed 28-2, with the votes against coming from Sens. Campbell and Crowe.