budget

Lee’s budget amendment is out. Here’s what’s in it.

Gov. Bill Lee delivers his State of the State Address on Jan. 31, 2022. (Erik Schelzig)

Gov. Bill Lee’s annual budget amendment is out, marking the beginning of the end of the legislative session. As first reported by Axios on Monday, the plan includes issuing up to $500 million in bonds in support of a new domed stadium in Nashville to replace the current home of the NFL’s Tennessee Titans (initial debt service would be up to $55 million).

According to slides presented by the administration, the majority of the funding for the new stadium would come from Metro Nashville and private sources.

Also in the governor’s plan:

— $80 million for a one-month mortarium on the state’s 4% sales tax on groceries.

— $66 million for air carrier support and $12 million for general aviation.

— $20 million to reduce the professional privilege tax on brokers, lawyers, doctors, and lobbyists from $400 to $300 per year.

— $20 million for riverfront development in Memphis.

— $17 million in grants to prepare a Nashville track for a NASCAR race.

— $15 million for voting machines with a paper trail.

— $10 million for the National Civil Rights Museum in Memphis.

Lee details amendments to annual spending plan

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

Gov. Bill Lee is making his end-of-session amendment to the state’s annual spending plan. Here’s a release from the governor’s office detailing the proposal:

NASHVILLE, Tenn. – Today, Tennessee Governor Bill Lee announced his amendment to the proposed Fiscal Year 2021-2022 budget.  

The amendment includes $580 million in available funds as a result of fiscal prudence. These funds will be invested in strategic long-term projects that focus on a return to pre-pandemic priorities and deliver critical services while not growing government. The budget amendment also includes nearly $100 million for a two-week sales tax holiday on all grocery sales, purchases at restaurants, and all prepared food. 

“This proposal supports Tennesseans by strategically investing in long-term initiatives that will move our state forward,” said Gov. Lee. “I’m especially proud to provide tax cuts to get money back to Tennesseans to encourage them to frequent industries that have been disproportionately and negatively impacted this year.”  

This amendment reflects the Governor’s priorities and includes record investments in broadband, economic development, safety and law enforcement, increasing reserves, and education.  

“Due to Tennessee’s strong financial leadership, Tennessee has been ranked number one in fiscal stability by US World News & Report in both 2019 and 2020,” said Commissioner of Finance and Administration Butch Eley. “Our prudent and cautious approach has established Tennessee as a leader in fiscal conservatism, and we thank the General Assembly for their partnership in these efforts.” 

Notable investments in the FY 21-22 budget amendment include:   

Tax Cuts 

  • $25M for a two-week sales tax holiday for groceries 
  •  $75M for a two-week sales tax holiday for restaurants and all prepared food 
  •  $16M to reduce the professional privilege tax by 25 percent

K-12 Education and Mental Health 

  • $250M trust fund to assist K-12 families who are facing significant mental health issues in the wake of COVID-19 
  • $18.5M to transportation to students for summer learning  
  • $2M to provide an additional 4 high quality, grade aligned books and resources over the summer for the 88,000 rising first graders in Tennessee 

Higher Education 

  • $79M to eliminate current TCAT waitlists statewide, currently at 11,400 students 
  •  $25M to Tennessee Promise to permit increases in the Hope Scholarship  
  • $4M to increase Agriculture Extension Agents at University of Tennessee and Tennessee State University  

Rural & Agriculture  

  • $50K to support the state fair (in addition to the $250,000 recurring in originally proposed budget for total of $300K and $5M non-recurring)  
  • $3M to provide additional funding for rural projects as part of the Rural Economic Opportunity Fund (in addition to $21M in originally proposed budget for total of $24M)   

Safety 

  • $500K to provide gun safety programming for children  
  • $17M to replace radios for state troopers   
  • $18M to improve the statewide disaster communications system  
  • $680K to add 4 new Homeland Security Agents  

Economic Development 

  • $5M to provide grants to restore and preserve historic downtowns across the state  
  • $3M to increase employment in Tennessee through the Small Business Innovation program 

Transportation 

  • $3M recurring and an additional $10M nonrecurring to provide additional direct funding to airports across Tennessee through the Transportation Equity Fund (total $50M investment in air infrastructure) 

To view the full budget amendment, click here.

Lee gives preview to annual budget address

Gov. Bill Lee is giving a preview to his annual State of the State address in a video released Monday morning.

Democrats on Friday made their prebuttal, which can be viewed here:

Here are some excerpts from Lee’s speech issued from a press release sent Monday:

Budget and Legislative Priorities

“We have conservative proposals for your consideration that will reduce crime, support strong families and get our economy back up to speed, especially in rural Tennessee. Our proposals honor the individual yet benefit the state as a whole, and they will leave us well-positioned for the recovery that has already begun across our state.”

Celebrating 225 Years of Statehood

“We will celebrate that since 1796 the ordinary has made us extraordinary and remember that generations before us have not just weathered but excelled in the cycle of perseverance, character and hope. I will once again travel to all 95 counties to reach the unsung people and places that make our state who she is.”

Vision for K-12 Education

“The reason we place so much focus on education is because students should be prepared for productive lives, not just the latest standardized test. I recently had a conversation with Commissioner Schwinn that the mission of the Department of Education should be simple: Students should be prepared for life beyond the classroom.”

Rural Investment

“Whether it’s running a small business, accessing virtual learning or accessing health care via telemedicine, slow internet speeds have many in rural Tennessee left at a disadvantage. A significant, one-time investment, combined with significant private investment, will get broadband to just about every community in Tennessee, and tonight, that’s exactly what I’m proposing.”

Pro-Life & Pro-Family

“But being pro-life isn’t just about defending the unborn and we must also think about how to use our passion for this issue to improve the lives of struggling families. My administration is preparing a number of new initiatives that we’ll announce throughout the year that will make Tennessee a national leader in foster care and adoption.”

Here is the schedule for your 2020 Tennessee state budget hearings

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

Gov. Bill Lee’s administration is holding annual budget hearings with the heads of Tennessee agencies next week. The hearings will be live-streamed at www.tn.gov.

Here’s the schedule of events.

Monday, November 9

9:30-10:00 a.m. – Opening presentation from Department of Revenue and Dr. Bill Fox regarding Tennessee’s financial outlook.

10:00-10:30 a.m. – Revenue

10:45-11:30 a.m. – Health

1:00-1:15 p.m. – Labor and Workforce Development

1:45-2:45 p.m. – Economic and Community Development

3:00-3:30 p.m. – Military / TEMA

3:45-4:15 p.m. – Tourist Development

Tuesday, November 10

9:30-10:30 a.m. – Education

10:45-11:45 a.m. – Higher Education

1:00-2:00 p.m. – TennCare

2:15-3:15 p.m. – Children’s Services

3:30-4:30 p.m. – Mental Health and Substance Abuse Services

Thursday, November 12

9:30-10:30 a.m. – Intellectual and Developmental Disabilities

1:00-2:00 p.m. – Human Services

2:15-3:15 p.m. – Correction

3:30-4:00 p.m. – Veterans Services

Friday, November 13

9:30-10:30 a.m. – Safety and Homeland Security

10:45-11:15 a.m. – TBI

11:30 a.m. -12:00 p.m. – Finance & Administration

1:00-1:45 p.m. – General Services

2:00-2:45 p.m. – Human Resources

Monday, November 16

9:30-10:00 a.m. – Financial Institutions

10:15-10:45 a.m. – Commerce and Insurance

11:00-11:30 a.m. – Agriculture

1:30-2:15 p.m. – Transportation

2:30-3:15 p.m. – Environment and Conservation

3:30-4:00 p.m. – Education Lottery Corp.4:00 – Governor Bill Lee Media Availability

House GOP picks an unusual bargaining chip in budget debate: Retaining the Hall income tax

Speaker Cameron Sexton (R-Crossville) presides over a House floor session on June 1, 2020. (Erik Schelzig, Tennessee Journal)

For years, the contest among legislative Republicans was over who could move to eliminate the state’s Hall Income Tax the quickest. Now it appears House Republicans want to hold on to the last vestige of the tax on earnings from stocks and bonds for another five years.

The Daily Memphian‘s Sam Stockard reports the House plan would keep the 1% tax on the books until 2025, pulling in about $49 million per year as the state scrambles to make up for revenues lost during the coronavirus pandemic.

The Senate wants to keep the levy on it’s current path toward expiration on Jan. 1.

Look no further than House Speaker Cameron Sexton (R-Crossville) to illustrate the political importance of doing away with the Hall tax. As Sexton told the told the Crossville-Cumberland County Chamber of Commerce in 2011. ”

We don’t want to be a state that penalizes people for investments or for saving … It’s also bad policy. We shouldn’t penalize people for saving for the future.

Will Sexton really want to have to explain to constituents — a large portion of whom are retirees — why his first session as House speaker included a resurrection of the hated Hall tax? Probably not. Many political observers see the Hall tax item as a bluff by the House to try to negotiate concessions out of the Senate.

The question is whether House Republicans are really just negotiating with themselves.

State sales tax collections drop $106M in first full month of coronavirus

Tennessee’s sales tax collections decreased by $106 million in the first full month of the coronavirus pandemic compared with the same month last year, a $13% drop.

General fund revenues missed projections by $144 million in May and have fallen short of expectations by $308 million through the first 10 months of the budget year.

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

NASHVILLE – Tennessee Department of Finance and Administration Commissioner Butch Eley today announced that revenues for May were $981.9 million, which is $197.3 million less than the budgeted monthly revenue estimate. State tax revenues were $184.7 million less than May 2019 and the overall revenue for the month represented a negative growth rate of 15.83 percent.

“May sales tax collections represent consumer spending that occurred during April, when Tennesseans were staying at home and many businesses were closed in response to the COVID-19 pandemic,” Eley said. “While sales of autos, apparel, furniture and restaurants dropped extensively, building materials and food stores sales experienced considerable growth. The state also realized large drops in gasoline tax receipts, motor vehicle title and registration taxes and mixed drink revenues.

“We responded quickly to develop plans that would mitigate revenue shortfalls at the outset of the pandemic and now the work begins to bring spending in line with what economists predict we will experience. We are encouraged about the improving employment numbers in Tennessee and while we hope for solid recovery trends, we are preparing for a longer and slower growth period, managing our budget conservatively as we work to help all of Tennessee recover from this unprecedented economy.”

As previously noted last month, the Tennessee Department of Revenue extended the due date for certain taxes on April 6, 2020 and the extensions can be found on their website at https://www.tn.gov/revenue/news/2020/3/31/tennessee-extends-certain-tax-deadlines-due-to-covid-19.html.

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Lee outlines budget cuts due to economic impact of coronavirus

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

Gov. Bill Lee’s office says $500 million in cuts will be needed for the current budget year and $1 billion for the fiscal year beginning July 1. Finance Commissioner Butch Eley said the administration plans to balance the budget using reserves over three years.

The state plans to create a voluntary buyout program for state employees, reduce spending on building projects and maintenance, and dial back spending in all state agencies. But officials have abandoned previous considerations of suspending this year’s back-to-school sales tax holiday and delaying the end of the Hall tax on income from stocks.

“We will balance our budget each year while providing important services to our citizens,” Eley said in a release. “We’re adjusting to the immediate impact of the pandemic on state revenues of up to $1.5 billion through the end of the next fiscal year, planning for the worst and hoping for the best.

Here’s a release from the governor’s office.

NASHVILLE, Tenn. – Gov. Bill Lee’s administration today outlined new spending plans for state government that reflect significant revenue reductions due to the economic impact of COVID-19.

Department of Finance and Administration Commissioner Butch Eley presented state lawmakers with the revised budget plans for the current fiscal year, as well as FY 2020-21, which begins July 1, 2020, and a framework for the following fiscal year, 2021-22.

“We will balance our budget each year while providing important services to our citizens,” Eley said. “We’re adjusting to the immediate impact of the pandemic on state revenues of up to $1.5 billion through the end of the next fiscal year, planning for the worst and hoping for the best.

“Tennessee has a history of being one of the best managed states in the nation, and we intend to work with the Legislature to continue that tradition, maintaining low taxes and preserving reserves while achieving efficiencies in operations and continuing to serve our citizens.”

In March, the administration and the General Assembly agreed on $397 million in recurring reductions at the onset of COVID-19, and the administration is proposing an additional $284 million in reductions for FY 20-21, bringing the total to $681 million in reductions. Hiring and expenditure freezes have also been in place since March. The state will close the current fiscal year on June 30 with unbudgeted non-tax revenues, agency savings and reserves.

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Lee: ‘Metrics’ will be available for lawmakers to plan budget cuts

Gov. Bill Lee speaks at an event in Nashville on April 2, 2019. (Erik Schelzig, Tennessee Journal)

Gov. Bill Lee says lawmakers will have the revenue data available to plan for further budget cuts when they return into session on June 1.

While the full set of tax collection information usually isn’t released until the middle of the month, the General Assembly won’t have to wait that long to make adjustments to the state’s annual spending plan, the governor told the Daily Memphian over the weekend.

“It’s a challenge to project, but there are metrics which you use to make projections,” Lee said.

The governor said several state economists are assembling data and the State Funding Board will meet again to make recommendations before the legislative session resumes.

General fund revenues fell $651M short of projections in April

Tennessee general fund revenue collections in April fell $651 million short of the projections established before the the coronavirus pandemic wrought havoc on the state’s economy.

Corporate franchise and excise taxes fell $487 million short of estimates, though a large portion of that may be explained by the governor’s decision to delay the filing deadlinefrom April to July. Sales tax revenues were $61 million less than projected in the month.

April revenue collections reflect economic activity in March, meaning the full budget impact of the pandemic won’t likely reveal itself until next month’s figures are released.

Here is the release form the state Department of Finance & Administration:

NASHVILLE – Tennessee Department of Finance and Administration Commissioner Butch Eley today announced that revenues for April were less than the monthly revenues from the previous year. Overall state revenues for April were $1.3 billion, which is a negative growth rate of 39.75 percent compared to last year and $693.8 million less than the state budgeted.

“The signs of economic downturn due to the COVID-19 pandemic have begun to appear in Tennessee’s April tax receipts,” Eley said. “April sales tax revenues, reflecting March taxable sales activity, were weakened as the state began to withdraw from its usual patterns of consumer spending by mid-month.  Franchise and excise tax receipts, along with Hall income and business taxes are also notably reduced due to filing extensions that will allow individuals and businesses to report their taxable activity later in the year.

“It has been 10 years since an economic downturn has impacted state revenues. The state’s large monthly revenue surpluses built up throughout the beginning of the year will now be tested as the pandemic’s impact begins to erase those gains.  Yet, we remain committed to keeping the state’s budget in balance despite the current challenges.”

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House, Senate pass barebones budget

The state Capitol has been closed to visitors since March 16, 2020. (Erik Schelzig, Tennessee Journal)

Both chambers of the Tennessee General Assembly have passed a barebones budget for the upcoming fiscal year. The spending plan projects no economic growth and required the deep reductions from Republican Gov. Bill Lee’s original proposal.

Democratic efforts to eliminate about $40 million to start up the governor’s school voucher program failed.

Lee was on hand to watch the the budget debate in the House and Senate.