New TNJ alert: A pricey plan to revive the old Legislative Plaza, a new deputy governor, and an interview with Ortagus
_ Planned overhaul of old legislative complex costlier than new one, state to ‘dispose’ of controversial office tower.
_ Legislative roundup: Campbell approved for Supreme Court, standardized test requirement punted in Senate.
_ The outsider’s insider: Butch Eley named top Lee deputy.
_ Congressional races: An interview with Morgan Ortagus after she jumps into the 5th District race with Trump’s endorsement in hand.
Also: David Lillard doubles down on fossil fuel investments, a “mysterious man” walks along the Smokies, battle lines are forming in the Hamilton County mayor’s race, and a very large check arrives in an unmarked envelope.
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Lee names Eley deputy governor
Gov. Bill Lee has named Finance Commissioner Butch Eley as deputy governor. Eley succeeds Lang Wiseman, who left the administration in December.
Here’s the release from the governor’s office:
NASHVILLE, Tenn. – Today, Tennessee Governor Bill Lee announced the appointment of Butch Eley as Deputy to the Governor. Eley will continue serving in his current role as Commissioner for the Tennessee Department of Finance and Administration (F&A) and as a member of Gov. Lee’s cabinet. The position of Deputy Governor was previously held by Lang Wiseman who has returned to the private sector.
“For the past three years, Butch has played a pivotal role in our strong economic recovery and in maintaining Tennessee’s reputation for conservative fiscal management,” said Gov. Lee. “His extensive public and private sector experience will continue to add enormous value as we invest strategically in infrastructure, education and other priorities to serve Tennesseans and support our state’s growth.”
Eley previously served as Chief Operating Officer in the Governor’s office from January 2019 to May 2020, where he led the state’s first four-year strategic planning process. In his subsequent appointment as Commissioner of Finance and Administration, he has developed multiple state budgets and works closely with legislative leaders of the Financial Stimulus Accountability Group (FSAG) to oversee and allocate the influx of federal relief funds provided to Tennessee over the past two years.
Prior to joining the Lee Administration, Eley was a founder and CEO of Infrastructure Corporation of America (ICA). Headquartered in Nashville, ICA was one of the nation’s leading infrastructure asset maintenance management companies with comprehensive asset management contracts throughout the country.
Eley earned his bachelor’s degree and MBA at Belmont University. He and his wife Ginger reside in Nashville.
General fund surplus hits $1.35B through first 8 months of budget year
The state’s general fund surplus reached $1.35 billion in March, the eighth month of the budget year.
Sales taxes, which make up the vast majority of general fund revenues, were $40 million more than projected for the month and have accounted for $941 million of the surplus to date. Corporate franchise and excise taxes were $69 million more than expected in March, and $419 million over estimates for the year.
Here’s the full release from the state Finance Department:
Department of Finance and Administration Commissioner Butch Eley today announced that Tennessee tax revenues exceeded budgeted estimates in March. Overall March revenues totaled $1.26 billion, which is $57.1 million or 4.75 percent more than the state received in March of 2020 and $112.1 million more than the budgeted estimate for the month.
“Most of the growth in March can be attributed to sales and use taxes, corporate taxes and business taxes, which have been strong contributors to revenue growth for most of the year, “ Eley said. “March sales tax revenues, based on February sales tax activity, were positive across all industries except the restaurant and food services industry and apparel and accessories retailers. Additionally, sales tax receipts for the month were supported by approximately $39.7 million from remote sales and marketplace facilitator laws. To date, online sales tax revenues have accounted for about 65.4 percent of all sales tax growth to the state.
“We continue to be pleased with the overall growth in total taxes this fiscal year and we are encouraged at the prospect of future growth as Tennesseans become more comfortable resuming some activities. We are optimistic but cautious in anticipation of revenues in the months ahead.”
On an accrual basis, March is the eighth month in the 2020-2021 fiscal year.
General fund revenues were $115.2 million more than the budgeted estimate while the four other funds that share in state tax revenues were $3.1 million less than the estimates.
Sales tax revenues were $40.4 million more than the estimate for March and were 7.45 percent more than March 2020. For eight months revenues are $940.8 million more than estimated. The year-to-date growth rate for eight months was 7.15 percent.
Franchise and excise tax revenues combined were $69.1 million more than the budgeted estimate in March and the growth rate was 7.54 percent. For eight months, revenues are $419.1 million more than the estimate and the year-to-date growth rate is 4.85 percent.
Gasoline and motor fuel revenues for March decreased by 9.44 percent compared to March 2020 and were $6.3 million less than the budgeted estimate of $87 million. For eight months, fuel tax revenues are below estimate by $16.4 million.
Motor vehicle registration revenues were $2.2 million more than the March estimate, and on a year-to-date basis they are $9 million more than estimates.
Tobacco tax revenues were $1 million more than the March budgeted estimate of $18.6 million. For eight months, revenues are $8 million more than the year-to-date budgeted estimate.
Privilege tax revenues were $2.9 million more than the March estimate. On a year-to-date basis, August through March, revenues are $58.2 million more than the estimate.
Business tax revenues were $6.3 million more than the March estimate. For eight months, revenues are $27.1 million more than the budgeted estimate.
Hall income tax revenues for the month were $0.5 million more than the budgeted estimate. For eight months, revenues closely match the year-to-date budgeted estimate.
Mixed drink, or liquor-by-the-drink, taxes were $2.4 million less than the March estimate, and on a year-to-date basis, revenues are 23.5 million less than the budgeted estimate.
All other taxes were less than budgeted estimates by a net of $1.6 million.
Year-to-date revenues, August through March, are $1.42 billion more than the budgeted estimate. The growth rate for eight months is 4.97 percent. General fund revenues are $1.35 billion more than the budgeted estimate and the four other funds are $69.4 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.
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.
Lee appoints Gibson as chief operating officer
Gov. Bill Lee, bottom left, looks on as his Cabinet takes the oath of office in Nashville on Jan. 19, 2019. (Erik Schelzig Tennessee Journal)
Gov. Bill Lee has named Brandon Gibson as the state’s new chief operating officer. Gibson, a former state appeals judge, previously served as a senior adviser to the governor. She succeeds Butch Eley, who is now the commissioner of the state Finance Department.
“Brandon has been a respected voice both within our administration and across our state,” Lee said in a release. “Her ability to think creatively and bring innovative ideas to fruition will be critical as state government continues to provide services to our customers in new ways during these challenging times. We’re lucky to have a public servant like Brandon in Tennessee and I’m excited for her to get started in this new role.”
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.”
Tennessee implements hiring freeze for state government
The state Capitol was closed to visitors on March 16, 2020. (Erik Schelzig, Tennessee Journal)
New Finance Commissioner Butch Eley has announced a state hiring freeze in a memo to department heads. Exceptions include “mission critical areas necessary for the public welfare.” Promotions, demotions, and transfers within agencies are not covered by the freeze unless they lead to an increase in the employee count. Departments are also instructed to put off equipment purchases not related to the COVID-19 response or work-from-home initiatives
Here’s the full memo sent out late last week:
To: All Agency Heads, Budget Officers, and Human Resources Officers
From: Butch Eley, Commissioner of Finance and Administration
Juan Williams, Commissioner of Human Resources
Date: April 23, 2020
Subject: Financial Management Policy
The economic effects of the worldwide public health crisis brought on by COVID-19 will ripple through the state’s economy and have a negative impact on the state budget. Prudent financial management therefore requires that each agency begin to restrain discretionary spending for the balance of fiscal year 2019-2020 and until further notice. Effective immediately, state agencies shall adhere to the following financial management policies.
- Hiring Freeze – A hiring freeze is imposed on vacant positions. Exceptions will be allowed in mission critical areas necessary for the public welfare and for the welfare of persons under care or custody of the state. Approval of a separate freeze exception justification letter by the Commissioner of Human Resources is required before filling any vacant position, unless blanket freeze approval is granted by the Commissioner of Human Resources for the two categories specified above. The hiring freeze does not apply to promotions, demotions, and transfers within an agency, provided that there is no increase in the employee count within the agency as a result of such transactions.
- Temporary Services Contractual Services – The hiring freeze also is imposed on hiring of temporary services workers through the statewide temporary services contract. The provisions of item 1 above shall apply as to exceptions and the process for approval.
- Equipment Purchases – A freeze is imposed on equipment purchases not necessary for the state’s COVID-19 response and working from home initiative. Agency heads should review equipment purchases in process and those planned for later in the current and next fiscal years to determine if they are required to address an emergency or otherwise essential circumstance. Justification of equipment purchase requests requiring approval of the Commissioner of Finance and Administration or the Budget Office should be limited to the circumstances stated in this paragraph and must be accompanied by a justification letter from the agency head. The justification letter should be addressed to the Commissioner of Finance and Administration and be submitted to the Budget Office at the time the requisition or purchase order is submitted.
- Other Program Requirements — Agencies must manage the expenditure of all other program funds as conservatively as possible. Agency heads should restrain any discretionary spending which will not disrupt mandatory program service delivery, and which will not circumvent the legislative intent in the appropriation of funds.
Thank you for your efforts during these difficult times.
Lee names Butch Eley as new finance commissioner
Gov. Bill Lee, bottom left, looks on as his Cabinet takes the oath of office in Nashville on Jan. 19, 2019. (Erik Schelzig Tennessee Journal)
Gov. Bill Lee is naming Butch Eley as his new finance commissioner. Eley has served as Lee’s chief operating officer and was a top adviser during the 2018 governor’s race. He replaces Stuart McWhorter, who stepped down to lead the state’s “unified command” in response to the coronavirus pandemic.
“The Department of Finance and Administration will play a crucial role in the reboot of our state’s economy and Butch brings significant expertise to the role as our state faces economic changes,” Lee. said in a release. “His knowledge of the private sector and service as our chief operating officer will ensure we keep Tennessee in a fiscally sound position by prudent management of state services.”
Here’s what The Tennessee Journal wrote about Eley when Gov.-elect Lee named him head of his transition team in November 2018:
Eley was an aide to then-U.S. Rep. Bill Boner (D-Nashville) who drew attention by going into real estate business with his boss in the mid-1980s. He was a spokesman for Boner’s successful 1987 mayoral bid and later served as his chief of staff, budget director, and economic development chief. The Tennessean editorial page declared Eley to be Boner’s “most loyal soldier.”
Eley left Boner’s staff in 1990 to open his own lobbying firm (later joining and then leading the Ingram Group), and was a noted campaign donor to Boner’s successor, Phil Bredesen, in 1991. He was named head of communications for Belmont University in 1995 and founded Infrastructure Corporation of America in 1998.
He was among those considering (but ultimately deciding against) a bid for Nashville mayor in 2015. Eley told The Tennessean he had been approached by several potential supporters who were “looking for somebody who can pick up where Karl leaves off.” That would be Karl Dean, the former Nashville mayor and Democratic gubernatorial candidate Lee vanquished on Tuesday.
Other members of the transition team include campaign general consultant Blake Harris, who will serve as executive director. Campaign manager Chris Devaney, a former state Republican Party Chairman, will be deputy director and legislative liaison. And Laine Arnold will reprise the role of spokeswoman that she previously held for the Lee and Randy Boyd campaigns.
