Balanced budget, education
With a focus on keeping and growing opportunities for job development in Tennessee, House members worked hard this year to ensure the state continues to foster an environment where new jobs are created and small business can thrive. Most Tennesseans are employed by small business in Tennessee, and conservatives felt that eliminating red tape, staving off tax increases, and shrinking the size of government would help Tennessee rebound from the economic downturn.
Conservatives fought hard in 2010 to craft a balanced budget that did not raise taxes while focusing on education as a priority. The 106th General Assembly concluded after both goals were met, passing one of the most fiscally conservative budgets in recent memory and significant education reforms that will benefit Tennessee students. In addition, strides were made in the areas of crime and safety, healthcare policy and immigration.
Getting economy on track
In what many legislative observers believe to be a first, the State House unanimously passed a balanced budget with no new taxes and no tax increases. Lawmakers held the line all year against proposed tax increases and fought for the removal of wasteful expenditures. The hard work paid off, as the final budget was one of the most conservative in recent memory that still protected priorities.
In addition, lawmakers left a healthy amount in the state's reserves accounts, including $429,207,100 in the Rainy Day Fund and TennCare Reserve Fund. The combined total of all reserve accounts will be $615.4 million. The 2010 budget is $29.7 billion after the legislature made approximately $650 million in cuts.
The governor's original budget proposal also included over $130 million in tax increases which House leadership denounced as an irresponsible tactic to balance the budget. Part of the tax increase plan included an $85 million tax on single article sales and an additional $50 million by increasing taxes on cable, long-distance telephone services and free continental breakfasts that hotels and motels sometimes provide. Lawmakers also reached a consensus on several contentious items such as the Career Ladder program, Agriculture Enhancement Grants, and state employee bonuses.
The state's Career Ladder Program, approved in 1983 as a form of incentive pay for educators, remained in the final budget and totals $34.5 million.
Lawmakers also reached an agreement on state employee bonuses. An original proposal would have given all state employees a bonus of 3 percent, but some members felt that was a bit excessive given other layoffs and economic conditions. The legislature ultimately settled on a more conservative plan that will pay employees an additional $50 per year of service, with a minimum of $150 for employees with at least one year of service (as of October 1, 2010) and a maximum pay out of $1,250 (representing 25 years of service). Teachers will be included in the bonus program.
Federal money in jeopardy
The budget cautiously allocates federal funding that has not yet been approved by the U.S. Congress, but funds only “contingency items” that are essentially “extras” with these dollars. The state was expecting Congress to have already approved the nearly $340 million in one-time funding, but Congress left on Memorial Day break without acting on the extension, and has still failed to do so. The funds will provide for upgraded radios for state troopers, an unnamed economic development project, the demolition of several dilapidated buildings at the University of Tennessee's Health Sciences Center, and the Civil Rights Museum. A portion would also be used on a post-flood tourism campaign to demonstrate that “Tennessee is open for business.”
Flood relief
In light of the devastating floods at the beginning of May, lawmakers included flood relief in the budget to the tune of $19.9 million. Flood relief plans were discussed at length during budget negotiations as lawmakers recognize the need for aid. Proposed methods for funding flood relief proposals included using cash from the state's Rainy Day Fund, using a portion of stimulus money and through various tax relief measures. Ultimately, the legislature settled on a plan that eliminates the state and local sales tax on major appliances, residential building supplies and residential furniture. To receive a refund from the Department of Revenue, flood victims must have purchased the equipment between May 1, 2010, and September 30, 2010. The total amount that can be received is $2,500 and the claimant must file a single application with the Department of Revenue by November 30, 2010, along with satisfactory proof from FEMA showing damage. The refunds are allocated out of the state's General Fund.
Technical corrections
The “technical corrections” bill submitted each year by the administration has evolved over time from legitimate technical changes in the Tennessee Code Annotated to a tax bill that supplements the state's General Fund. Lawmakers have fought for returning the legislation to a true “technical” corrections measure for many years, and this year the move was successful. Three months ago, the technical corrections bill was laden with more than $130 million in tax increases to balance the budget. Opponents stripped the taxes from the bill, which also included positive measures of tax relief, flood victim assistance, and economic development measures. The final vote on the legislation was 92-2.
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(Editor’s Note: Rep. Kevin Brooks serves the 24th Legislative District in Cleveland and Bradley County. He and his wife, Kim, are actively involved in their community and local schools with their two children, Zach who is attending Lee University, and Elizabeth, who attends Cleveland High School).
