The General Assembly convened Tuesday at noon. The first week of the new session was highlighted by the inauguration of Tennessee’s newly elected leader, Gov. Bill Haslam, on Saturday, and an organizational session of the General Assembly.
Although the budget deficit will be the predominant driver for legislative action this year, other key issues expected to be on lawmaker’s agenda in 2011 are job creation, education, eliminating waste in government and immigration reform. Nearly $2 billion in nonrecurring funds has helped Tennessee’s 2010-2011 budget recover from recession-related revenue shortfalls. With those funds now expiring, lawmakers must tighten the belt to weather this economic storm.
The state has suffered $1.2 billion in net revenue loss and $500 million in additional spending requirements, resulting in a $1.70 billion budget gap. State tax revenues have declined by over 11 percent. Typically, state revenue grows by $300 million to $400 million each year.
Additional reductions are still needed to address a $185 million budget imbalance. In addition, the Legislature is expected to receive pressure to restore already enacted cuts of $540 million to TennCare, $301 million to higher education, $86 million to Corrections, $58 million for Children’s Services and $46 million for Intellectual Disabilities. Renewal of the Hospital Assessment Fee to restore certain TennCare cuts will also be on the table again in the 2011 legislative year.
Unlike Congress, the Tennessee General Assembly is constitutionally bound to balance the budget. The weakening economic condition means lawmakers must be vigilant to make sure that taxpayers are protected and dollars are spent in the most efficient and effective manner. The General Assembly adopted a plan to address the $1.7 billion budget gap in multiple budget cycles with expenditure reductions, future revenue growth, limited revenue measures and the use of one-time funding to help balance the budget. It is hoped that these measures would provide a smoother transition to a smaller budget.
Many of the reductions that have been identified and approved in the 2009-10 and 2010-11 fiscal year budgets have been delayed by using one-time funding from reserves or ARRA-related funding. The multiyear budget plan does assume revenue growth in the current fiscal year of 2.3 percent. It is based on continued recovery in 2011-12 with 4.5 percent revenue growth and 5 percent growth in fiscal year 2012-13. However, revenues are not expected to recover to the 2007-08 levels for five more years in fiscal year 2012-13.
Other looming budget issues in the future include pressure to fund the next phase of BEP 2.0, which has been stuck at 50 percent funding since enactment in 2007. Also, employees who have not received a raise in recent years will be looking for an increase in salary, and at the very least a one-time bonus of some sort.
On the brighter side of a gloomy budget picture, Tennessee continues to remain a low-debt state. Also, while many other states are counting on additional federal money to “fix” their budget problems, Tennessee is not. Plus, Tennessee has been recognized for being ranked among the best places in the U.S. for economic development by nationally recognized experts.
The state ranked in the top three states for business by Chief Executive Magazine and received top five honors by Site Selection Magazine for economic development and a desirable business climate.
Tennessee must be aggressive in bringing new jobs to the state. This includes making Tennessee a business-friendly state by holding down taxes and government red tape. Republicans have worked diligently to resist efforts to erode Tennessee’s business-friendly status. Expect Republican lawmakers to continue to defend the rights of small business owners against any further efforts to place government mandates on companies within our state boundaries. Also, Gov.-elect Haslam has already announced that he will be proposing a job creation program during the next legislative session.
With Tennessee facing significant budget challenges, lawmakers must look for ways to reduce the size of government and to make it work more efficiently and effectively. Republicans will be looking for ways to stretch taxpayer money by identifying waste to produce a leaner and more efficient state government system. The people of Tennessee entrusted Republicans with majorities in both houses of state government, as well as the governor’s office.
The cornerstone of our beliefs is that we need less government, lower taxes and common-sense reform that lessens the bureaucratic red tape and burdens on our families and businesses so that they thrive. Expect legislative efforts this year aimed at lessening the bureaucratic burden on our citizens, so we unleash the potential and the ingenuity of our citizens to grow Tennessee jobs.
As Tennessee struggled this year to make ends meet, lawmakers are also bracing for dire effects on the state’s budget as a result of the new Congressional health plan signed by President Obama in March. The plan is expected to cost the state at least $200 million annually, as well as taking away the ability of Tennessee to control its own health care program. The most significant impact of the Obama health care plan will take place in the 2013-14 budget year.
Expect the Tennessee Health Freedom Act to be reintroduced this year. It would protect a citizen’s right to participate, or not participate, in any healthcare system, and would prohibit the federal government from imposing fines or penalties on that person’s decision. Financial experts predict that the federal healthcare plan will consume any anticipated growth in state revenues once the economy recovers, crippling Tennessee’s ability to make future improvements in critical needs like education, job investment and public safety.
The Tennessee General Assembly will continue to monitor education reform passed last session in 2011. Lawmakers passed bold initiatives last January in a special session designed to transform education. That legislation allowed Tennessee to receive approximately $500 million in federal funds in the federal Race to the Top competition. Race to the Top is authorized under the American Recovery and Reinvestment Act of 2009 (ARRA) and is a competitive grant program to encourage and reward states who are implementing significant reforms in four education areas: enhancing standards and assessments; improving the collection and use of data; increasing teacher effectiveness and achieving equity in teacher distribution; and turning around struggling schools.
Expect lawmakers to continue to monitor the progress made under this new reform law and to make any needed revisions to enhance these education reform efforts.
Several Republicans went to Arizona in August to meet with sponsors of the Arizona Immigration law and attend an educational seminar which details provisions of the new law. Expect immigration reform legislation, similar to the Arizona law, to be introduced in the 2011 session. The 4-pronged legislation will cover law enforcement, businesses, health care and higher education.
The bill is expected to require police to check the immigration status of those they detain or arrest. It will also deal with the use of E-Verify which allows employers to check employees’ Social Security information.
Another component is expected to reduce the burden on hospital emergency rooms in providing non-emergency health care services. On education, the legislation is expected to restrict illegal immigrants from receiving in-state tuition at Tennessee colleges and universities.
Reapportionment, or redistricting, will be a matter for the 107th General Assembly either in the 2011 or 2012 legislative sessions. It is an arduous task that is done every 10 years after the census is completed.
State legislative and Congressional districts will be redistricted by the Tennessee Legislature. The purpose of redistricting is to assure citizens of equal representation. This right is rooted in both the federal and state constitutions and has been repeatedly ruled upon by the courts over the years, setting additional standards that must be followed.
The most famous of these rulings is a Supreme Court decision on a landmark Tennessee case, Baker v. Carr, which set the nationwide standard of “one man, one vote.” Therefore, districts must be divided as closely as possible to guarantee that right. Expect the conversation on reapportionment to begin this legislative session as the census data becomes available.