Capitol Hill Report

By State Representative Joey Hensley, M. D.

2010 Special Session of 106th General Assembly to convene January 12th

The second session of the 106th General Assembly will gavel to order on January 12th at high noon, convening the 2010 legislative session. As I discussed in a previous column, this will be a Special Session to focus on education. I have heard from many of you with concerns about changing the way teachers are evaluated. We are so fortunate here in the 70th district to have so many good teachers that this has not been an issue for us. Unfortunately, that is not true in many districts across the State. I do not know what the Governor is going to propose so I don’t know how I will feel about the changes he wants to make. I can assure you that we will be meeting around the clock beginning next week to gather all the details. As soon as they become available I will pass them on to you.

As the regular session reconvenes at the conclusion of the Special Session, we plan to focus on balancing the budget, adequately funding education and streamlining government functions. With analysts predicting at least a $1 billion shortfall, lawmakers face difficult decisions in the months ahead. Because we are facing so many difficult issues, I am sending a Legislative Survey out to you so you can let me know how you feel about these important issues. My survey will be inserted into the local newspaper in a couple of weeks. Look for it on bright yellow paper and please, take the time to fill it out and return it to me. Your opinion on these issues is very important to me. Thank you in advance for taking the time to fill out the survey and mail it back to me.

Focus on education initiatives is key, Lawmakers say

Despite budget challenges and the Special Session, education will still be at the forefront of the debate in the 2010 legislative session. Because Tennessee currently ranks 41st in student achievement, It is imperative to move forward with key education initiatives, in addition to funding K-12 education.

Legislators will continue to move forward with their Education First proposal, which would literally make education spending a top priority by requiring the General Assembly to pass an education budget independent and prior to the rest of the state’s expenditures. Sponsors say the bill will prioritize education spending and eliminate any last minute compromises that often accompany the massive appropriations bill, which is generally one of the last acted upon pieces of legislation before adjourning.

I feel that this “first funding” requirement will prevent the education budget from becoming a political football during legislative sessions and prevent its use as a late-session hostage in budget negotiations.  Also, by funding education first, the schools will have the budget in time to allow them to hire teachers and prepare their own budgets earlier, a common problem that is cited with passing the state budget at the 11th hour.

Tennessee currently ranks 41st in student achievement.  Only 63 of every 100 Tennessee ninth graders will graduate from high school, and only 17 will complete their college education within six years after graduating. Lawmakers believe that Tennessee can do better, and agree that education initiatives should be a top priority for the Tennessee General Assembly.

Budget outlook presents challenge

Because the Tennessee General Assembly is constitutionally mandated to pass a balanced budget, lawmakers will face extraordinary challenges. In October, Tennessee fiscal analysts said $1.1 billion in baseline budget reductions will likely need to be made in order to keep the state finances afloat.

The 2009-10 budget, passed in June of 2009, anticipated revenue growth of approximately one percent, but revenues have been falling short of that mark. In October, the last month of available data, revenue declined once again. For a record 17 straight months, Tennessee has seen negative revenue growth.

Budget facts and figures

• The current budget, as passed, also requires the Administration to identify additional reductions of over $290 million in next year’s budget in order to balance the budget on a recurring basis by fiscal year 2011-12.

• The General Assembly reduced growth by $750 million (12 percent) last year, but approximately $526 million was added back - from federal stimulus funds as one-time funding – minimizing the first year appropriation reduction to only $227 million.

• The General Assembly will now have to look at reducing growth without the assistance from the stimulus funds.  In other words, the 2009-10 budget anticipated $753 million in planned recurring reductions.  The net reductions were $227 million.  The budget the General Assembly will receive in the 2010 session will be at least $526 million less.

• When disbursements of federal funds are complete, Tennessee will get around $5 billion in stimulus funds from the American Recovery and Reinvestment Act (ARRA).  The money is used for programs from highways and bridges to food stamps and home weatherization.

• Tennessee is set to receive roughly $5 billion in stimulus funding over several years. This year, the state will have approximately $658 million in ARRA funds, and $252 million is estimated to come from TennCare match funds. Higher education will receive $165 of the $658 million infusion of money.

The Administration has reportedly met with the various state departments and is asking for 6 percent to 9 percent more in reductions on top of the $753 million. In addition, the Governor is asking for $120.3 million in over appropriations, estimated at about $70 million.

Some who are concerned about the difficulty that comes from such substantial cuts have said an alternative to raising the sales tax rate or adding an income tax would to study how sales taxes are applied and areas where exemptions might be repealed—from medical services to gasoline. I am against implementing any new taxes or raising any existing taxes. This is a time when we need to concentrate on keeping more money in the pockets of taxpayers who are having a hard time making ends meet.

The State Funding Board made a preliminary revenue estimate in December, giving lawmakers a better snapshot of the budget hole it is facing. The Board will likely revise the estimate in late March or early April, as opposed to its practice of meeting in May, hopefully allowing the General Assembly to finish earlier in the year.

State faces other financial challenges

The Unemployment Trust Fund will once again be a significant issue early in the 2010 legislative session. Despite a $140 million infusion of federal stimulus funds into the system in 2009, the fund continues toward insolvency. Analysts are predicting the fund could be very close to deficit status by the end of the year. The most concerning time to be in the red will be between mid-January and mid-February. If the state incurs a deficit, it will likely require a bridge loan from the federal government until the legislature can make other provisions in the Unemployment Trust Fund.

The Lottery Scholarship Fund will be another area for the legislature to examine. Nearly $10 million in reserves was needed to close the 2008-2009 fiscal year, and adjustments to the lottery-funded Pre-Kindergarten program brought program expenditures in line with revenue estimates for the 2009-2010 fiscal year. Lawmakers will need to keep a close eye on the fund in order to fulfill its commitment to lottery scholarship recipients.

Contact Representative Hensley at:

106 War Memorial Building

Nashville TN 37243

Toll Free 1-800-449-8366 ext. 17476

Fax 615-253-0231

855 Summertown Highway

Hohenwald TN 38462

Phone 931-796-2018

Cell Phone 931-212-8823

E-mail: rep.joey.hensley@capitol.tn.gov