Legislative Update - Week of February 24, 2020

Governor Lee Pumps the Breaks on Paid Family Leave through Executive Order

On January 7, 2020 Governor Lee signed an Executive Order and proclaimed that “Tennessee will lead the nation” in supporting state employees by providing paid family leave. This Executive Order would have provided this benefit to more than 30,000 executive branch employees with the Governor also announcing support for future legislation to expand the benefit to other state employees. The benefit was supposed to go into effect on March 1, 2020.

Last Wednesday, however, the Governor announced that he would seek to provide such a benefit to state employees through legislation, not Executive Order. Several sources in the media have pointed to legislative pushback and concern, but the press release issued by the Governor on January 7 included supportive quotes from the Lt. Governor, the Speaker of the House, the House Majority Leader, and other legislators. Regardless of why the strategy for implementation changed, this debate should begin very soon in legislative committees. 

Items to Watch this Week

Changes to School District Budgets

Last week, HB 2001/SB 1962 was discussed in committees in both the House and the Senate. This legislation was filed at the request of the Comptroller’s Office, and there are questions about its potential impact on how school districts get their budgets approved. 

Under the language in the bill, each county commission would annually “make revenue estimates and determine the level of revenue necessary to establish a budget for the operation of county schools…”  Following the receipt of such information, “The director of schools and the chair of the local board of education shall prepare a budget according to the revenue estimates and revenue determinations made by the county legislative body…”

Committee testimony revealed the bill’s intent was to ensure accuracy and stability with the budget process while also ensuring school boards and county commissions are working together for fair estimates and budgets. Concerns were raised, though, that this legislation would limit a school board from submitting a budget that reflects all of the needs of the district. When questions were raised regarding which county school districts might be impacted by the legislation, testimony from the Comptroller’s Office revealed that they do not think that those counties operating under a charter or a private act would be affected.

The bill passed the House K-12 Subcommittee and the Senate Education Committee. It is now scheduled on a Consent Calendar on the Senate Floor tonight, and it is scheduled in the House Education Committee at 9:00 a.m. on Wednesday morning. 

Adjustments to Excise Taxes

HB 2301/SB 2686 would create an annual review of the excise tax rate based on the growth rate of the state’s revenue collections.  Under the bill, each December, the State Funding Board would certify the growth rate based on actual revenue collections from the prior fiscal year.  

  • If the growth is more than 2.0%, the tax rate would be reduced by 0.1%
  • If the growth is more than 1.0% but less than 2.0%, the tax rate would stay the same
  • If the growth is less than 1.0% but not negative, the tax rate would increase by 0.1%
  • If the growth is negative, the tax rate would increase to the max amount of 6.5%

The legislation would create a minimum excise tax of 6.0% with a maximum excise tax rate at the current rate of 6.5%.

This legislation has been placed behind the budget in the House since there will have to be substantial funds provided to offset potential decreases in these tax collections, but dozens of House members have signed onto the bill including House Speaker Sexton. It is scheduled tomorrow morning in the Senate Revenue Subcommittee.

*To see a full list of bills being tracked, click here. As amendments are filed and bills are further examined, bills may be added or deleted from this list.      

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