The State House unanimously passed a budget on Friday afternoon, June 4th, after weeks of contentious negotiations. After Republicans held the line against Democrat-proposed tax increases and fought for the removal of wasteful expenditures, the budget proposal finally agreed upon does not include either but still protects funding for 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 $28.6 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 Republican leadership denounced as a 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.

Career Ladder
The legislature approved the Career Ladder program in 1983 as a form of incentive pay for educators. If teachers hit certain benchmarks, their pay was supplemented. The program was closed to new entrants in 1994, and shrinks every year due to attrition. Estimates for the 2010-2011 fiscal year indicate approximately $5.4 million in savings because of retirements. Although there was discussion of removing Career Ladder funding from this year's budget, the program was ultimately included with temporary funding and totals $34.5 million.

State Employee Bonuses
The Governor had originally proposed a 3 percent one-time bonus for state employees costing $164.7 million but lawmakers felt that was excessive in a year when layoffs were occurring. The proposal in the final budget would provide for a one-time bonus of $50 per every year of service. Employees will receive a minimum of $150 and a maximum of $1,250 and the bonus is contingent upon the state collecting over projected revenues. If given, lawmakers said the bonuses would likely happen in the fall of this year.

Federal money still 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. 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. Republicans have fought for returning the legislation to a true "technical" corrections measure for many years, and this year the GOP was successful. Three months ago, the technical corrections bill was laden with more than $130 million in tax increases to balance the budget. Republicans stripped the taxes from the bill, which now includes tax relief, flood victim assistance, and economic development measures. The final vote on the legislation was 92-2.

---

The State House passed House Bill 2622 Tuesday night with a vote of 53-32, after months of wrangling in committee. The bill prohibits the legislature from requiring any person to participate in any health care system or plan. Democrats attempted to attach poison pill amendments and use complicated parliamentary procedures in an effort to kill the bill. Because the House and Senate versions differed, the legislation went to a conference committee. Although every House Republican present voted for the conference committee report, it failed to obtain the fifty constitutional votes for passage and died along party lines with a 44-39 vote.

House Republicans have fought all year to enact legislation to counter the federal health care takeover, believing that expanding government programs is rarely an effective solution to complex issues. Further, Republicans have argued the federal government's takeover of healthcare will only prove to balloon the cost of healthcare services to the states.

---

The legislature voted this week on complex legislation that ensures fairness in construction industry bidding, protects general contractors from workers' compensation claims filed by subcontractors and addresses employee misclassification. Earlier in the year, the General Assembly approved legislation calling for the immediate suspension of a law passed in 2008 due to unintended effects of the act to require sole proprietors and partners engaged in the construction industry to carry workers' compensation coverage on themselves. Since January, the legislature has been discussing alternative ways to address gaps in coverage for workers in construction companies without harming small business owners.

The new law requires everyone in the construction industry to be covered by workers' compensation insurance or be specifically exempted. Sole proprietors and partners in the construction industry will have to carry insurance on themselves, but they can obtain an exemption from the requirement. The exemption is limited to certain members of the construction industry including, but not limited to, officers of a corporation, a sole proprietor, members of a limited liability company, or a partner in a limited partnership. In addition, those who request an exemption must be current in paying all taxes. No more than three people on any one commercial job are eligible to claim an exemption.

The measure also substantially increases penalties for employers who fail to comply with the law. The bill set different effective dates for various provisions, phasing in the new law slowly. The final product came after months of discussions between lawmakers, the Department of Commerce and Insurance and various representatives of the construction industry. The bill passed 87-7.

---

The legislature adjourned "sine die" at 1:15 a.m. on Thursday, June 10, 2010, officially ending the 106th General Assembly. This week, lawmakers took up several matters after passing the budget last Friday, and below are some of the items that received approval at the eleventh hour.

• The State House of Representatives voted 61-30 to override the Governor's veto on a measure that allows licensed carry permit holders to carry firearms into establishments that serve alcohol. It was the second time the legislature has overridden the Governor's veto on the proposal, and the law took effect immediately on June 4, 2010.
• Senate Bill 440 was approved by the House this week amid complaints from some Democrats. The bill requires felons to have paid all court costs associated with their conviction before the restoration of their voting rights. Republicans argued that it is a choice to engage in criminal behavior, and felons must be prepared to deal with the consequences of that decision. After much discussion, the bill passed 70-23.
• House Bill 670 would require jailers to determine whether or not their inmates are in the country legally, and set the wheels in motion to have them deported if it is found they are illegal. The legislation was amended several times as some legislators attempted to exempt their individual counties from the requirement and the House and Senate ended passing different versions, forcing the bill into a conference committee. The changes were finally reconciled and the only counties exempted are Davidson and Shelby Counties. The final proposal was approved 84-3.

---

The House passed House Joint Resolution 1253 Monday evening commending Arizona for their bold move on immigration policies. Arizona recently passed a law that allows law enforcement officials to require citizenship documentation on any citizen that is detained or arrested. The resolution passed with a 67-27 vote.

The recent immigration policy adopted by Arizona has received national attention. In a poll conducted by MSNBC, NBC, and Telemundo, 61 percent of Americans support Arizona's actions. Lawmakers have defended the law's importance from both an immigration and economic standpoint. Individual states and municipalities across the country have implemented a slew of illegal immigration laws in the last few years following inaction by the federal government.

To read the resolution in its entirety, please visit http://www.capitol.tn.gov/Bills/106/Bill/HJR1253.pdf.
The resolution has been sent to the Governor for action.

---

207 War Memorial Building
Nashville, TN 37243

rep.joshua.evans@capitol.tn.gov

Phone: 615.741.2860

513 Memorial Blvd, #312
Springfield, TN 37172

joshua@repjoshuaevans.com

Phone: 615.948.1376