Tax relief, public safety and education highlight fiscally responsible budget passed by General Assembly

(NASHVILLE) April 22, 2022 – The state budget led a host of important bills approved by lawmakers this week as the 2022 legislative session begins to close. The General Assembly, which is looking to adjourn next week, has completed the majority of its business with most of the remaining action pending on bills that were behind the budget due to their cost.

This year’s no-debt budget highlights lawmakers’ continuous efforts to cut taxes for Tennesseans, maintain fiscal responsibility, ensure public safety and prioritize education. It invests $52.58 billion in the state of Tennessee for the 2022/2023 fiscal year, with total legislative initiatives making up $84.1 million recurring and $570.8 million in non-recurring expenditures.

To maintain fiscal responsibility, lawmakers are making a $250 million investment in the state’s Rainy Day Fund, which serves as Tennessee’s savings account to withstand economic downturns. This allocation raises the fund to a historic level of $1.8 billion. Another key conservative component of this budget is that $1.3 billion of Tennessee’s $3 billion revenue surplus is set aside for future use. Additionally, the budget uses the surplus for many one-time expenditures to prevent the growth of state government but still provide resources and relief to important initiatives.

“Because of Tennessee’s record of fiscal responsibility, all expenditures in the budget are paid for with cash,” said Senator Bo Watson (R-Hixson), Chairman of the Senate Finance, Ways and Means Committee. “Budgets in lean times are difficult. Budgets in times of great prosperity are even more difficult because you have to make real decisions about the best use of our dollars when there is an abundance of money. I am proud of the work we have done on this budget and am confident we are making sound investments that will benefit the state of Tennessee for decades to come.”

In this budget, Republican lawmakers continued their commitment to Tennessee taxpayers by ensuring citizens can keep more of their hard-earned money. With additional tax and financial relief appropriated by the General Assembly, Tennesseans will be able to recognize a total of $281 million in tax and financial savings in the 2022/2023 fiscal year.

“Many years of sound fiscal management have strengthened Tennessee’s economy and propelled the state into a strong fiscal position,” said Senate Majority Leader Jack Johnson (R-Franklin). “We have been able to cut taxes year after year while state revenues continue to go up, which is remarkable. Our commitment to being a low-tax state has been a driver in economic growth, and I am proud we are able to return $281 million to Tennessee taxpayers this year.”

Everyday Tennesseans will benefit from the financial and tax relief provided in this year’s budget. As proposed by Governor Lee, it includes $80 million for a grocery sales tax holiday for August 2022. Lawmakers also wanted to ensure there was financial relief in the budget that only Tennesseans could take advantage of and not out-of-state residents who shop and do business in Tennessee, so the budget provides $121.6 million to eliminate the state’s $29 license plate registration fee for one year.

Lawmakers allocated $9 million to continue their multi-year commitment to eliminate the professional privilege tax. This appropriation will remove the annual $400 tax physicians pay in order to practice their profession. In 2019, lawmakers passed legislation eliminating the professional privilege tax for 15 licensed professions.

Another significant tax cut includes $68 million for a sales tax reduction on broadband supplies. This tax reduction will incentivize companies to accelerate the deployment of needed broadband services to rural communities.

Other reductions in taxes added by the legislature are $2.8 million to reduce sales tax on agricultural machinery and equipment to mirror tax reductions that manufacturers in Tennessee currently receive and $360,000 to eliminate a tax on gold, bullion and silver.

Because Republican lawmakers take great care when allocating taxpayer dollars to large initiatives, after much consideration the Senate voted to remove a budget item proposed by Governor Lee to issue a $500 million bond to help complete a new covered stadium that would be home to the Tennessee Titans. Senate Republicans expressed concerns about the wisdom of such a large investment in a sporting venue. Ultimately, the proposal was added by the House of Representatives and the final version of the budget included the $500 million bond authorization for the Titans stadium and $55 million recurring to cover the debt service.

“The Senate was always uncomfortable with the Titans bond authorization. That was clear both on the floor and in committee. But ultimately, with a $52 billion budget you cannot let perfect be the enemy of good,” said Lt. Governor Randy McNally (R-Oak Ridge). “This budget continues the fiscally responsible tradition Tennessee is known for across the nation. We have fully funded the priorities of our people while providing much needed tax relief. Our rainy day fund stands at historic levels. We are well positioned not only for today but also well prepared for whatever awaits us in the future. This is a budget all Tennesseans can be proud of.”

Education

Education remains a top priority in the 2022/2023 budget. It includes the largest increase in K-12 education funding in the history of Tennessee. With an additional $1 billion in K-12 funding, Tennessee is investing a total of $6.5 billion in K-12 education. This includes $750 million for the Tennessee Investment in Student Achievement (TISA) Act, along with $125 million to increase teacher salaries. The General Assembly also provided $20 million for Humphrey County Schools to cover losses from devastating floods last year.

Many significant investments in higher education were made including:

$200 million for TCAT infrastructure improvements
$643,500 to increase middle college scholarships from $1,250 to $2,000 per semester
$19.4 million to alleviate TCAT Waitlist
$500 million to CTE grants for high school and middle school students
$88 million for GIVE and HOPE expansions bringing the scholarship award to $5,700 per year for juniors and seniors and $4,500 per year for freshman and sophomores
$90 million for the outcomes-based funding formula
$66.3 million for a 4% salary increase within higher education
$18 million to build a new TEST hub at UT Martin

Public Safety

To ensure Tennessee remains a great place to live, work and raise a family, lawmakers made significant investments in public safety. A $25 million appropriation was included in the budget for key legislation protecting victims of violent crimes and providing true accountability for those who commit crimes. This “truth in sentencing” legislation requires a person convicted of certain violent offenses to serve 85% to 100% of their sentence before becoming eligible for release.

Lawmakers added $7.5 million in one-time money to the $500,000 proposed by the governor for competitive grants to be awarded to volunteer fire departments and rescue squads for equipment and supplies, bringing the total to $8 million. Also added by the legislature was $6 million to increase the per day rate paid to local jails from $39 per inmate per day to $41.

Other investments in public safety include:

$365 million for the law enforcement training academy
$100 million for crime prevention
$43.2 million to increase correctional officers’ salaries to $44,520
$16 million for 100 new state troopers
$4.2 million for 20 additional TBI agents to help combat human trafficking, cyber security, narcotics, and more
$25.3 million for evidence-based programming in seed grants
$9 million for educational technology in local jails
$1.2 million total to add 11 more assistant district attorneys general
$800,000 to raise the retirement benefits for highway patrol and commissioner officers
$3.6 million for security measures and personnel at TCATs

Health and Welfare

Taking care of the most vulnerable populations in Tennessee continued to top the list of priorities for the General Assembly in 2022. The budget allocates funds for mental health treatment centers, drug rehabilitation, the adult health care safety net and Alzheimer’s and dementia caregivers.

Details on these budget initiatives include:

$5.5 million for mental health treatment centers
$2 million for Naltrexone which has been an effective treatment in drug courts
$5 million for the adult health care safety net
$1 million per year for a 3-year pilot program for respite care for Alzheimer’s and dementia caregivers
$3 million to establish an education and dental safety net fund pilot program that will serve 33 counties devoid of dental services
$9.7 million for salary raises for DCS caseworkers to combat hiring challenges
$1 million to the Jason foundation to address suicide rates

Grants

The budget also includes $17 million for grants to be distributed statewide for important initiatives. These include:

$1 million to senior centers
$900,000 to the Epilepsy Foundation
$500,000 to Big Brothers Big Sisters
$3 million to county fairs
$5 million to Volunteer Fire Departments (repeated from public safety)
$2 million to search and rescue squads (repeated from public safety)
$1 million to DIDD for universal changing tables
$10 million to the Winds of Liberty Museum for military veterans

In Brief…

Expanding opportunities for state investment through proposed Constitutional Amendment

A resolution to allow the state of Tennessee to expand its investment opportunities and maximize the value of revenues from Tennessee taxpayers was given approval from the Tennessee Senate on Wednesday. After three readings on the floor of the Senate, Senate Joint Resolution 913, sponsored by Senator Ferrell Haile (R-Gallatin), received unanimous approval, exceeding the minimum two thirds supermajority of votes required to pass, which is the first step to enshrining the law to the Tennessee Constitution.

Currently, the Tennessee Constitution prohibits the state from investing in stocks or funds. Therefore, the state can only invest its funds in debt instruments, such as U.S. bonds, notes and treasury bills. An amendment to the Tennessee Constitution is necessary in order to change this law and recognize greater returns on investments of taxpayer dollars.

The resolution will now go to the House of Representatives for approval. If it is passed by the General Assembly this year, it would need to pass by a two-thirds majority again in the 113th or 114th General Assemblies, in order to appear on the ballot for a statewide referendum in November 2026. The amendment would become part of the state constitution if adopted by a majority vote in the governor’s election.

Protecting the U.S. southern border and building the wall — The Senate this week passed House Joint Resolution 652 urging congress to complete a secure border wall on the U.S. southern border. The resolution states the General Assembly “strongly support[s] the completion of the secure border wall across our nation’s southern border and strongly urge[s] the United States Congress to immediately act to fund the construction of such border wall without delay.”

Enhancing integrity of elections — The Senate this week gave final approval to a bill aimed at enhancing the integrity of elections. Senate Bill 2675 by Leader Jack Johnson (R-Franklin) revises and expands the manner in which the Secretary of State and county election commissions must audit state and local elections. Under the bill starting in 2024, the secretary of state must randomly select at least three counties to audit after the August election; and after each November election, the secretary of state must randomly select at least six counties to audit. The bill also includes a provision that requires hand recount audits of paper ballots in Williamson County, which uses ballot marking devices that allow voters to cast their vote on a machine that prints out a paper ballot. The Heritage Foundation has ranked Tennessee third in the nation on a recently released election integrity scorecard. With the help of this legislation and other efforts, the state is working on claiming the top spot.

Truth in Sentencing — The Senate this week passed truth in sentencing legislation that requires a person convicted of certain violent offenses to serve 100% of the sentence imposed before becoming eligible for release. Senate Bill 2248, sponsored by Lieutenant Governor Randy McNally (R-Oakridge) and Senator Jon Lundberg (R-Bristol), ensures criminals convicted of 9 different offenses including first degree murder, criminally negligent homicide, aggravated vehicular homicide, especially aggravated kidnapping would have to serve 100% of their sentence undiminished by any sentence reduction credits for which the person is eligible or earns. A person convicted of one of these 9 offenses could still earn credits that can be used for increased privileges, reduced security classification, or for any purpose other than the reduction of the sentence imposed by the court. Under the legislation, another 16 offenses require 100% of the sentence to be served unless the inmate earns a satisfactory program performance. In these cases, a person can receive credits for a GED or job training. These credits would be used for parole eligibility once a person has served a minimum of 85% of their sentence. Last year, state lawmakers approved truth in sentencing reform for 31 crimes historically targeting women and children.

Strengthening protections for police and service animals — The Senate this week passed legislation known as Joker’s Law that would strengthen the penalty for anyone who harms a law enforcement or service animal in Tennessee. Sponsored by Sen. Mike Bell (R-Riceville), Senate Bill 2013 increases the penalty for anyone who knowingly and unlawfully kills a police dog, fire dog, search and rescue dog, service animal or police horse. Offenders would now be charged with a Class B felony. Anyone between the ages of 14 and 17 who kills or causes serious injury to one of those animals could also be tried as an adult. Under present law, killing a law enforcement service animal is a minimum Class E felony. The bill is named in honor of Joker, a K-9 with the Bradley County Sheriff’s Office who was seriously injured after being shot during a pursuit last year.

Restitution for children of victims of DUI offenders — Legislation that provides restitution for minor children when a parent is killed by a drunk driver now heads to the governor’s desk for his signature. Passed by the Senate this week, Senate Bill 2103 by Sen. Bell requires the convicted offender to pay restitution in the form of child maintenance to each of the victim’s children until each child reaches 18 years of age and has graduated from high school. The bill requires the court to determine a reasonable payment after considering factors including the financial needs of the child and the financial needs of the surviving parent, among other criteria.

Cracking down on mail-order abortions — The Senate this week voted to approve legislation that creates criminal and civil penalties for anyone who provides abortion-inducing drugs through telemedicine and subsequently supplies those drugs via courier, delivery or mail service. Abortions via mail have become increasingly common since the Federal Drug Administration approved telehealth and mail distribution of abortion-inducing drugs in 2020. Current law in Tennessee already bans mail-order abortions. Senate Bill 2281 by Sen. Bell strengthens current law and patient safety measures by putting further restrictions on the use of telemedicine and courier delivery. The bill intends to keep patients from developing serious, life-threatening complications during an unsupervised chemical abortion at home. The bill creates a Class E felony for anyone who intentionally, knowingly, or recklessly violates this act. Failure to comply with this act provides a basis for a civil action against a healthcare provider.

Streamlining reporting system for dangerous road conditions — The Senate passed a bill this week that aims to make it easier for citizens to report road hazards and settle claims with the state when vehicles are damaged on state-maintained highways. Sponsored by Sen. Becky Massey (R-Knoxville), Senate Bill 2678 requires the state treasurer to work with the Tennessee Department of Transportation to develop and implement a centralized information system for the reporting of dangerous road conditions. It expands the authority of the state treasurer to settle citizens’ claims when personal property is damaged by road hazards such as potholes. The state received 1,800 claims for pothole and road hazard damage in 2021 and of those, only 12 were settled.

Banning dangerous drug sales — Sponsored by Sen. Bell, Senate Bill 1997 bans in Tennessee the sale of tianeptine, which is marketed as an antidepressant and attaches to the receptors in the brain similar to opioids. Also known by its street name ‘Zaza Red’, the drug creates withdrawal similar to heroin, and has not been approved by the Federal Drug Administration for use in any way. The legislation was drafted to apply to all possible substances meant to replicate tianeptine. The bill cleared the Senate this week.

Establishing task force on judicial redistricting — The Senate this week voted to approve Senate Bill 2011 by Sen. Bell, which establishes an advisory task force that will recommend a proposed statewide redistricting plan every 10 years. The task force will be appointed by the Speakers of the Senate and House, and consist of 14 members, including trial court judges, district attorneys, public defenders, and citizen members as well as the chairs of the Senate Judiciary Committee and House Civil Justice Committee. The task force must be established by July, 2025 and submit its findings by January, 2027 in order for the legislature to be able to address judicial redistricting before the next judicial election in 2030.

Ensuring judicial integrity — To ensure the integrity of judges in Tennessee, Senate Bill 2478 by Sen. Bell adds two new qualifications for the job. The first is being in good standing with the Board of Professional Responsibility, and the second is not having been publicly censured, suspended or disbarred from the practice of law by the Board of Professional Responsibility within 10 years before the judge’s term of office for dishonesty, fraud, deceit or misrepresentation. The bill applies to judges of the Supreme Court, court of appeals, chancery courts, circuit courts, criminal courts and others, and is set to take effect Oct. 1, 2022.

Keeping obscene materials off school computers — Present law requires students to be prohibited from accessing pornography and other obscene materials on school computers. Senate Bill 2292, sponsored by Sen. Bell and approved by the Senate this week, ensures vendors that contract with schools comply with the law and take steps to block inappropriate content. If a provider fails to comply with the bill, then a local education agency (LEA) may withhold further payments to the provider and ultimately consider non-compliance a breach of contract. The bill also requires each local board of education to establish a mechanism for parents to report a failure of the technology selected by the LEA to prevent access to harmful materials, and submit an annual report to the state board of education on the successes or failures of the technology. The bill applies to all future contracts.

Funding for ambulance services — The Senate this week passed Senate Bill 1872 by Sen. Ken Yager (R-Kingston), which extends the ground ambulance assessment for another year through June 30, 2023. The bill could generate over $20 million for local ground-based ambulance services throughout the state.