Capitol Hill Week 1/29/2016

Senate Finance, Ways and Means Committee hears Quarterly Report from State Comptroller as Legislature anticipates presentation of Governor Haslam’s Budget on Monday

(NASHVILLE, Tenn.), January 28, 2016 – Tennessee Comptroller Justin Wilson appeared before the Senate Finance, Ways and Means Committee this week urging state lawmakers to look to the future when deciding how to spend state funds and excess state revenues. In his quarterly report to the Legislature, the comptroller echoed Treasurer David Lillard’s testimony last week, saying the state is in good, strong fiscal condition.

Wilson attributed the state’s healthy financial position to the General Assembly’s action to forgo, reduce or eliminate expenses and the administration’s continued efforts to streamline operations. The report was delivered just days before Governor Bill Haslam is scheduled to present his 2016-2017 budget to a joint convention of the General Assembly on Monday.

The state collected about $353 million over budget estimates for the 2014-2015 fiscal year, which ended in July. Similarly, the State Funding Board met in November and projected that revenues could grow by up to $348 million during the current 2015-2016 fiscal year.

Wilson recommended putting about $75 million of the excess funds to increase Tennessee’s Rainy Day Fund, the reserves which serve as the state’s financial safety net in the event of a downturn in the economy. The fund for the current budget year is $568 million, still short of the state’s pre-recession year level of $750 million in 2008. He said adequate reserves are a key component of the state’s fiscal integrity and critical to keep Tennessee’s AAA bond rating. He also suggested the use of available funds to increase government efficiency, reduce future costs and lower the risk of catastrophic loss through appropriation of information technology, cybersecurity, overdue capital maintenance and infrastructure. Wilson urged committee members to take care to ensure any new budgetary commitments are financially sustainable, saying the state’s fiscal history offers numerous examples of the serious problems that arise when recurring expenses are paid with nonrecurring funds.

“Comptroller Wilson offered very wise advice,” said Senate Republican Caucus Chairman Bill Ketron (R-Murfreesboro). “Building back our reserves should be the first thing we do with the excess revenue. Tennessee is in sound fiscal condition because we have adhered to conservative financial practices despite temptations to spend beyond our means. We need to continue to prioritize spending, realize efficiencies and have adequate resources in our Rainy Day Fund to weather any future economic storms.”

General Assembly Adopts Judicial Confirmation Plan

The Senate and House of Representatives have adopted a conference committee report on Senate Bill 1 which puts into place a framework on how the state’s appellate judges should be confirmed or rejected under the new constitutional mandate adopted by voters in 2014. The bill is sponsored by Senate Judiciary Committee Chairman Brian Kelsey (R-Germantown).

Under the constitutional amendment, appellate judges are appointed by the governor and confirmed by the legislature. The voters of Tennessee have the ability to vote to retain or not retain judges at the end of their eight-year terms or, if an appointment is to fill a vacancy, at the next even year August election.

“I am thrilled the agreement passed the Senate and House with overwhelming majorities,” said Kelsey. The Senate passed it unanimously (33-0) and the House tally was 86-5. “I look forward to holding the first ever confirmation hearing in the Senate Judiciary Committee in the coming weeks. We are setting precedent for quality judges in Tennessee for the next hundred years.”

Top Administration Officials talk to Senate Transportation Committee about Tennessee’s Roads

The Senate Transportation and Safety Committee heard from Deputy Governor Jim Henry, Tennessee Department of Transportation (TDOT) Commissioner John Schroer and Tennessee Department of Economic and Community Development Commissioner Randy Boyd regarding Tennessee’s transportation outlook. The officials are asking lawmakers to consider a long-term solution to fund the approximately $6.1 billion in road projects currently pending in Tennessee saying it is not only needed for public safety but to maintain the state’s forward momentum in creating jobs.

“Transportation revenues in Tennessee are not expected to be sufficient to maintain existing highways and meet long-term transportation demand,” Henry said.

Tennessee’s roads are ranked third best in the nation, despite spending the third least per capita. Schroer said the cost of asphalt has increased 242 percent since 1989. These escalating costs, combined with stagnate revenues from the state’s gas tax and instability in federal funding, are the primary reasons the state has not kept up with demand, according to the officials.

Tennessee relies on fuel taxes to fund its highways and does not use debt financing, tolls, or general fund revenues. Those taxes are levied on a per-gallon basis, not on price, and drivers now purchase fewer gallons a year than they used to as vehicle mileage has improved. Schroer said the gas tax paid per new vehicle has declined from $213 per year for a new light duty vehicle in 1990 to $166 per year in 2013 and is expected to further decline to $107 per year by 2025.

The administration officials fear that pavement surfaces on existing highways will deteriorate due to lack of state funding. They are also concerned about the impact to bridges which are in need of repair. They indicated that this, in turn, could hamper Tennessee’s efforts to bring new jobs as good roads are a top priority for industries looking to locate here.

Members of the Transportation Committee praised TDOT’s efforts last week to clear roads of snow and ice after a winter storm moved through Tennessee. Crews worked continuously through the weekend to clear roadways for travelers.

Posted in News