“I’m pretty sure there’s no appetite in the General Assembly for tax and fee increases,” Sen. Mike Faulk said. “So I anticipate additional cuts beyond those proposed by the Governor.”

            Tennessee’s revenue collections have continued to underperform at unprecedented levels as the national economy has declined.  December tax collections represent the 19th consecutive month of negative sales tax growth. 

            Bredesen’s proposed budget would make $394.2 million in recurring reductions in state dollars for a wide variety of programs and services, including $200.7 million in the state’s TennCare program, $64.3 million in higher education, $15.9 million in Children’s Services and $20 million in non-BEP K-12 funds.  The governor’s proposal would stave off further reductions for two more years for about 40 programs by asking the General Assembly to tap into $202 million from the state’s Rainy Day Fund and TennCare reserves to keep them afloat.  Some of the programs slated to be continued for two years are the Coordinated School Health Program, Exemplary Educators programs, Family Resource Centers, Minority Health Initiative, HIV rapid testing, Behavioral Health Safety Nets and Family Support Services, to name a few.

            The Rainy Day Fund is the state’s savings account to be used in cases of severe economic hardship.  The fund will be essential if the economy worsens.   The TennCare Reserve Fund was put into place to make sure the state had money to address the fluctuations in costs in the program, which were particularly prevalent in the early years.  The reduction will leave about $550-$600 million in the two reserves combined.

            The governor’s tax proposals include a $21.3 million proposed sales tax on cable and satellite television services; $2 million to tax cable boxes, a $6.5 million increase in the rate charge on interstate and international business telecom service; $10 million to clarify ‘sale for resale’ provisions, and $10 million to repeal the dividend paid deduction on real estate investment trusts (REITs).

            In addition, the governor proposed that $21.9 million would be raised from a $2 per year increase for the cost of a Tennessee driver’s license.  The measure, however, would extend the driver’s license renewal time from 5 to 8 years.  The governor said the driver’s license fee has not been increased since 1988.  The fee increase would allow the Department of Safety to maintain 85 trooper positions in 13 rural counties that had been slated for reduction and 56 driver’s license positions. In addition, the Department of Safety would use the proceeds to purchase new radio equipment to digitally enhance emergency communications.

            Improvements to the budget include $47 million in growth money for the state’s Basic Education Program; $82 million to shore up the Tennessee Consolidated Retirement System; $164.7 million to provide a one-time 3 percent bonus to state employees and teachers – many of whom have had no raise since 2007; $23.5 million for an economic development package; $10.9 million to restore land and soil conservation funds; $2.3 million in perinatal grants; and, $7.6 million to keep prisoners in local jails.

            The budget is crafted from the high end of the revenue figures adopted by the Funding Board at the 1.9 percent growth rate.  Under the proposal, 24 percent of the budget will go to TennCare, 19 percent to Pre-K-12 education, 13 percent to higher education, 6 percent to transportation, with the remaining 38 percent going to other state government needs.  Approximately $12.44 billion of the budget is derived from state funds, with $11.2 coming from taxpayer dollars being returned to the state from the federal government.  The remainder, which totals $4.8 billion, comes from departmental revenues and fees. 

            Unlike Congress, the Tennessee General Assembly is constitutionally bound to balance the budget.   The legislature will closely examine the budget over the next two months as the various agencies and departments are called before Senate committees to explain the details further.  The weakened economy means lawmakers must be vigilant to make sure that taxpayer dollars are spent in the most efficient and effective manner.

Legislation approved by full Senate to boost sale of “prime milk” by Tennessee dairy farmers

            The full Senate has approved a bill to help Tennessee’s dairy farmers by establishing a category of milk to be called "Tennessee Prime Milk.”  The voluntary milk labeling category is designed to promote Tennessee's new official state drink: milk!

            The bill, Senate Bill 1899, sponsored by State Senator Mike Faulk aims to help Tennessee's dairy farmers which have declined from 10,000 active farms at the height of the business to 500 today.  The measure allows marketing and sale of a "home grown" milk product with solid non-fat content that will likely be priced below organic milk categories.  “By creating this niche category of Tennessee Prime milk, we hope to provide a way to jump start the recovery of Tennessee’s dairy industry,” said Mike Faulk, State Senator from Hawkins County.

            The voluntary program calls for the milk to be certified by the state’s Department of Agriculture for sale at retail stores as “Tennessee Prime Milk” if it meets higher standards.  Bottling plants can label their milk as "Tennessee Prime Milk", as long as 80% of the milk is produced in Tennessee.  Reduced fat Tennessee prime milk sold at retail must contain at least 10 percent milk solids not fat (SNF); non-fat or skim Tennessee prime milk must contain at least 9 percent SNF; and whole Tennessee prime milk must contain at least 8.5 percent SNF.

Only 50 percent of milk consumed in the state is from Tennessee dairies.  The bill, which has received national attention now goes to the House of Representatives for approval of an amendment before going to the governor for his signature.

Senate approves legislation to help protect children from Internet predators

     Legislation was approved by the State Senate this week to allow law enforcement to act more quickly to protect children from sexual predators. The bill, Senate Bill 1529, authorizes district attorneys general or assistant district attorneys general to issue a subpoena for the Internet Protocol (IP) address of a suspected child sexual predator.  The bill mirrors federal law on the matter. 

     An IP address can be used to identify the region or country from which a computer is connecting to the Internet. It can also show the user's general physical location.

     Last Spring, actor and child protection activist David Keith, who is the spokesman for the National Association to Protect Children, testified before legislative committees in favor of the bill.  He told lawmakers that since 2005 more than 750,000 pedophiles have been identified by computer in the United States, with only two percent of those being investigated.  He said hundreds of thousands of children are being raped, tortured, filmed and traced on the Internet, and law enforcement agencies don't have the resources to investigate the crime. 

     The legislation, which has already been approved by the House of Representatives, now goes to the governor for his signature. 

Higher Education working collaboratively to improve teacher quality

     Tennessee’s colleges and universities are working collaboratively to improve teacher quality according to officials of the state’s Teaching Quality Initiative who testified before the Education Committee this week.  Co-chairs Dr. Hal Knight, Dean of the College of Education at East Tennessee State University, and Dr. Bob Rider, Dean of the College of Education at the University of Tennessee at Knoxville, told lawmakers the group is working on both the teacher quality and teacher supply issues facing Tennessee.

     The collaboration was formed to bring a shared vision among Tennessee higher education institutions to assure that teachers graduating from those institutions demonstrate higher levels of knowledge, competence and personal characteristics to bring student learning to new heights.  It will also ensure programs in the state’s colleges and universities are accountable for their graduates. 

     Dr. Knight thanked the Education panel for passing legislation last month to allow colleges and universities to receive feedback on how teachers who graduate from their colleges are performing.  The legislation gives teacher training programs access to non-identifying TVAAS data on their graduates to help identify the strengths and weaknesses of their programs.

     One of the group’s goals is to actively recruit science and mathematics majors to teach in Tennessee schools.  To accomplish this there has been a collaborative effort between the colleges of sciences and education.  This effort will help the state’s plan to enhance its Science, Technology, Engineering, and Math (STEM) program.  The state is partnering with Battelle, which manages the Oak Ridge National Laboratory, to provide an extensive network of STEM programs across the state.  This includes building new science labs, adding new technology, and creating new curricula to inspire and create new interest in science and math.

     The group is also focusing on teacher mentoring programs to help provide the support system needed to establish those who are new to the profession.  The premise is that new teachers need a robust program of mentoring that begins early in their preparation programs and continues through their early years in the profession.  Induction and mentoring for beginning teachers have been shown to have multiple benefits for both teachers and the systems in which they work.

Issues in Brief

     Soldiers honored – Tennessee’s soldiers serving in Iraq and Afghanistan were honored this week by Governor Phil Bredesen and the General Assembly.  In the State of the State Address, Bredesen recognized several soldiers who were deployed, some who have served multiple missions.  Lawmakers stood in silence to recognize the 11 Tennesseans who lost their lives in the War on Terror over the past year and the 114 who have made the ultimate sacrifice since 2001.

     Encouraging children to engage in outdoor physical activities -- The Senate passed Senate Joint Resolution 705 this week to encourage Tennessee children to engage in physical activities outdoors.  The bill comes from the “Every Child Outdoors-Tennessee” coalition of more than 100 supporting organizations.  Studies document that “children who engage in outdoor physical activities are healthier, perform better in school, have better social skills and self-image and lead more fulfilled lives.”  They also show the average child spends 6.5 hours per day in front of the television, on the computer or texting. “I feel strongly our child obesity problem could be addressed in part by the encouragement of outdoor activity,” said State Senator Mike Faulk who is the founder of a child obesity initiative in northeast Tennessee called “Get A Hit: Stay Fit”.

     Unemployment Fund -- Tennessee Finance Commissioner Dave Goetz told the Senate Finance Committee on Tuesday that the state would have to borrow money by the end of the month to keep the fund solvent.  He also predicted a deficit could occur next year.  The money borrowed is interest-free until December, at which time the federal government will begin to charge if the funds are not paid back. 

    Eliminating government duplication -- The Senate Education Committee has approved a bill to eliminate the General Assembly’s Education Oversight Committee, a duplication of the efforts of the House and Senate Education Committees.  Passage of the bill, Senate Bill 2408, would save the state $25,200 in travel and per diem costs.  The Committee was created to oversee implementation of the Master Teacher Program which has since been phased out.

     Employer options for payment of wages -- Tennessee employers would have the right to issue payment of wages through either an electronic automated fund transfer or a prepaid debit card under legislation approved by the Senate Commerce Committee this week.  The bill, which is permissive, aims to help employers lower expenses by giving them the right to use these payment methods as an alternative.  The move is expected to save employers, who choose to utilize fund transfer, an estimated 75 percent from the costs of issuing payment by check.  Under the bill, Senate Bill 2633, employees would not be charged for the debit card withdrawal if they choose to access an in-network ATM machine to receive the payment.