February 16, 2017

 Chamber's 105th Annual Meeting Draws Record Crowd; Gov. Haslam Addresses Attendees on Need for Business Tax Reform, Infrastructure Enhancements and Workforce Development


The Tennessee Chamber of Commerce, in partnership with TCCE and TEDC, yesterday hosted a record crowd of business leaders, local chamber executives, and economic development professionals from across the state in its largest-ever annual meeting.  This year's summit, the 105 th  of its kind, featured a speaking lineup of high-profile elected officials and state government leaders, including remarks from Lieutenant Governor Randy McNally and Governor Bill Haslam.   During the lunchtime programming, Gov. Haslam spoke to the Chamber's 500 attendees on the need to maintain Tennessee's business-friendly climate and preserve our upward economic growth by modernizing and enhancing our state's transportation infrastructure, reforming our tax code for manufacturers to be more competitive with our regional neighbors, and maintaining our emphasis on improving educational outcomes and workforce development efforts.

Specifically regarding our business taxes, Haslam noted that Tennessee, while making healthy progress in recent years rolling back taxes on individuals, continues to rank near the top nationally in the tax burden placed on businesses and manufacturers. Remitting the recurring budgetary surplus drawn from over-collected franchise and excise taxes in the form of an optional single sales factor tax assessment on manufacturers is not only the fairest and most logical next step, he maintained, but would spur further capital investment and job creation in the state by attracting new manufacturing businesses and allowing existing ones to expand their operations locally. Preceding the Governor's speech, Lt. Gov. Randy McNally echoed similar sentiments and urged support for Haslam's IMPROVE Act package, calling the proposed increases in fuel taxes more akin to a user fee designed to evenly capture revenue from all commuters and travelers, both residents and visitors alike. McNally, too, asserted that infrastructure improvements were critical to attracting further industry growth to Tennessee.
Both leaders concluded their remarks with a final acknowledgement of Tennessee's record-breaking gains in K-12 academic achievement and Haslam's historic higher education proposal that would extend a full, last-dollar scholarship to any Tennessee resident without a degree looking to return to community college or technical school through the Tennessee Reconnect program.        
Annual Meeting Attendees Hear from Afternoon Panelists on IMPROVE Act, Education and Workforce Policy

Following the keynote lunch event with Gov. Haslam, attendees gathered for a series of afternoon informational sessions with expert panelists to discuss some of the policy topics ranked of highest importance by the Chamber's members. Answering discussion questions on some of the most pressing education issues for the Chamber's workforce development panel were Education Commissioner Candice McQueen, House Education Administration and Planning Committee Chairman Harry Brooks, and House Education Instruction and Programs Committee Chairman John Forgety.  In fielding a question about how K-12 policies can help address skills gaps, Commissioner McQueen observed the importance of laying a firm academic foundation for students early in their educational careers and emphasized the importance of maintaining rigorous learning standards that align with tested materials.  Chairman Harry Brooks added that expanding early postsecondary opportunities like Advanced Placement and industry certification courses in high school would help incentivize students to pursue postsecondary degrees and help them successfully complete their college or technical school endeavors.  Similarly, Chairman Forgety spoke to the soft skill and training needs of employers from today's graduates and pointed out the readily accessible populations of potential adult workers that could now become competitive job applicants under Gov. Haslam's Tennessee Reconnect expansion.

Attendees also heard insightful analysis on the Governor's IMPROVE Act and posed questions to the top leaders of each legislative chamber in a subsequent leadership panel with House Speaker Beth Harwell, House Majority Leader Glen Casada, Senate Majority Leader Mark Norris, and House Republican Caucus Chairman Ryan Williams.  You can read more about the topics discussed at the panel and on a particular question posed by one of Tennessee's tastiest manufacturing companies in this article from the Chattanooga Times Free Press.
UT Report: Gas Tax versus Sales Tax - Who Would Actually Pay for Roads?

Proponents of the Sales Tax say their way would be better for
low-income - They are wrong.

The University of Tennessee's Center for Business & Economic Research issued a report weighing the different road funding options between shifting sales tax revenues and increasing fuel and diesel taxes.  Notably, they reviewed how families of different incomes would be impacted by the two proposals.  The data shows something that is not immediately evident.  The "wealthy," described as the upper third, paid over 90% more on fuel, but only 50% for food, where much of the sales tax is collected.

Income Group
Average Spending on Gasoline and Motor Oil
Average Spending on Food at Home
Lower Third
Middle Third
Upper Third
Source: The Pew Charitable Trusts, 2016.
Excerpt: "(Tennessee's) position at the crossroads of America makes it
reasonable to assume that a significant share of gas taxes are paid by non-residents who are either passing through or visiting our many tourist destinations. This is not likely the case with our sales tax on grocery food (or our sales tax more broadly), which can similarly be assumed to be primarily paid by Tennesseans."

So this study begs the question:   Should your great Aunt Alice, who doesn't drive much, be asked to subsidize our entire road system when she buys groceries?  Or does the Governor have it right - that we should capture user fees every time a driver purchases a tank of fuel?  It seems obvious to us that the tax on a fuel equitably captures a proportional use of our state's road and bridge infrastructure. The report above makes the case that relying more on traditional sales will put more tax burden on Tennesseans and fail to capture the user fees owed by visitors travelling across our roads.

TDOT released an interactive tool to navigate priority transportation projects across the State of Tennessee. This map displays an overview of projects.  You can look at the entire state, focus on specific county or legislative district.  We like that TDOT also chose fun icons to differentiate the types of projects that are listed in the backlog.  Click on an icon on a road near you to get additional details. 
Governor Haslam's "Road Show"

02/17/17 Knoxville Chamber breakfast - 8:00am (Eastern) at the Knoxville Convention Center ( Knox County )

02/20/17 Winchester - 6:00pm (Central) at the Franklin County Annex Building ( Franklin County

02/20/17 Sumner County Event - 5:00pm (Central) at Station Camp High School, Gallatin

02/23 Putnam County Event - TBD at Trinity Assembly, Algood (HT: Highlands Economic Partnership )  
Tennessee General Assembly: Weekly Calendars

Senate's weekly calendar click  HERE .

House of Representative's weekly committee calendar click  HERE

House of Representative's weekly subcommittee calendar click  HERE

Haslam Announces Bob Rolfe as ECD Commissioner

Tennessee Gov. Bill Haslam today announced Nashville business executive Bob Rolfe as commissioner of the Tennessee Department of Economic and Community Development (ECD). An innovative business leader, Rolfe, 56, has more than three decades of experience in business and investment banking in Tennessee. "Bob Rolfe has spent his career growing companies and creating jobs, and he will bring incredible experience and energy to our work of making Tennessee the No. 1 location in the Southeast for high quality jobs and ensuring that success is felt throughout the state," Haslam said. "Bringing someone of Bob's caliber to this position says a lot about the momentum we have right now in Tennessee, and I know that will continue to flourish under his leadership." - Read more here.   
Puzder drops out, Trump picks Alexander Acosta as new labor secretary nominee

President Trump on Thursday selected Alexander Acosta , dean of the Florida International University College of Law, as his next choice for Labor Secretary after Andrew Puzder's nomination crashed when his support in the Senate faltered.  If confirmed, Acosta would be Trump's first Hispanic Cabinet official.

He comes with a big edge - he has won Senate confirmation three times before - first as a National Labor Relations Board member, then as an assistant attorney general and later as a US attorney in south Florida.

The Senate has Confirmed 12 of Trump's Cabinet Level Nominees

Need a job? These companies are looking for you ( USA TODAY )

More than half of manufacturers expect to ramp up hiring this year but labor shortages are a top concern

The majority of U.S. manufacturers expect to grow in 2017, but widespread labor issues could hinder the industry's expansion. That's according to the 2017 National Manufacturing Outlook and Insights Survey conducted by LBMC and the Leading Edge Alliance. The October survey - based on responses from more than 250 executives of small and large manufacturing companies - shows more than half of manufacturers expect to ramp up hiring this year but labor shortages are a top concern and cutting costs remains a priority.  "Very clearly, workforce is at the top of everyone's mind," said John Mark McDougal of LBMC. "There are some immediate short-term solutions and things we can look at, but what's more concerning or pressing is focusing on this for the longer term through everything from training, education and retraining people as jobs and skills become obsolete in a technological world."
Carbon Tax Proposals Heating Up Around the Nation

Several state legislatures have recently introduced measures that would impose carbon taxes or similar measures in their states. While a legislative initiative in Washington failed to enact a carbon tax during the November 2016 elections, the movement may be picking up steam. Among recent proposals are Oregon's S.B. 748 , which would possibly take the place of comprehensive tax reform in the State and impose a cap and trade program, including a penalty for exceeding set limits on carbon emissions per taxpayer. Another similar measure was introduced in Vermont with S.B. 66 , which would also establish a cap and trade program. Other measures, such as Rhode Island's H.B. 5369 , would establish a direct tax on carbon emissions. Rhode Island's proposed bill would establish a carbon tax in the State levied at a rate of rate of $15 per ton of carbon dioxide released between January 1, 2018 and December 31, 2019 and beginning on January 1, 2020 at a rate increasing by $5 plus inflation per year. Washington has also seen the idea resurface with various carbon tax proposals ranging from $15-25 per ton of carbon, with annual increases. These Washington proposals include S.B. 5127 , H.B. 1646 , S.B. 5509 , H.B. 1555 , and S.B. 5385 . Meanwhile draft legislation in Massachusetts, S.D. 1021 and H.D. 1504 , would impose a "fee" on carbon-dioxide emitting fuels, including natural gas, petroleum and coal, at the first point of sale along with an end of year rebate of carbon taxes paid. A similar carbon tax and rebate program has been proposed in New Hampshire ( S.B. 123 ).

Tax Update:
Tennessee Chamber-Supported Franchise and Excise Tax Annualization Bill Introduced: Estimated to save business $11m annually

Legislation that will allow business taxpayers to pay franchise and excise taxes through an annualized method has been introduced in the Tennessee General Assembly.  Last year, the Tennessee Chamber filed similar legislation that was sidetracked due to an $11 million fiscal cost to the state that was not included in the 2016 budget. The legislation filed this year is similar to the 2016 legislation and is included in Governor Bill Haslam's budget and is supported by the Tennessee Department of Revenue.  Chamber members that worked on this legislation include Tennessee Chamber Tax Committee Chair Carl Hartley of Baker Donelson, Larry Hyatt of the Hyatt Group, Merwin Ullstead with Kraft CPA's and Mason Barrick of LBMC.  The Chamber appreciates their time and energy in negotiating this important tax change that will save businesses over $11 annually in tax payments and reduce overpayment requirements. Tennessee Chamber studies noted that all but one of our surrounding states allow the annualized tax payment method.  To view the legislation, please click here .  

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The Capitol Update is written by the Chamber's government affairs staff and is distributed statewide to all of our business, local chamber and economic development professionals.  The Tennessee Chamber Capitol Update is a powerful grassroots communication tool and we encourage you to share this publication with your team members to provide crucial updates and engage your local elected officials on important issues.