February 2, 2017
Gov. Haslam Rolls out Budget:
State of the State Tutorial Challenges Lawmakers
Recognizes some have said they will never vote for a tax increase
Nashville - With Monday starting the legislative session, Governor Haslam used nearly 60 percent of his State of the State address to share lessons on responsible budgeting with lawmakers.  While there was the anecdote about Aunt Edna, it is unclear what legislators took away from the lesson of paying for ongoing operational expenses with recurring revenue sources.  The most positive receptions of the night were for the recognition of previous tax cuts and a series of tax-cuts that would accompany the governor's proposal to relieve the transportation backlog. 

"Show me the math on your plan and show me what you want to take out of the general fund if you're going to pay for it with general fund money," Haslam said. "Or show me what tax that you're proposing to cut that you don't want to cut now because you want to use that money for roads."

Several other ideas have been bandied about in the Legislature this week, including a proposal to shift one cent of the sales tax to the highway fund.  Haslam recognized and rejected that idea in his speech.  He noted that sales taxes are paid primarily by Tennesseans, whereas our roads are used heavily by out-of-state drivers, and that raising the gas tax at the pump ensures that the burden is carried by all travelers.  Still some members were not convinced. "Now is not the time to raise taxes," said State Senator Mark Green, who is running to succeed the term-limited governor next year.  "Our priorities must continue to lower taxes, not increase them."

Update: Adding more drama, to this week's events, two top House Republican leaders Rep. Glen Casada (R-College Grove) and Rep. David Hawk (R-Greenville) in a hastily called press conference unveiled limited detail about a counter proposal to Gov. Bill Haslam's proposed IMPROVE act that calls for diverting money from the state's existing 7 percent sales tax base to fund needed road improvements ( Times-Free Press coverage).  While a number of legislator and industry groups noted concerns with the plan, Lt. Governor Randy McNally presented perhaps the harshest criticism in noting the plan is not sustainable and would jeopardize Tennessee's AAA bond rating. 
TN Chamber Promotes 2017 Legislative and Policy Agenda: Transportation, Business Taxes, Workforce and Regulations Main Focus Areas
This week, the Tennessee Chamber of Commerce & Industry promoted its legislative policy agenda for the 2017 session of the Tennessee General Assembly. Developed based on the needs and feedback of the Chamber's business members across the state, the agenda focuses on the policy areas of highest importance to Tennessee's business community, ranging from infrastructure and business tax reform issues to workforce development and regulatory compliance. The key centerpiece for this year's agenda focuses on keeping Tennessee competitive by making critical investments to our state's transportation infrastructure and reforming tax policies that hinder manufacturing growth. Read the 2017 Agenda in its entirety here.

Workforce Development Takes Center Stage at State of the State Address
Plan Seeks to Aggressively Pursue Drive to 55 Goals

Nashville - In his seventh State of the State address to the Tennessee General Assembly, Gov. Haslam introduced a landmark plan to make our state the first in the nation to offer all adult residents without a degree tuition-free access to community college.  Dubbed the Tennessee Reconnect Act, the proposal, if adopted, would make Tennessee the first and only state to offer all citizens- both high school graduates and adults- the opportunity to earn a college, technical school, or other post-secondary degree or certification without paying any tuition costs or fees.  Combined with the existing Tennessee Promise program, the new investment in the Tennessee Reconnect Act signals a groundbreaking step forward towards accomplishing the goals of Gov. Haslam's Drive to 55 initiative.  Launched in 2013, Drive to 55 is the governor's well-known effort to increase the number of Tennesseans with a postsecondary degree or certificate to 55 percent by 2025. Currently, Tennessee needs 871,000 post-secondary degrees or certificates to reach 55 percent, and mathematically there is no way to reach that goal by only serving high school students. You can read more about the Tennessee Reconnect Act here.
Moreover, the governor also unveiled his new Tennessee STRONG Act, or Support, Training, and Renewing Opportunity for National Guardsmen.  The STRONG Act would seek to establish a four-year pilot program for eligible members of the Tennessee National Guard to receive a last-dollar tuition reimbursement toward a first-time bachelor's degree.  Read more about the Tennessee STRONG Act.
Labor Chief Defends Unemployment Insurance Program in Senate Commerce Committee Hearing
(Tennessean) Senate commerce committee members had sharp criticism Tuesday over a backlog of unemployment claims that has not been diminished at the promised rate and continuing to sit in a backlog though it was expected to be resolved before the end of 2016.  Full article
Good for Business : Chairman Johnson seeks reassurance that the department will not penalize employers who were not notified of pending claims.  Video (fast forward to 28:30 to see this exchange)

How will your local transportation projects be impacted with Haslam's IMPROVE Act?
In the past two weeks much of the conversation has been focused on finding the right solution to our transportation project backlog.  Chamber members frequently note that local roads and infrastructure is crucially important to their operations. The Tennessee Chamber believes we must maintain our current roads and we should build improved infrastructure for the needs ahead.  As part of Haslam' s IMPROVE act, The Governor has released a list of almost 1,000 projects that will be funded that impact local communities.  We encourage you to look over the list and discuss these projects with your elected officials.
You can review local projects for your area, here - Project List by County
The Governor's plans includes new road maintenance funds that Counties and Cities.

Tennessee Chamber / TCCE / TEDC Day on the Hill & Annual Meeting February 15: Mark your calendar!
Please join us February 15th for our annual Day on the Hill and Annual Meeting & Reception.  This is our largest event of the year and allows a unique opportunity to interact with our elected leaders and hear about the legislative session.  For more information ... click the image above!

Why Single Sales Factor is Essential for Economic Development in Tennessee, And Why Your Legislators Need to Hear from You
A key component of Governor Haslam's IMPROVE act is an elective single sales factor apportionment for Tennessee manufacturers. Just this week, the Governor and the ECD Commissioner noted that numerous companies we are recruiting are asking about this tax structure  that so many of our surrounding states have adopted.  Already, 6 of our 8 neighboring states have adopted a single sales factor.  We need to give our manufacturers this option to keep Tennessee competitive. In addition, single sales factor (SSF) is an important tool for existing manufacturing too, perhaps even more so.  Companies operating in singles sales factor states are no longer penalized with an increased tax burden when they add jobs, give pay raises or invest in new machinery.  That is because a single sales factor business only pays a tax rate
determined by their in state sales which more accurately reflects their economic activity. If you knew that you could make more products for your customer by purchasing new machinery and adding ten new jobs - would you make that investment in a state where you were taxed more for your capital investment or - would you cross the state line where you are would only be taxed for the increased sales you made?

Giving manufacturers the option to use Single sales factor will help keep Tennessee competitive - for the jobs we have now and the ones we are willing to grow.  When the manufacturing sector thrives, it provides positive downstream effects.  Here is some encouraging news to back that up: Tennessee leads nation in small business growth.

"A lot of the small businesses we serve are what we call second derivatives off of many major manufacturers so the growth of auto manufacturers and others is undoubtedly helping many small businesses to grow," said Frank Fiorille of the Paychex / HIS Small Business Index.

Tennessee Chamber Survey Shows Trump Boosting Business Confidence
A new study from Middle Tennessee State University's Jones College of Business and the Tennessee Chamber of Commerce and Industry shows skyrocketing optimism among our state's business leaders following last year's Presidential election.  

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
Next week the Senate, has several bills of interest to business will be heard in committee
SB 0114 - Property Tax relief for property owners impacted by the Chimney 2 Fire in the Gatlinburg area
SB 0127 - Prohibits state and local government for taking action against private business based on internal business practices that are in compliance with state law.
SB 0261 - Workers Compensation: adds an additional step in the
SB 0262 - Employee Scheduling: prohibits a local government from imposing a requirement upon an employer pertaining to employee scheduling.
'Trump Signs 2-for-1 Order to Reduce Regs'
The Hill reports that yesterday, President Trump "signed an executive order that would require agencies to revoke two regulations for every new rule they want to issue."  The article points out that "Trump met with a handful of small business owners at the White House prior to signing the order."  The new executive order is being "touted it as the most significant" regulatory reform "since President Reagan created the Office of Information and Regulatory Affairs (OIRA) in 1981." Trump told reporters that he "isn't done targeting regulations, reiterating his campaign promise to try and cut 75% of rules."

House Republicans Move To Reverse Obama-Era Rules

The AP (2/1, Daly, Freking) reports House Republicans began debate Wednesday on a measure to rescind Obama-era rules designed to protect streams. However, Rep. Bill Johnson (R-OH) said, "Make no mistake about it, this Obama administration rule is not designed to protect streams. Instead, it was an effort to regulate the coal mining industry right out of business." Lawmakers are set to "rescind a separate rule requiring companies to disclose payments made to foreign governments relating to mining and drilling." The Hill (2/1, Henry) reports the Stream Protection Rule finalized by the Interior Department in December "has been a longtime target of Republicans." The NAM issued Key Vote Letters in the House and Senate supporting the resolution.
U.S. Chamber's Donohue Congratulates President Trump's Nominee for Supreme Court
U.S. Chamber President and CEO Thomas J. Donohue issued the following statement yesterday regarding President Trump's nomination of Neil Gorsuch to the Supreme Court of the United States:
"We congratulate Judge Gorsuch and applaud President Trump for quickly naming a Supreme Court justice nominee. The Supreme Court plays a critical role ensuring the rule of law is upheld and constitutional protections for all are honored. The election is over and now it's time for the Senate to act."   Additionally, Judge Gorsuch delivered the Barbara K. Olsen Memorial Lecture at the Federalist Society's National Lawyers Convention in 2013.  A significant portion of his remarks focused on overcriminalization.  

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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.