February 23, 2017
IMPROVE Plan Hits a Road Block in House Subcommittee; Members Hit the Brakes Unexpectedly on Alternative Plan
Wednesday in the House Transportation Subcommittee, Governor Haslam's IMPROVE Act hit an unexpected road block that left both supporters and opponents of the transportation plan scratching their heads.  After convening the afternoon subcommittee and hearing testimony from the trucking association, members were scheduled to first debate and consider action on the Governor's legislation and proposed amendment before hearing alternative plans proposed by Reps. David Hawk (R-Greeneville) and Jason Zachary (R-Knoxville).  To the surprise of subcommittee members and onlookers alike, Chairwoman Terri Lynn Weaver instead called up the rival transportation plan sponsored by Rep. Hawk out of order.  Confusion and uncertainty immediately ensued, leading Rep. John Mark Windle (D- Livingston) to introduce his own surprise amendment calling for the removal of sales taxes on any purchases of baby formula.  Chairwoman Weaver promptly ruled Rep. Windle's amendment to be untimely filed and therefore out of order, causing Windle to make a motion to abruptly adjourn the committee, which prevailed on a 5-4 vote.  When later asked by the media why she took up the Hawk bill out of order, Chairwoman Weaver gave uncertain answers.
The event highlights the upheaval in the House in finding a solution to Tennessee's transportation needs and resulting in an embarrassing first hearing on this issue.   

It is critical that the business community voice their support to 
House Transportation Subcommittee   members for the IMPROVE Act.   Click HERE   and follow this link from the Transportation Coalition of Tennessee to let your legislators know you support Governor Haslam's transportation legislation.

While the attempt to leapfrog Gov. Haslam's gas tax bill had a jarring and confusing short-term impact on subcommittee members, the successful motion to adjourn was interpreted by many as a positive long-term signal for the legislation.  The bill is still set for consideration at the top of next week's calendar in the subcommittee, and once again the vote is expected to be very close.
Senator Beavers and her 
Terrible, Horrible, No Good, Very Bad Week

This time last week Senator Mae Beavers and Representative Mark Pody started a press conference promoting two of their bills ( SB0771 & SB0752 ).  It didn't take long for them to notice that the committee room was filled with citizens opposed to their efforts - first by the waving of signs, then by raised voices citing their objections.  The press conference abruptly ended with Senator Beavers leading the way out of the door.  Soon after, she exited the building leaving Rep. Pody to receive the brunt of the resistance in the legislative hallway. 
Then Tennessean reported on a local town hall meeting where Senator Beavers proclaimed she had met with "intelligence people" and that Muslim terrorists are infiltrating churches and planning a jihad in the Bible Belt.  Beavers later modified her comments admitting some of her information "was not entirely accurate". Senator Beavers is also sponsoring legislation requiring all driver's license possessed by non-citizens to read "ALIEN" business groups including the Chamber have opposed this bill and question it's need and impact of chilling business foreign business investment.  We suspect Mork would also take offense.
With the President's Day holiday and a few jabs on social media, Beavers may have thought the storm had passed.  Nevertheless, the discord reappeared when a smaller group showed back up Tuesday morning to visit her in her office and oppose her social crusade.  Beavers refused to meet them and after 30 minutes of the protesters asking questions through the closed door of her office, Beavers reappeared announcing 

A local report announced that the protesters had cancelled their plans to visit again on Wednesday...
Our take:   This group appears undeterred. Unless Senator Beavers meets with them, they will be back every week.  
Growing Jobs and Capital- The Case for Single Sales Factor and the Impact of Manufacturing in Tennessee

With the recent uptick in business tax collections fueling revenue surpluses for our state budget, adopting a permissive Single Sales Factor plan would promote economic development across the state by enhancing the competitiveness of Tennessee's franchise and excise tax laws on manufacturing employers.  Current law requires that a manufacturer's business tax liability be assessed based on a 3-factor combination of its property, payroll, and sales.  The Single Sales Factor would remove the state tax assessments on property and payroll and instead focus solely on a manufacturer's sales, thereby eliminating the current tax penalties on local jobs and capital investment in our state.
As many of Tennessee's regional neighbors have adopted some form of Single Sales Factor tax policy for manufacturers it is critical that we stay economically competitive to avoid a geographic drain of jobs and private investment.  Georgia, South Carolina, Mississippi, Louisiana, Missouri, North Carolina and Virginia all permit some form of Single Sales Factor tax assessment on businesses.  Comparatively, Tennessee's current franchise and excise tax laws offer a disincentive for manufactures to locate within or expand their job and capital investments in our borders, leaving many of these high-quality employers to look to other states to grow their operations. 
Manufacturing Impact on Tennessee's Economy  

No other sector contributes more to driving widespread economic growth across a broad spectrum of industries than manufacturing.  In fact, Tennessee was recently ranked the top state in the nation for small business job growth due to expansions by major manufacturing employers in our state.  Not only does this job growth offer more employment opportunities for Tennesseans and expand local tax bases, but with an average employee earning roughly $65,491 per year compared to $42,327 for all other non-farm businesses, the manufacturing industry is also elevating the standard of living for both urban and rural families.  With over 331,000 employees across the state and accounting for over $45 billion worth of economic output in 2013 alone, no other private sector in Tennessee has the singular capability to improve economic conditions for more Tennesseans than manufacturing.

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
Big bounce: State revenue $169M over budget estimates in January

Tennessee tax revenues were above budgeted estimates for January. Finance and Administration Commissioner Larry Martin today announced that overall January revenues, driven by a very large one-time franchise and excise tax payment, were $1.4 billion. Total revenues were $169.1 million more than the state budgeted and 10.54% more than revenues received in January of last year. Read the details .

Chart - Revenue Collections since FY '94-'95
(yes they are up this year)
Future of Obama's Overtime Rule "Very Much In Doubt"
The Columbus (OH) Dispatch  (2/19) said the future of the Obama administration's overtime rule "is very much in doubt." The article quotes NAM Director of Employment Policy Amanda Wood saying, "I think that uncertainty worries our employers because they can't plan if there's a cloud of uncertainty on them." She added, "It's also hard to create more jobs when you're not sure what the next threshold would be in a year, two years, three years going forward."

Pruitt Confirmed as EPA Administrator:
Announces withdraw CPP, WOTUS rules,
re-examine carbon role
Newly confirmed Environmental Protection Agency Administrator Scott Pruitt says he will work to withdraw regulations governing the Waters of the US rule and the Clean Power Plan. With regards to the EPA regulating carbon dioxide, he said, "Part of that process is a very careful review of a fundamental question: Does EPA even possess the tools, under the Clean Air Act, to address this?"   The  Washington Post (2/17) reported the National Association of Manufacturers proclaimed Pruitt would "restore balance to the way environmental regulations are developed." E&E Publishing reported on Pruitt's path to confirmation, including support he received from the National Association of Manufacturers. According to the article, NAM President and CEO Jay Timmons said in a statement "that for too long," the EPA has ignored the economic impact of its various regulations. Yet, Timmons said, Pruitt's nomination for EPA administrator "signals that change is finally coming."

Tennessee Stands Out for Strengthened Influence in DC

No state in this decade has seen a more meaningful boost than Tennessee in institutionalized congressional influence. Only eight states, all with much bigger delegations because they're much more populous, have more overt sway at the Capitol this year. That is one of several notable findings from the new Roll Call Clout Index.
Just two years ago, Tennessee's clout ranked 14th among the states, unremarkable because that is closely in line with its ranking as the 16th most populous state, with 6.6 million residents. And only six years ago, the 11-member delegation was punching well below its weight, coming in at No. 27 in the Clout Index.  What's changed is that the state has done better and better, especially relative to other states its size, in the calculable things that contribute to a delegation's overall leverage. In a Republican Congress, it makes a difference that both senators and seven of the nine House members are on the majority side. In an institution with plenty of recent turnover but where seniority still provides tangible benefits, it makes a difference that all but one of the Volunteer State's lawmakers have been in office longer than six years.
And the partisan alignment and longevity has helped propel members of the delegation into positions that convey authority and power. Not only are both senators in their third years as chairmen of premier panels,  Bob Corker at Foreign Relations and  Lamar Alexander at Health, Education, Labor and Pensions, but also two House members have been handed committee gavels this winter:  Diane Black at Budget and  Phil Roe at Veterans Affairs.  Beyond that, Alexander chairs the Appropriations subcommittee controlling spending on energy and water development programs, while fellow Tennessee Republicans have risen to senior seats on all three premier House committees: Black at Ways and Means,  Chuck Fleischmann on Appropriations and  Marsha Blackburn at Energy and Commerce.
Angst in GOP over Trump's trade agenda

Republican lawmakers are concerned about where President Trump is headed on trade and are asking who in the administration is in charge of policies that could affect their home-state economies. Their biggest worries are what will replace the Trans-Pacific Partnership - the largest trade deal in U.S. history until it was scrapped by President Trump - and the future of NAFTA, which the president has called "the single worst trade deal in history."  Trump talked tough on trade during the campaign, pledging to renegotiate deals that he said have ripped off American workers. But many lawmakers on Capitol Hill are confused about what comes next amid crosstalk from different voices in the administration.
Which Trade Deficits Really Matter?
It's Complicated...

President Donald Trump is fixated on deficits as measures of how the U.S. gets the short end of the stick in trade deals. He's had Mexico in his Twitter crosshairs for selling $63 billion more in goods to the U.S. than it buys, blaming "one-sided" Nafta for a "massive" imbalance-one he's promised to fix by renegotiating the terms of the agreement. (Plenty of fun charts from Bloomberg - Here .

When you consider the size of the gaps the U.S. has with some of its biggest trade partners, U.S deficits with Nafta partners Canada and Mexico are relatively minimal. A 65 percentage-point import-export difference favors Ireland in the largest trade deficit of America's 15 top trading partners. A 60 point gap favors China. The U.S. has big imbalances with Japan, Germany and India, too. The U.S. came out on the other side of the split with the Netherlands, the U.K. and Brazil; each bought more from the U.S. than it sold back in 2016.
So... Chan and Mark Zuckerberg Were Driving though Alabama
Of course he wrote a Facebook post - but who took their picture and where was he going? Click right to see selected photos of his Bubba Gump adventure  in Bayou La Batre, AL.

U.S. Chamber Update / U.S. House of Representatives Could Consider Legal Reform Legislation in March
Last week, the U.S. House Judiciary Committee reported two important legal reform bills out of committee.  H.R. 985, the Fairness in Class Action Litigation Act (FICALA) and H.R. 906, the Furthering Asbestos Claim Transparency Act (FACT Act), were both passed on party line votes. Institute for Legal Reform (ILR) strongly supports both bills, which will create greater fairness and transparency in federal courts and address significant abuses that have long harmed our civil justice system.

A summary of the class action reform bill can be found here.  And despite claims by opponents of asbestos claims transparency, the American Legion recently endorsed the FACT Act in a letter to the sponsor. ILR is calling on the State Legal Reform Network to contact your federal legislators and ask them to support these two common-sense legal reform bills.

For further information, please contact:

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.