Budget, Jobs Headline 2012 Legislative Agenda

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NASHVILLE – The second session of the 107th General Assembly began on Tuesday, January 10, with a full array of issues on tap for 2012.  Tennessee’s budget and job creation, however, will be the predominant drivers for legislative action.  

Evidence of this came as Governor Bill Haslam’s announced an aggressive legislative package this week.  The Governor’s priorities include proposals designed to move Tennessee forward as the number one location in the Southeast for creation of high quality jobs through economic development efforts, meaningful education reform, a more efficient and effective state government, and improved public safety.   

Legislative Priorities Include Lowering Taxes On Food
Among Governor Haslam’s 2012 priorities is a proposal to reduce the state portion of the sales tax on grocery food from 5.5 percent to 5.3 percent, with the goal of lowering it to 5.0 percent in three years.  The reduction of sales tax on food has been a goal of Republicans in the General Assembly for many years.

“I am very pleased to see this proposal included in the Governor’s legislative package,” said Senate Judiciary Chairman Mae Beavers (R-Mt. Juliet), who has sponsored legislation to phase out the sales tax on food for more than a decade. “I support efforts to bring tax relief to Tennessee families and senior citizens through the reduction of sales tax on groceries and hope that we can eliminate it in the near future.” 

In addition, the Governor adopted another Republican initiative to lower or phase out the estate tax, which is commonly referred to as the “death tax.”  The Governor’s plan raises the exemption level to $1.25 million this year with the objective of reaching a $5 million level in subsequent years.    

Currently, the tax applies to estates worth more than $1 million.  Tennessee has a high inheritance tax which ranges from 5.5 percent to 9.5 percent, as compared to its neighbors.

Prescription Drug Abuse – Another key legislative priority for 2012 is curbing prescription drug abuse.  Tennessee ranks second in the nation in regard to the overutilization of prescription pain medications.  Governor Haslam’s legislative package addresses prescription drug abuse by utilizing the state’s Controlled Substance Monitoring Database system more effectively and ensuring that healthcare professionals tap into the system when prescribing certain scheduled drugs.  

The General Assembly passed legislation during the 2011 legislative session cracking down on prescription drug abuse at pain clinics in Tennessee.  That law required the Department of Health, in concert with the doctors, nurses and physician assistants, to establish rules to govern the operation of clinics, including personnel, patient records, data collection and reporting, inspections, health and safety requirements and patient billing.

“Our legislation combating meth, which I sponsored, and the prescription drug abuse law passed last year was a tremendous step forward,” said Senator Beavers.  “We must continue to fight the war on drug abuse as it impacts far too many families in our state.”

Statistics from the Tennessee Drug Diversion Task Force show that 56 percent of patients who receive opioid prescriptions have filled another opioid prescription within the previous 30 days.  Young adults ages 18 to 25 have the highest annual rates of prescription drug abuse.

Higher than Expected Revenues Help With Budget Challenges

With Tennessee facing significant budget challenges, the state received good news this week regarding state revenues.  For the eighth consecutive month, Tennessee’s growth rate has been 5.0 percent or higher.  December collections were $123.2 million more than the budgeted estimate.  

Year-to-date collections for the first five months of the 2011-2012 fiscal year were $194.2 million more than the budgeted estimate.  In December, the state’s Funding Board issued new revenue estimates for the 2011-12 fiscal year to be within the range of 3.9 percent to 4.21 percent overall, with growth of 4.2 percent to 4.58 percent in the general fund. The outlook would generate $177 million to $209 million above the Board’s previous estimates and would help soften the blow of more drastic cuts to the state’s budget.

Although the revenue increase is promising, it is important to note that the state is still not back to pre-recession 2008 collection levels on sales taxes.  

Tennessee has worked hard to ‘resize’ state programs and services to reflect a much smaller budget, especially with the uncertainty of potential cuts from Washington.  The General Assembly has cut $1.521 million from its budget in total reductions since the 2008-09 fiscal year.  In the previous three years, Tennessee had already reduced discretionary spending by 21 percent.

Governor Haslam is expected to present his budget to the legislature at the end of the month, and State Senators will begin hearings on details of the plan the first week of February.

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