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TN Revenue Up in 1st Month of New Fiscal Year Collections

Press release from the Tennessee Department of Finance & Administration; September 12, 2014:

NASHVILLE, Tenn. – Tennessee revenue collections exceeded budgeted estimates for the first month of the state’s fiscal year. Finance and Administration Commissioner Larry Martin today reported that overall August revenues were $870 million, which is $31 million above collections a year ago. The growth rate for August was 3.70%.

“Sales taxes collected by retailers in July grew 6.73 percent, the largest month-over-month growth we have experienced in the past 27 months,” Martin said. “Corporate tax collections grew by 9.25 percent, but were still slightly under budgeted expectations. All other taxes, taken as a group, had negative growth of 5.33% but were $6.1 million above the budgeted estimate for August.

“While we are encouraged by the August numbers, we continue to be concerned about the relatively slow economic recovery in Tennessee. It is important for us to maintain our close controls on state spending and to carefully monitor revenue trends.”

On an accrual basis, August is the first month in the 2014-2015 fiscal year.

August collections were $24.4 million more than the budgeted estimate. The general fund was over collected by $22.7 million and the four other funds that share in state tax collections were over collected by $1.7 million.

Sales tax collections were $19.2 million more than the estimate for August. The August growth rate was positive 6.73%.

Franchise and excise taxes combined were $0.9 million below the budgeted estimate of $35.5 million, and the growth rate was positive 9.25%.

Gasoline and motor fuel collections increased by 4.91% from August of 2013, and were $0.3 million above the budgeted estimate of $70.1 million.

Inheritance tax collections were $2.5 million above the budgeted estimate.

Privilege tax collections were $1.8 million more than the budgeted estimate of $21.4 million

Business tax collections were $2.4 million above the August estimate.

Tobacco tax collections for the month were under collected by $1.1 million.

All other taxes were over collected by a net of $0.2 million.

The budgeted revenue estimates for 2014-2015 are based on the State Funding Board’s consensus recommendation of December 17th, 2013 and adopted by the second session of the 108th General Assembly in April 2014. They’re available at http://www.tn.gov/finance/bud/Revenues.shtml.

COLLECTION TABLES

Travel Tech Group Lauds Demise of Local Tourism Tax Shift

Press release from the Travel Technology Association; March 20, 2013:

NASHVILLE, Tenn., March 20, 2013 /PRNewswire/ — Travel Tech: The Travel Technology Association applauds the wisdom of the Tennessee Senate State and Local Government Committee for voting “no” on Senate Bill 212, which would have created new taxes on brick-and-mortar and online travel services. Online travel companies (OTCs), Tennessee travel agents, anti-tax organizations, independent Tennessee hoteliers, business travelers, internet coalitions and other groups were among those who raised concerns about the impact of the proposal.

Tennessee joins a number of other states in the last two years, including Florida, Virginia, Utah, Oregon, Connecticut, Massachusetts and New Mexico that have considered and rejected similar taxes as unworkable and harmful to tourism and job creation. This marks the second consecutive year that the Tennessee Senate has recognized these taxes as bad policy for Tennessee. A federal court in Goodlettsville, TN, also sided with the OTCs in 2012, holding they were already in compliance with Tennessee tax law.

“We hope the bill supporters in Tennessee now recognize that they were led astray by interest groups looking to use public policy as a competitive tactic to impose new taxes on traditional travel agents and OTCs alike,” said Simon Gros , Chairman of Travel Tech. “OTCs and traditional travel agents are in the business of encouraging travel to places like Tennessee, which creates real jobs and real tax revenue.”

The bills would have also imposed major compliance burdens for local businesses in Tennessee. Any Tennessee-based travel agent who used the fee-for-service merchant model for bookings and assembling travel packages would have had to take on the unprecedented responsibility of calculating and remitting the tax owed in multiple taxing jurisdictions. These added compliance costs would have placed particular strain on traditional brick-and-mortar travel agents, who already operate in a business climate marked by extremely low margins.

Travel Tech: TN Tourism, Travel Threatened by New Tax on Travel Services

Press release from The Travel Technology Association; March 8, 2013:

NASHVILLE, TN, March 8, 2013—In a potential blow to Tennessee travel and tourism, state Senator Doug Overbey and state Representatives Art Swann and Steve McDaniel have sponsored legislation that would impose a new tax on travelers who use the services of online travel companies and brick and mortar travel agents.

The legislation would apply state sales taxes and county and local hotel occupancy taxes to the service fees of traditional and online travel agents that facilitate reservations for Tennessee hotel room transactions. The move would raise prices for consumers and jeopardize Tennessee hotels’ ability to provide competitive travel deals.

The new service tax bills, Senate Bill 212 and House Bill 678, directly contradict decisions made in dozens of states and courts nationwide—including a 2012 decision by the U.S. District Court for the Middle District of Tennessee—which in recent years have soundly rejected similar travel service taxes as being inapplicable as OTCs do not operate hotels.

State legislatures across the nation—such as those in Virginia, Florida, Texas, Pennsylvania, Utah, Oregon, Missouri, Connecticut, and Massachusetts—have examined adding new travel taxes in recent years, and have overwhelmingly recognized that application of these unconstitutional taxes immediately makes a state less competitive for travel and tourism.

While aimed at out-of-state visitors, this new tax would equally impact Tennessee residents looking to book their in-state travel through online and traditional travel agents.

“Tennessee officials have been conned by special interest groups into thinking it is good public policy to trade a short-term cash grab for long-term economic stability. Passage of S.B. 212 and H.B. 678 will make Tennessee less competitive for tourism dollars. The sponsors might as well title this bills, ‘The Kentucky Tourism Stimulus Act,’” said Simon Gros, Chairman of Travel Tech: the Travel Technology Association.

About Travel Tech

The Travel Technology Association, or Travel Tech, is the association for online travel companies (OTCs) and global distribution systems (GDSs), and is dedicated to connecting consumers and travel providers, eliminating barriers to travel and protecting consumers. Travel Tech’s members include: Amadeus, Expedia, Orbitz Worldwide, Priceline, Travelocity, Travelport and Vegas.com.

RYO Shop Operators Claim Victimization by Gov’t, Big Tobacco

Tennessee tobacco farmers will see taxes on their products rise because of legislation passed this year by the General Assembly, mirrored by a provision in the federal highway bill passed in July.

Although the highway bill has been touted by Washington politicians as supporting or creating around a million jobs, the provision taxing roll-your-own tobacco shops as manufacturers could put an end to an entire industry.

“It’s definitely a major body blow, a knockout punch if you will,” said Mark Griffey, one of the proprietors of Smokes-4-Less in the Knoxville area. Griffey says he shut down two of his three stores and laid off nine of his 10 employees after the federal bill was signed. “So, for all intents and purposes, if we don’t get some kind of injunction or antitrust suit, or something, we’re dead.”

The federal bill raises taxes on pipe tobacco to the same rates as cigarette tobacco and requires that roll-your-own shops be licensed as manufacturers in order to run the machines, which cost over $30,000 apiece — an investment businesses say now looks to be a money loser.

The state legislation sought to “level the playing field” by requiring the roll-your-own shops to register with the state to ensure that they were using the proper tobacco, paying the proper taxes on the tobacco, and paying into the Master Settlement fund, said Senate bill sponsor Jack Johnson, R-Franklin. The fund was set up after a 1998 settlement between the top four cigarette companies and the states, which required payments from the companies over a 25-year period.

“As I understand it, the federal law is pretty much going to put them out of business,” said Johnson, who, in the interest of full disclosure, admitted during the legislative session that his wife operates a convenience store. “That was not our intention with what we passed at the state level, but we did feel like it was necessary to level the playing field a little bit.”

Voting against the measure was Rep. Frank Niceley, R-Knoxville, who says it will work a hardship on farmers.

“It was just a tax on Tennessee farmers, and I‘ve never voted to tax Tennessee farmers,” said Niceley. “And I’m probably not going to be starting.”

Business owners like Griffey say the bills are a thinly-veiled effort by government and big business to butt roll-your-own operations out of the market. Although the state measure would have been crippling enough, it at least allowed them time to adapt, Griffey said. But the enaction of the federal bill was instantaneous.

“They started talking about it at the end of June, and then July 5th or 6th, Obama signed the thing, and it’s instant,” said Griffey.

Nationwide, there are about 1,000 stores with roll-your-own machines from RYO Machines, a leading manufacturer, RYO told the Huffington Post in July.

Griffey said he feels that much of the pressure on legislators to level the playing field seems to have come from lobbyists for larger tobacco companies and convenience stores, industries which were negatively affected by the roll-your-own shops’ ability to sell tobacco at a lower tax rate. This sentiment is one that Niceley shares.

“They call these machines manufacturers, they can make 200 in about 10-12 minutes, with the customer doing it themselves,” Griffey said. “The way they make them, they make 20,000 in a minute. It’s just the big guy snuffing out the little guy.”

Tennessee Republican Congresswoman Diane Black also sponsored a measure to raise the tax rates on roll-your-own shops, though it was not her measure that ultimately passed.

Revenue Dep’t Boat Bungle Prompts Call for Tightening Tax-Collection Rules

A dustup earlier this year between a Murfreesboro man and the Tennessee Department of Revenue over taxes on a home-built boat has led one lawmaker to consider reforming the state’s tax laws.

The problems began for Johnathan King, 39, when he attempted to register a 14-foot boat, which he had built in his garage for personal use, with the Tennessee Wildlife Resources Association. The boat, made of plywood, fiberglass overlay and epoxy, had been built with materials purchased locally, a motor purchased in Hermitage four years ago, and plans purchased over the Internet, King said.

“We were informed that we had to provide documentation, receipts and several other things on the value of the craft, and what it would be taxed at, and then the cost of building it,” King said. “And that’s really what kind of set off the debate on the tax issue, which prompted the Department of Revenue to send us that letter indicating that we were dealers.”

The term “dealer” is used in the sales and use tax laws to describe anyone with an obligation to pay tax, whether it’s on the sale or the purchase of an item, according to a statement from the Department of Revenue: “It is not the Department’s position that an individual who builds a boat from a kit or component parts is in the business of selling boats. However, tax is due on the purchase of those materials, just as it is due on any other purchase.”

The department sent King a bill amounting to over $500 for the estimated taxes on his boat, which included sales and use tax on the materials used to build the boat, as well as the threat of a lawsuit if he did not pay. King, a former employee of the Internal Revenue Service, has since gotten the bill reduced to $40.

King’s case also attracted attention from Capitol Hill.

Rep. Joe Carr, R-Lascassas, King’s representative, said the law governing King’s tax case is overly broad and ambiguous and gives state tax collectors too much wiggle room. Carr says the state should not have compelled King to pay the tax on the boat since he had already paid sales taxes on the materials.

“That’s just an example of an overbearing bureaucracy that has too much latitude with regards to how a statute or regulation can be interpreted,” Carr said.

King agrees: “I just can’t believe nobody has put their feet to the fire before now. And they still don’t really have their feet to the fire.”

The use tax, which was enacted in 1947, is used by the state “to complement the sales tax by taxing merchandise purchased from out-of-state sources that do not collect the state’s sales tax,” according to the Department homepage. The tax exists in order to protect local businesses from “unfair competition” from out-of-state merchants who don’t have to collect the sales tax.

King, who had a previous dispute with the state over a $650 tax bill on his corporation, calls the Department’s methods “thuggish at best.”

Carr, who was unable to file a bill in time to address the issue last legislative session, has said that if he is re-elected he will take the issue back up next session. He intends to file a bill to revise the wording of the state’s tax laws as to who is required to pay taxes as a dealer, as well as who is not, in order to prevent any future misinterpretations and problems for Tennesseans.

“That’s the silliness of some of these regulations, and we’ve gotta deal with it in, I think, a fairly forceful manner,” Carr said.

Evans: Nation on Path to Bankruptcy

Editorial from Rep. Joshua Evans, R-Greenbrier; July 6, 2012:  

Throughout this week of celebrating our Independence, I hope that, in addition to the fireworks and the barbecues, each of us takes the time to reflect on the system that our Founding Fathers so wisely developed. Influenced by the experiences of other nations where citizens struggled beneath all-powerful monarchs, overly-influential legislative bodies, and historic social barriers that stood in the way of true individual involvement in the state, our government was created to give voice to the citizens of our nation.

This time of reflection is essential today because we have a presidential administration that is acting with impunity – resembling the all-powerful monarchs that our governing system was designed to resist.

First, the administration argues before Congress that Obamacare is not a tax. This argument protected Congressmen who were afraid to explain to their constituents why they had voted for the largest tax increase in American history.

Then, the administration goes before the Supreme Court and argues that Obamacare is indeed a tax and thus constitutional. So – for all of you keeping score at home – for political expediency, the bill is not a tax, yet for Constitutional expediency, it is a tax.

In his recent proclamation that created a path to amnesty for many who are in our nation illegally, the President belied his apparent belief that members of congress are simply obstructions and side-stepped them and their collective authority.

And for good measure, when Congress dared to call into question the Department of Justice and its egregious failures through the Fast and Furious operation, the President invoked executive privilege, protecting a number of documents that could potentially reveal the implicit – or even explicit – support of the administration in these illegal activities.

These are three examples – all of them recent – of an administration acting in a manner where it appears as if all others are irrelevant or at best bit-players in the administration’s larger production.

Unfortunately for the American taxpayer, the price-tag for the President’s actions is growing by the day. The projected cost of Obamacare has already grown from $800 billion to $1.7 trillion. In addition, the EPA now has more regulations in the approval pipeline than the Agency generated in its entire 40 year existence. These regulations contribute to $1.75 trillion in costs to the American taxpayer while also killing jobs and stifling business growth.

We are on a path that will bankrupt this great nation. This fall, however, we have the opportunity again to exercise our freedoms to shift the direction of the country and to place us back on a path to prosperity.

In the 2010 elections, the American people expressed their displeasure with Obamacare, voting the Republican Party into 63 democrat-held seats in Congress – and 680 seats shifted to the Republican Party in state legislatures across the country. This was an historic shift, and voters have a similar opportunity this year.

The power of your votes is clearly evident in our General Assembly. Through the repeal of the Death Tax, through ongoing Tort-Reform efforts, through the strengthening of our right-to-work laws in Tennessee, through the passage of business-friendly, job-creating statutes, and through our extensive education reform efforts, we have navigated our state into a position where businesses and individuals in Tennessee have greater opportunities to be successful.

We are blessed to live in a nation where through our votes we are given the opportunity to steer our course, directing us – as we have in Tennessee – to prosperity. So as we celebrate our Independence and look forward to the elections ahead, I implore you to remember the privilege that we share in our ability to vote and the responsibility we share to exercise that privilege.

The Pork Not Chopped

Tennessee Republicans this year had a window of opportunity to trim $23 million from the budget’s pork-barrel buffet that’s annually lain before them in the late hours of the legislative session.

But as often happens, the home-cooked political victuals proved too toothsome to pass up. They opted instead to heap their plates and hand taxpayers the tab in advance of hitting the exits and heading for yonder hills, dales and campaign trails.

Late in April, GOP lawmakers in both the House and the Senate appeared to identify more than a dozen local projects deemed worthy of consideration for removal from the state’s $31.5 billion budget.

As legislators entered the final stages of drafting the spending plan, bickering broke out over the relative merit of a series of “local projects” that had somehow meandered into the funding mix– despite a supposed informal “agreement” to spend taxpayer dollars solely this year on projects with obvious statewide or regional impact. At one point, the Senate even voted to cut $22 million worth of local pork that had crept into the budget after their brethren in the House had cut $1.8 million in suspicious spending they’d sniffed out.

But it was all just a show, little more than political theater. Ultimately, after an all-too-surreal House-Senate conference committee hearing, only $1 million in spending previously on GOP lawmakers’ wish lists was no longer in the final budget document.

House Finance Committee Chairman Charles Sargent, R-Franklin, admitted that the late-stage discernment of waste in the budget ultimately amounted to legislative “gamesmanship” — that, truth be known, there wasn’t much taste on anybody’s part for reducing tasty government handouts sure to wow the folks back home when it comes time for incumbents to brag on what they brung em’.

“It always happens at the end of the year. These are the things you just have to work out and take care of,” Sargent told TNReport.

Nevertheless, Lt. Gov. Ron Ramsey, who presides over the Tennessee Senate, said he doesn’t think voters of a fiscally conservative bent ought to be of a mind to make the GOP’s big-spenders pay come election time.

Ramsey, a “huge believer in preserving history, preserving our roots,” suggested it’s natural to make taxpayers pick up the slack when private-sector fundraising for cultural-heritage conservation comes up short.

“I think that fits right into my basic philosophy in general,” said the Blountville auctioneer, who often sells himself as a friend of Tea Party conservatives.

Still, Ramsey conceded not everyone may agree with every aspect of discretionary government spending in the coming year’s budget, especially when you get down to details.

He acknowledged that one of his own rather infamous pet projects — the Birthplace of Country Music Museum — probably “sounded awful” to those of a mind to zero in and identify the particulars of potential government waste. But GOP legislators even in the House rallied around the proposal to capture $500,000 from taxpayers’ wallets to help fund the $13 million as-yet-unfinished tourist trap located in Bristol, Virginia, just across the street and the state line from Bristol, Tennessee.

House Democrats had something of a field day ridiculing the fact that Republicans were willingly sending Tennessee tax dollars to Virginia. Later, though, their leadership acknowledged the outrage was calculated more to raise awareness of their own projects that didn’t get funded than any principled stand against spending money outside state borders.

“That never would have happened in a Democratic administration — at least not until we took care of our own projects first,” conceded House Democratic Caucus Chairman Mike Turner.

Ramsey noted, though, that what is, or is not, a “local” project is mostly a matter of perspective.

“You can argue the same thing of the Civil Rights Museum in Memphis: Doesn’t help the state, it only helps Memphis. You could argue that Stax Museum (of American Soul Music) doesn’t help the state — it only helps Memphis,” said Ramsey.

During House floor debate on the museum, Rep. Richard Montgomery, R-Sevierville, argued that taxpayer resources allocated toward tourism is almost always money well spent.

“I live in the center of tourism — the most active tourism area in the state of Tennessee, and we understand that,” said Montgomery. “We understand, too, that when you spend money on tourism it is a proven fact that every dollar you spend will get you $13 in return. Sometimes it is even more than that.”

But to the Tennessee Beacon Center’s bacon detector, things really aren’t all that complicated: If it looks and smells like pork, it probably is.

“It was sort of surprising that he came out with $500,000 for the museum in Bristol. And I think the most egregious part of it is it isn’t even in Tennessee, and this shows that taxpayer waste doesn’t even stop at the state line,” said Justin Owen, president of the free-market think tank that each year takes it upon itself to root out unnecessary and ill-advised government spending in the Volunteer State.

To be fair, Owen noted, the Legislature also voted to cut taxes this year — including reducing the sales tax on food from 5.5 percent to 5.25 percent, lowering the tax on inheriting wealthy estates and eliminating the tax on gifts. The reduction in the food tax will cost the state $22 million in “lost revenue.” And duly elected spenders of state taxpayer dollars will have about $95 million less to play around with after the three-year phase-out of the inheritance tax. Eliminating the gift tax will cost government an estimated $15 million annually.

But, clearly, the temptation to spend recklessly doesn’t stop at the party line either.

“Republicans spend just like Democrats. When you’re in control, you’re going to spend money,” Owen said. “There’s an incentive there to spend taxpayers’ money on things that really don’t benefit taxpayers as a whole, that go to benefit a select few.”

The Beacon Center’s 2012 Pork Report, due out later this month, takes special care to identify “tourist-related pork” and what Owen terms “corporate welfare,” like tax incentives for private businesses, including breaks for filmmakers shooting in Tennessee.

Andrea Zelinski and Mark Engler contributed to this report.

Ending Inheritance Tax a Priority to Many Farmers

Tennessee farmers flooded the state Capitol for Ag Day on the Hill Tuesday, in part to show off their livestock and the impact of farming on the state’s economy — but also to urge lawmakers to eliminate the so-called “death tax.”

The tax applies to inheritances, which to them means paying thousands to tens of thousands of dollars if they are left the family farm and its value exceeds $1 million.

“I already paid for it once. And I already pay taxes on it every year to keep it,” said Mark Klepper, a farmer and former Greene County board member for the Tennessee Farm Bureau.

“You work hard all your life to make the money, you get taxed on it while you make it, you get taxed on it to keep it and the interest you make of it. And then when you die, your children have to pay tax on it just to keep it again,” he said. “It’s not fair for the person who actually works to achieve wealth gets punished for working.”

Gov. Bill Haslam is making it his priority to scale back the tax on inheritances this year. His plan, SB3762, includes raising the existing tax exemption from property and wealth valued at $1 million to $1.25 million. His administration’s long-term goal is to increase that to $5 million over several years.

The bill hasn’t moved far in either chamber of the General Assembly, generally because lawmakers were waiting for state officials to finalize the plan’s budget impact. It would save taxpayers some $14.2 million, but would also mean that much less in the budget to fund programs. It is scheduled for a hearing in the House Finance Subcommittee Wednesday.

Wearing a button that read “Kill the Death Tax,” House Speaker Beth Harwell said the measure is crucial to farmers.

“Unfortunately, because we have such an aggressive death tax in this state, a lot of times they have to sell the farm when someone passes away in order to pay the death tax rather than let the family inherit it and keep it in the family. We want to stop that,” she said.

The Beacon Center of Tennessee has also pushed to eliminate the death tax. The free-market think tank released a report recently that profiled farmers who say the tax has hurt them, including a cattle farmer from Robertson County and a farmer in Christiana who deals in row crops and cattle.

“Tennessee is one of only two states in the south that imposes a death tax, and not a single state in the Sun Belt has a death tax,” the reports stated. Another study the Beacon Center co-authored with Arthur Laffer’s Center for Supply-Side Economics concluded that the inheritance tax “is an immoral tax that hits homeowners, small business owners & farmers disproportionately hard.”

The tax on inheritances is one of several lawmakers are pushing this year, including the taxes on food, gifts and interest from stock and bonds.

Lowering the death tax is the most important because it is “disruptive to the family farm, disruptive to our rural heritage,” said Tom Brown of Manchester, who is part of the Tennessee Farm Winegrower’s Alliance. “They get carried away with the taxation system to fund all these entitlement folks, and that’s not what America was built on. The backbone of the American economy is small business and the family farm.”

Lt. Gov. Ron Ramsey is confident the state will gradually lift the death tax exemption, but it’s going to take time.

“We can’t just pass a bill and worry how to pay for it down the road. That’s the reason why we’re going to do it in stages to get rid of this,” Ramsey said. “If there’s any industry in the state this affects more, it’s farmers, the people that probably inherited their farm, and they want to pass it on to their kids, too.”

Ramsey said he’d like to see lawmakers also reduce the Hall tax this year, which taxes interest from stocks and dividends. However, Harwell and Haslam have said they plan to take a pass on that this year.

Haslam Bills Meet Resistance

Last week was trying for Gov. Bill Haslam after a number of his high-profile bills faced turmoil and criticism from both Democrats and the GOP faithful in the Legislature.

Haslam has dozens of legislative initiatives he’d like the General Assembly to pass this year, ranging from lowering the tax on food to overhauling how state workers are hired and fired.

Here is a breakdown of the status of some of his proposed bills:

Classroom Sizes Bill A Bust (SB2210/HB2348): Haslam spent weeks trying to sell the public on increasing pay for teachers in challenging schools and difficult subjects by letting districts adjust average class sizes. No dice. The governor dropped that plan after hearing teachers and lawmakers argue stacking more students in the classroom is a bad idea.

Ownership Trips Up Economic Development Bill (SB2207/HB2345): The administration wants to collect certain financial information on businesses wanting tax breaks but says companies will only comply if the state keeps that info secret. There’s been some resistance from the Legislature, where leaders say info on the winning companies should be public. Edits are in the works. The bill faces floor votes in each chamber as early as Thursday.

State Employees Steps Away from TEAM Act (SB2246/HB2384): Haslam wants to do away with “bumping,” which lets laid-off state workers take jobs of lower seniority workers, creating a domino effect. The state employees union says Haslam’s plan could lead to political hiring and firing and stopped negotiating with the administration. The bill is now in State and Local Government committees to be heard Tuesday.

Inheritance Awaiting a Price Tag (SB3762/HB3760): For all the Republicans’ enthusiasm for reducing the tax on inheritances, Haslam’s plan to up the $1 million exemption to $1.25 million hasn’t budged. The office that estimates the fiscal impact of legislation has yet to calculate the price tag for this bill, which is why it hasn’t moved.

Slice the Food Tax Also On Hold (SB3763/HB3761): Lawmakers across the political spectrum are hungry to reduce the food tax, although some want it cut differently. Haslam’s proposal would drop the 5.5 percent tax to 5.3 percent. Lawmakers have placed this bill on the back burner, parking it in finance subcommittees while awaiting an estimate of its fiscal impact.

Boards and Commissions Begin To Move: (SB2247/HB2385SB2248/HB2386SB2249/HB2387): The governor wants to eliminate redundancies by restructuring 22 state boards and commissions, including a panel that oversees Haslam family-owned gas stations. The Senate unanimously OK’d one bill shifting some duties from the Board of Probation and Parole to the Board of Correction Thursday, but two other bills have yet to be heard in committee.

Comptroller Strikes Positive Note on State Finances

Tennessee’s finances may not be perfect, but they’re in “good, sound fiscal condition,” according to the state’s top auditor.

“Let’s not mess it up,” Comptroller Justin Wilson told members of the House Finance, Ways and Means Committee this week.

“To keep in really good shape, the state needs to continue to reduce expenses, and the administration needs to continue to increase the efficiency of operations,” he said.

Wilson said the state needs to focus on rebuilding the rainy day fund, brace for the costs of implementing national health care reforms, maintain the state’s high credit ratings and improve financial reporting.

Source: Tennessee Comptroller's Office

The comptroller offered committee members a snapshot of the state’s finances as the group prepares for Gov. Bill Haslam’s annual State of the State address later this month where he’ll release an estimated $32 billion budget proposal.

Wilson said state government will have to keep an eye on growing expenses such as Tenn Care, K-12 education and pensions. If that doesn’t happen, the state will have a hard time justifying tax cuts or funding capital projects, an area where the state has “fairly severe needs,” he said.

Gov. Bill Haslam has proposed reducing the sales tax on food, as well as lifting the estate tax exemption from $1 million to $1.25 million.

But even though the economic picture is beginning to look better, tax reductions are not a good idea, said Sen. Doug Henry, D-Nashville.

“That is a temptation since collections are up. That’s a temptation that I really think we need to try to avoid if we can,” said Henry. “A day or two of prosperity could be easily offset over the long haul by the carelessness in this area of thinking.”

Wilson said he still expects the state’s finances will return to pre-recession levels by 2014.

State Treasurer David Lillard is expected to make his own presentation to the committee next week that will likely review college savings plans and state pension costs.