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Reagan Administration Economist Arthur Laffer Speaks at GOP Retreat

Economist Arthur Laffer, widely known as the “father of supply-side economics,” spoke to House Republicans during their retreat this week at Tims Ford State Park.

Laffer, a member of President Ronald Reagan’s economic policy team, talked to the group about Tennessee’s economic assets, said Rep. Debra Maggart of Hendersonville, the House Republican Caucus chair.

“Dr. Laffer has a wealth of data, research, knowledge and experience about how the different states compare with one another,” she said.

“One of the focuses he worked on with us was how Tennessee ranks with other states and what makes Tennessee so attractive to people to live here. We’re in a central location, we don’t have a state income tax, we are a right-to-work state, and states like that tend to have favorable economic outcomes.”

In addition to listening to Laffer and other guests, Republicans discussed ways to improve communications with their constituents and various items constituents are concerned about, including reaction from teachers about the state’s new teacher evaluation process, Maggart said.

The retreat, which is held every two years, was paid for with caucus funds, Maggart said.

Maggart didn’t have an exact number of lawmakers who attended the retreat Monday and Tuesday, but she said she had 55 RSVPs committed to attend at least part of the event and that it looked like most of those showed up, including Speaker of the House Beth Harwell and House Majority Leader Gerald McCormick of Chattanooga.

The Republicans have a 64-34-1 majority in the House.

Maggart, who was guarded about sharing what legislators discussed, said the lawmakers did not formally talk about redistricting, a subject of much political speculation. The discussions did include attempts to dramatically reduce the number of bills filed in the Legislature, she said.

“We talked about next year (an election year). I’m not going to unveil what we’re doing,” Maggart said.

Tennessee Republican Party Chairman Chris Devaney has said the state GOP’s goal is to produce a “walkout-proof” majority in the Legislature, meaning enough of a majority that Republicans would have a quorum even without the presence of Democrats in meetings. Republicans have a Senate majority of 20-13. Two more Republican seats in each chamber would be needed to meet Devaney’s goal.

Maggart said the Republicans have been working on their legislative package for next year, although she said she was not ready to unveil that now.

“We’ll be giving that information out when we get it ready,” she said.

Republicans have already been public about at least visiting issues such as changing workers’ compensation laws, oversight of the Court of the Judiciary, halting the extension of unemployment benefits, further monitoring regulations that may hamper business and enacting more tort reform measures next year. But Maggart made clear the party still believes jobs cannot be legislated, a position that puts Republicans at odds with Democrats, who presented a list of jobs bills this year with complaints that they were not seriously considered. Unemployment in the state is 9.8 percent.

Democrats have also scheduled a Jobs Tour for Sept. 19-24, and the state Democratic Party took exception Wednesday to the rosy picture painted by Gov. Bill Haslam and Lt. Gov. Ron Ramsey about their presentation to the major bond rating agencies in New York.

A release from the Tennessee Democratic Party quoted Chairman Chip Forrester as saying, “This bond rating dog and pony show for Wall Street executives looks obnoxious to the 300,000 Tennesseans who are struggling to find work and provide for their families.”

Maggart maintains that jobs cannot be legislated.

“We’re going to continue to concentrate on paving the way for job creation. The Legislature does not create a single job,” she said. “We want to do what we can to make Tennessee the most attractive state for small businesses to thrive. We want to decrease regulation on small business people.”

Maggart gave the handling of the new photo ID law, requiring photographic identification in order to vote, as an example of how the number of bills filed in the Legislature can be decreased.

“Freshmen didn’t know I was working on it for five or six years, so we can cut down on the number of people filing the same bill,” she said.

Republicans have drawn up a process, spearheaded by Harwell, where lawmakers can consult freely about their bills in a process that normally holds even the filing of legislation as a matter of attorney/client privilege. McCormick has also spoken publicly about reducing the number of bills.

On the teacher evaluations issue, Maggart said members are hearing about it from their districts.

“Teachers are concerned about it. They have questions,” Maggart said. “That was pretty much across the board. I shouldn’t say everyone, but a lot of people had heard from teachers concerned about the process.

“You know it’s going to be a concern because it’s new. It has never been done before. Certainly you’re going to have people who have questions.”

The state adopted a system where teachers will be evaluated based on a formula that relies heavily on classroom observation and student growth under the state’s value-added assessment scores.

Laffer is one of the authors of Rich States, Poor States, released by the American Legislative Exchange Council and issued in its fourth edition this June. Other authors of the book are Stephen Moore, senior economics writer for the Wall Street Journal, and Jonathan Williams, director of the Tax and Fiscal Policy Task Force for ALEC.

“He (Laffer) uses IRS data. That’s such a great data resource, because the IRS knows so much about you. They’ve got your address, know how much you make, how much your deductions are. He has been analyzing people who move, like him, and what the state’s economic status is. Ours is good. People move here from other states,” Maggart said.

“He contrasted all the good things about Tennessee and how we keep moving forward on those things.”

Laffer Associates, an economic research and consulting firm, is in Nashville. An effort Wednesday seeking comment by Laffer on the Republican retreat was unsuccessful.

Other speakers at the retreat included Clint Brewer, assistant commissioner for communications for the Department of Economic and Community Development; a presentation on communications for lawmakers by a consulting firm; and a presentation by Public Opinion Strategies, which handles polling.

Guv Opts to Water Down Charter School Bill

Gov. Bill Haslam’s office is introducing a last-minute rewrite on his pledge to give charter schools greater flexibility just as GOP lawmakers start counting down the days until they adjourn.

The changes would give school districts the power to deny charter applications based on their price tags — assuming they can convince the state treasurer that the cost presents a “substantial negative fiscal impact” that the district cannot absorb.

But exactly how those decisions would be made is still up in the air, admitted Sen. Jamie Woodson, a high-ranking Republican and education reform leader pushing the bill.

“The pure definition of what is substantial financial impact is, I will admit…yet to be determined,” she told the Senate Finance, Ways and Means Committee shortly before the body voted 8-2 to send the plan to the Senate floor.

Republican leaders in both chambers hope to wrap up the year’s legislative session this weekend, although House Chief Clerk Joe McCord said Thursday lawmakers may need a few more days to finish their business. Either way, the governor’s administration is running out of time to tweak the bill.

The price on Haslam’s original charter school proposal, HB1989, slowed the measure down to a halt in both chambers earlier this session, with it sitting for almost two months in the Senate and a month in the House while Democrats wrangled with Republicans and the Haslam administration over details of the bill.

Critics took issue with every major thrust of the plan, including lifting the 90-school cap on the number of charters throughout the state and allowing the state’s virtual school district in charge of turning around failing schools to OK charter applications.

The administration wouldn’t budge much there, or on Democratic efforts to include specific language mandating that the majority of charter school enrollees be at-risk students who come from under-performing schools, struggle academically or come from low-income families. All those issues stayed put.

But the big issue came down to the price tag, and some Republicans split with their caucus and voiced reservation about the local cost of the school choice legislation.

Under the original version, the proposal would have cost local public school districts about $4.3 million statewide by shifting dollars to the independently run public schools when the expansion gets off the ground in 2013-14. But that total would climb to $25 million by 2022, according to the Fiscal Review committee.

The new version of the bill requires local school districts that want to reject a charter proposal to send an analysis to the state Treasurer detailing their inability to “adjust expenses on a system-wide basis due to the transfer of students into the proposed charter school.”

The school district and charter school applicant would both have five business days to send their own analysis of the figures to the treasurer after the district rejects the charter.

The treasurer’s office, now manned by David Lillard, can consult the Department of Education, the local board of education and the charter applicant in deciding the merits of the rejection. It can also ask for outside experts to review the contested financial data, although the final decision must be made within 30 days.

Even if the treasurer strikes down the local school district’s claims about financial stability, the charter school applicant must still contest the school district’s original charter denial to the state Board of Education within five days of the Treasurer’s decision.

The new proposal would cost the state about $50,000 a year in the event the state treasurer seeks outside help weighing the financial statements. Local expenditures in the school districts would be at least $1 million, according to the fiscal note, though researchers admitted they couldn’t pinpoint a specific number because there are too many unknowns.

According to the new fiscal note:

“While the exact fiscal impact is dependent on multiple unknown factors, it is assumed that the (Local Education Agency) will be able to account for half of the shift through normal system-wide adjustments and the net increase in permissive local expenditures is estimated to exceed $1,000,000 statewide.”

The concession won’t water down the bill, according to Will Cromer, the administration’s policy director. Instead, it creates an method for testing whether school districts really can’t absorb new charter schools.

“It creates the process to make that claim, but there’s also a process to evaluate the claim,” he said.

The charter schools bill passed in the Senate committee Wednesday with Democrats Sen. Lowe Finney, D-Jackson, and Sen. Joe Haynes, D-Nashville, voting no. Sen. Douglas Henry, D-Nashville, was the only Democrat to vote for the bill. In the House, the measure won on a voice vote, although Reps. Craig Fitzhugh, D-Ripley, and Jimmy Naifeh, D-Covington, expressed dissent during committee discussions.

The debate boils down to a philosophical difference about money following the student, said a lobbyist for charter schools — whether parents or school administrators and educational professionals ought to decide where a child can get a publicly-funded education.

The charter school legislation is one of the signature education reform measures Haslam has presented in his first year as governor, along with changes in teacher tenure law, which Haslam has already signed.

Mike Morrow contributed to this report.
Clarification: If the Treasurer disagrees with the local school board’s assertion that opening the charter school would cause undue financial burden, the charter school must still appeal the local school board’s original denial to the state Board of Education, under the proposed amendment.

Anti-Tax Tootin’ in Giles Co.

Horn-honking motorists stepped up the pressure on Giles County officials Monday, who dropped their bid for a county wheel tax, WKSR in Pulaski reports.

County commissioners were set to consider a resolution asking the Tennessee Legislature for permission to enact a $50 wheel tax. One commissioner said the resolution had already been pulled from the agenda Friday, and state Rep. Eddie Bass said there would not be time to pass the bill this legislative session, which may end this week.

But as WKSR reports, a healthy dose of the First Amendment in the form of “car horns blaring from the street below” surely didn’t hurt.

Meanwhile, the budget talks in Cookeville are heavy on the honey, low on the vinegar.

The city estimates it will take in $100,000 in tax from liquor sales in the first full year for package stores to be permitted there, the Herald-Citizen reported last week. The city’s $21 million proposed budget for the 2012 represents a more than 5 percent increase over this year, with no property tax increase.

Ramsey: Keeping Non-Economic Damages Cap at $750K Preferable

Lt. Gov. Ron Ramsey said this week he believes Republicans in the Senate prefer the original version of Gov. Bill Haslam’s tort reform bill, and that the legislation will likely move through the Senate simultaneously with that in the House.

Ramsey said he anticipates Senate activity on the bill next week. He said his prediction would be that the Senate would adopt part of the governor’s bill, but not the current House version as amended.

“I think the majority of our caucus likes the governor’s original bill without the amendment,” Ramsey told reporters. “I think the bill to begin with was a compromise.”

A subcommittee of the House Judiciary Committee on Wednesday passed a version of the tort reform measure, which is one of the main legislative efforts on Haslam’s agenda, and it is headed to the full House Judiciary Committee on Tuesday.

The thrust of the legislation, HB2008/SB1522, is to put caps on monetary awards for victims in civil suits. Haslam says the caps will create a more stable business climate for the state. He believes the bill will help create jobs, his top priority as governor.

Ramsey also sees the bill as a way to help create jobs, but he has refused to speculate on a specific number of jobs that could come from the action.

Haslam originally offered a proposal that put caps on non-economic damages in such lawsuits at $750,000. But the legislation immediately became the subject of negotiations behind the scenes among various parties involved.

The administration offered a subsequent version of the legislation that would raise the cap in “catastrophic” cases to $1.25 million. But by the time the subcommittee took up the bill Wednesday, the $1.25 million had been reduced to $1 million.

Herbert Slatery, Haslam’s legal counsel, attributed the changing figures to “the legislative process.”

The $1 million would apply to the most severe cases, such as those that involve amputations or spinal cord injuries that leave victims with paralysis. The $750,000 cap remains in the bill for most cases, and Ramsey’s comments suggest the Senate would like to keep the $750,000 in all cases, as Haslam first proposed.

Advocates for reform say there should be some level of predictability of how big awards could be in cases where victims are harmed. Opponents say such figures should be left to the judicial system, and that legislated caps significantly take away the opportunity for justice in such cases.

The issue has become a matter of emotional appeal, with opponents of the caps offering examples of people who have suffered serious losses. Testimony in committee hearings has included people affected by such cases.

Opponents of the bill have used the star power and persuasiveness of actor and former U.S. Sen. Fred Thompson to head the lobbying effort against the bill. Thompson has appeared before lawmakers but did not address the subcommittee on Wednesday.

Haslam has emphasized that caps will not apply in cases where intentional misconduct comes into play.

The bill includes caps on punitive damages that are two times the amount of compensatory damages in a case, or $500,000, whichever is greater.

It is possible other amendments will be offered on the legislation.

“On any kind of issue, you can argue extremes on both sides,” Ramsey said. “You kind of look at what’s reality in real life, and I think that’s what we’re doing.”

The legislation defines “catastrophic loss or injury” as cases that involve spinal cord injury resulting in paraplegia or quadriplegia; amputation of two hands, two feet or one of each; third-degree burns over 40 percent or more of the body as a whole or third-degree burns up to 40 percent or more of the face; or wrongful death of a parent leaving a surviving minor child or children for whom the deceased parent had lawful rights of custody or visitation.

Ramsey: ‘Nomadic Bands’ of Protestors Don’t Scare Us

Statement from Lt. Gov. Ron Ramsey, R-Blountville, March 15, 2011:

The right of all citizens to protest and assemble peacefully is sacred in the State of Tennessee. However, this General Assembly will not be intimidated by nomadic bands of professional agitators on spring break bent on disruption. We talk through our differences here. Tennessee is not Wisconsin.

Locals Study New Taxes, Fees

Gibson County leaders want to raise the wheel tax 35 percent in a plan the mayor says will boost business relocation and the economy.

WBBJ TV Channel 7 reports that the mayor is touting the plan to increase the wheel tax from $35 to $47.50 as a way to attract jobs. The county commission is set to vote on the measure Monday.

They’re not the only local governments eyeing taxes and fees. River enthusiasts in Cheatham County, you’re the next target.

County commissioners are considering the formation of a Visitors and Recreation Bureau, which, the Ashland City Times reports, “would regulate and tax recreational businesses such as the canoe rentals in south Cheatham County. The money generated would be used to help promote tourism in the county.”

The story says that the Chamber of Commerce would pay for the bureau staff and that “there is no funding required by the commission.”

Meanwhile, a sewer district near Crossville is considering shaking up its fees, according to the Crossville Chronicle.

The Tansi Sewer Utility District is considering a fee structure of $60 monthly for service and a charge for new connections of $5,950, which could be paid over 10 years.

While locals are talking about what fees and taxes to levy next, the tax talk at the Capitol has leaned in the other direction. State senators on Wednesday approved a measure that seeks to ban any future implementation of an income tax. The proposal moves to the House, and at the earliest could be approved by voters in 2014.