Grants Subject to ‘Fiscal Cliff’ Make Up 7.7% of TN State Revenue: Report

Because of Tennessee’s reliance on federal grants, the state is among those that would be most severely affected if Congress takes no action to avert the so-called fiscal cliff, according to a recent study.

The study by the Pew Center on the States gauged the effect of the planned cuts to federal spending, which, paired with tax increases set for January, have come to be known as the fiscal cliff because of its possible economic impact.

Pew looked at the federal grants subject to the cuts as a percentage of state revenue, based on fiscal year 2010 numbers. In Tennessee, such grants made up about 7.7 percent of revenue, putting the state in the top five in terms of impact, behind South Dakota, Illinois, Georgia and Texas.

The study also broke down federal spending by area: defense versus that spent on all other programs.

In the breakdown by nondefense spending, Tennessee ranked in the top 10.

Nondefense spending via the feds made up 3.1 percent of Tennessee’s gross domestic product in 2010, a measure used to measure economic output, the study says. The national average is 1.8 percent.

By the broader measure of federal spending on defense and other areas as a percentage of GDP, the state appears to be more independent of action or inaction in D.C. That figure is 4.9 percent, coming in below the national average of 5.3 percent.

Tennesseans are shielded from the tax increases that may come into play for residents of states that link income taxes to federal tax provisions. However, the Tennessee’s estate tax is linked to changes at the federal level, the study notes.

A primer on the tax implications of the fiscal cliff is available at the Tax Foundation website.

Press Releases

Laffer to Speak at Sumner County Commission

Press release from the Tennessee House Republican Caucus; July 16, 2012:

NASHVILLE, Tenn.—He helped President Ronald Reagan implement supply-side economic policies. In the last session of the General Assembly, he helped shape policies from the House Republican Caucus to cut taxes in Tennessee. Tonight, he will be in Sumner County.

Dr. Art Laffer, the father of supply-side economics and founder and chairman of Laffer Associates, tonight will be at the Sumner County Commission meeting at 5:30pm to discuss the benefits of the elimination of Tennessee’s death tax.

Representative Debra Maggart (R—Hendersonville), who serves as Chairwoman of the House Republican Caucus, worked with Dr. Laffer to appear before the entire Caucus at a retreat last summer and played an important role in making sure Laffer’s ideas were implemented this session.

“Dr. Laffer is recognized as one of the foremost minds when it comes to sound economic policy,” stated Maggart. “We are fortunate to have him as a resource in Tennessee and I am incredibly grateful he is appearing before the Sumner County Commission to discuss some of the great economic reforms we passed in this General Assembly. Ultimately, because of common sense reforms like the ones Dr. Laffer advocates for, Tennessee is going to be in better shape when it comes to job creation and business development.”

Dr. Laffer currently lives in Nashville where he is the founder and chairman of Laffer Associates, an institutional economic research and consulting firm, as well as Laffer Investments, an institutional investment management firm utilizing diverse investment strategies. The firms provide research and investment management services to a diverse group of clients, which includes institutions, pension funds, corporations, endowments, foundations, individuals and others.

Press Releases

Ramsey: ‘Death Tax’ Will Soon Meet the Reaper

Statement from Lt. Gov. Ron Ramsey, April 27, 2012: 

Lt. Governor Ramsey Made the Following Statement Following Senate Passage of HB3760:

“The American Dream — working hard to provide for your family — is not a dream that ends in death. Taxing those who have worked their whole lives to build and sustain a small farm or business in order to pass it on to the next generation is not just carrying out bad policy — it is acting in bad faith. By passing this bill today on the Senate floor, we have ushered this immoral, unfair tax up to Death’s door. When Bill Haslam adds his signature, the death tax in Tennessee will have met the reaper. I applaud the Governor, Speaker Harwell and all who have worked hard to make this possible. This is a good day for Tennessee.”


Press Releases

TN Home Builders Association 2012 Legislative Policy Agenda

Excerpted from the Home Builders Association of Tennessee‘s “Legislative Briefing,” Jan. 26, 2012:

2012 Legislative Agenda

The Home Builders Association of Tennessee Board of Directors approved the 2012 Legislative Agenda during the membership’s recent Fall Annual Meeting. We have worked diligently to craft the proper language of the proposed legislation and to secure outstanding sponsors who will carry the bills in both the Senate and the House…

Tennessee Home Construction Jobs Development Act

The legislation (SB1296-Johnson /HB0730 Casada) is more commonly referred to as the Building Homes – Building Jobs Act.

This legislation is a carry-over from 2011. Construction, especially homebuilding, is one of the state’s weakest sectors. From the employment peak in 2007 to the fall 2010, construction employment estimates indicate a loss of 36,300 jobs. The loss of 36,300 jobs resulted in a loss of $9.08 billion in output, $2.69 billion in earnings, 72,600 total jobs, and $168 million in state taxes. A substantial share of the shortfall of state taxes was associated with the decline in this industry. The positive effect of this proposal on the creation of approximately 4,900 new jobs across the state is borne out in a recent study by the Sparks Bureau of Business and Economic Research at the University of Memphis. This economic development legislation, which would grant $6,000 to approximately 1,666 new home buyers, would have a positive impact on every county and every community in Tennessee.

Legislation to Prevent Single Family Residential Fire Sprinkler Mandates

Simply put, proposed legislation (SB2492 Tracy/HB2639 Watson) would mimic several other states’ legislation that prevents any county, municipality, city or town from requiring the installation of fire sprinklers in single-family residential construction. Legislation would NOT prevent nor dissuade any home buyer or homebuilder from installing fire sprinklers. It just would prevent any mandates to require them. It is our belief that current building codes offer significant fire safety features, including the installation of hard-wired smoke detectors, in new construction. A recent University of Tennessee study underscores the fact that the majority of fire safety issues are in those homes built using pre-1998 building code construction.

Tennessee Public Improvement District Act

This legislation (SB1865 -Overbey / HB1643-Dennis) is also a carry-over from 2011. The legislation, based on similar current laws in Alabama, Mississippi, Arkansas, Florida, Georgia, Texas and Louisiana, would provide an alternative financing mechanism for municipalities and developers to pay for infrastructure needs. With the current state of the financial markets, which limit borrowing for these type projects, we see this as an option that will serve as an economic development tool for cities, counties and developers that will help stimulate new housing construction opportunities.

Property Tax Relief Legislation

As proposed, this would be enabling legislation that would allow counties to delay the reassessment of improved land until a time at which the property is sold to the first owner. Currently, the land is reassessed once a plat has been recorded to subdivide the land into lots and again when the builder improves the lot with constructing a new home. This legislation would defer the reassessment until the lot is sold to a builder and the lot would not be reassessed until a new home is sold to a homeowner. This deferral would significantly help our members during recessions to carry their real estate for longer periods of time by significantly reducing their annual carry costs.

Tax Assessor Legislation

Proposed legislation would require that the Tax Assessor’s office establish new parcel ID numbers immediately upon recording a subdivision plat after January 1 in a given year. As it stands now, the Assessor establishes a parcel ID number for each parcel of real estate on January 1 of each year. No matter what happens to that property throughout the year, even if it is subdivided and homes are constructed on it, when the tax bill comes out, it is billed under one number.

If a closing occurs prior to January 1 of the following year, then taxes must be paid on the entire property. But if it is still under the original parcel number, then the seller has to pay the entire tax bill, even on land that the seller doesn’t own. A closing cannot take place without the entire tax bill being paid.

The proposed legislation requires the Assessor to establish parcel identification numbers for subdivided lots effective at the time subdivision plat is recorded rather than waiting for the following January. The Assessor shall prorate the assessment on such real property for the year for the parent parcel from January 1 to the date of subdivision. And for resulting parcels, the assessment would cover the period from the date of the subdivision to the year-end. Any supplemental tax resulting from added value, shall be assigned exclusively to such resulting parcel to which the value was added.

As always, your assistance in helping educate your legislators on the importance of these issues will be most important in securing successful passage of these matters. As you look at the emphasis of our proposed legislation this year, you will see the one overriding powerful belief, and that is: