Featured NewsTracker Tax and Budget

No-Bid Contracts Worrisome to Some State Lawmakers

State lawmakers from both parties are expressing concern that taxpayer interests aren’t adequately safeguarded when public contracts are inked with private firms without first submitting jobs to competitive bidding.

Lebanon Republican state Rep. Mark Pody, who was backed up by Rep. Brenda Gilmore, D-Nashville, said this week during a Joint Fiscal Review Committee hearing that the state ought open up more of its contracts to market competition.

“I don’t think (noncompetitive bidding) is in the taxpayer’s best interest. They needed to go through the competitive system and have it competitively bid,” Pody said.

At a minimum, any single-source contract ought to raise a “red flag” and should be earnestly probed by the Fiscal Review Committee, the Lebanon lawmaker added.

Gilmore agreed. “We may be saving money but we need to know why,” she said.

Committee Chairman Bill Ketron, a Murfreesboro Republican who chairs the state Senate’s majority-party caucus, joined the call for more information on noncompetitive contracts.

Pody brought the issue to the forefront Monday afternoon during the joint committee’s monthly meeting, when it was considering a contract extension with Xerox to provide services for the International Fuel Tax Agreement. IFTA is described on the state’s website for trucking commerce as “a tax collection agreement by and among the 48 contiguous States and Canadian provinces bordering the United States to simplify the reporting and collecting motor fuel use taxes used by motor carriers operating in more than one jurisdiction.”

Phillip Mize, the state Department of Revenue’s chief financial officer, explained that Xerox offers one of six commercial products that help commercial fleets and states track fuel taxes owed to other jurisdictions.

Mize defended the contract by saying Xerox is the “most mature product” and controls 45 percent of the market. He also said the state negotiated a 5 percent discount, totaling $420,000, over the previous contract.

After the meeting, Pody said the contract may well provide a savings for the state, but without it being competitively bid, there is no way to know for certain. He said it is worrying there are five other providers available on the market, but the contract was not offered the same bid process as other state-awarded contracts.

“I think that anything that is competitively bid, even if it ends up here, would be a lot more transparent,” Pody said before voting against moving the contract out of committee. The contract with Xerox passed 15-1, with Pody casting the sole dissenting vote.

The committee approved another proprietary contract Monday, but it was explained that no other company provides the service.

Business and Economy NewsTracker

Proposal Would Require Calculating ‘Impact on Commerce’ Before Approving New Laws

If you often wonder how new laws being debated in the Legislature might affect Tennessee business and industry operating costs, you might have a designated place to look in the future.

Senate Bill 116 and House Bill 220 would both require a statement of “impact on commerce” for proposed new legislation heard in certain committees. The full Senate has already passed its version of the idea this year, while HB220 is still slogging through lower-chamber committees.

“From a fiscal standpoint, when we pass a bill down here, our communities back home really need to know what is going to be that impact,” Sen. Bill Ketron, R-Murfreesboro, told the Senate State & Local Government Committee last month during a hearing on the cost-to-business bill he’s sponsoring.

Ketron, who also chairs the Joint Fiscal Review Committee, said states like Florida, Maryland, Delaware and New Jersey already require such analysis on legislative proposals. He said the bill was suggested to him by chambers of commerce around Tennessee.

Rep. Mark White, the House sponsor, said the bill will help legislators know how their proposals are “affecting the business person in the state as we try to make Tennessee a more business-friendly state.” The Republican from Germantown is vice chairman of the Fiscal Review Committee.

Ketron said initially there were concerns about the additional work becoming a burden on the staff who prepare cost-to-taxpayers and government revenue estimates for proposed laws, otherwise know as “fiscal notes.” However, after many conversations with Fiscal Review Director Bill Geise, Ketron said it’s been determined staff can take on the extra work within the existing budget.

The process would, if approved, be phased in over a two-year period, with three standing committees – House Business & Utilities, House Insurance & Banking and Senate Commerce & Labor – receiving the impact statements beginning Jan. 1, 2014. Then in January 2015, six additional standing committees will begin receiving the statements: Senate and House Finance, Ways & Means; House State Government; House Local Government; House Consumer & Human Resources; and Senate State and Local Government.

While the bill cruised through the Senate in March 32-0, HB220 was postponed Wednesday to the last meeting of the House Finance, Ways & Means Subcommittee after Rep. Charles Sargent raised a question about the phase-in implementation.

Sargent, the House Finance, Ways & Means Committee chairman, wanted to add a verbal amendment to the bill that would exclude the six other standing committees from receiving the business impact statements in 2015. However, Rep. Michael Harrison, chair of the subcommittee, would not allow it, saying that the committee had “turned down the gentleman from Knoxville on a verbal amendment…to be fair to everyone.”

House Bill 220 is on the House Finance, Ways & Means Subcommittee’s April 10 calendar.

Amelia Morrison Hipps may be reached at, on Twitter @DwnHomePolitics or at 615-442-8667.