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Martin Named Head of Finance & Administration

Press release from the Office of Tennessee Gov. Bill Haslam; August 13, 2013:

NASHVILLE – Tennessee Gov. Bill Haslam today announced Larry Martin as commissioner of the state Department of Finance and Administration (F&A).

Martin has been the interim commissioner since June 1 after former commissioner Mark Emkes’ retirement.

“I want to thank Larry for continuing to serve Tennesseans as the F&A commissioner,” Haslam said. “Putting together the budget is one of the most important things we do, and Larry’s skills and experience with complex systems and organizations is unmatched.”

Last year, he joined the governor’s staff as a special assistant to the governor, working alongside Human Resources Commissioner Rebecca Hunter to oversee the implementation of Haslam’s civil service reform, the Tennessee Excellence, Accountability and Management (TEAM) Act; and reviewing state employee compensation.

From September 2006 to December 2011, Martin, 65, served as deputy to the mayor in Knoxville for both Haslam and Mayor Daniel Brown. He was responsible for Finance, Public Works, Community Development, Information Systems, Purchasing and Risk Management for the City of Knoxville.

Prior to joining city government, Martin was an executive of First Horizon/First Tennessee Bank, joining the company in 1969 and serving in various capacities before retiring as the chief operating officer for First Tennessee Financial Services with responsibility for all Tennessee Regional Bank Markets; Merchant Services Processing; Hickory Venture Capital; and the Commercial, Corporate and Middle Market Divisions of the bank. A native of Jackson, Tenn., Martin received his bachelor of science from the University of Tennessee’s College of Business.

“I look forward to continuing the good work of the governor and applying his thoughtful and comprehensive approach to the budgeting process,” Martin said.

Larry Martin Announced Interim Finance Commissioner

Press release from the Office of Tennessee Gov. Bill Haslam; May 28, 2013:

NASHVILLE – Tennessee Gov. Bill Haslam today announced Larry Martin will become the interim commissioner of the state Department of Finance and Administration (F&A) when Commissioner Mark Emkes retires at the end of the month.

Martin becomes interim commissioner at F&A June 1 after Emkes’ retires effective May 31.

A year ago, he joined the governor’s staff as a special assistant to the governor, working alongside Human Resources Commissioner Rebecca Hunter to oversee the implementation of Haslam’s civil service reform, the Tennessee Excellence, Accountability and Management (TEAM) Act; and reviewing state employee compensation.

“I am grateful that Larry has agreed to step into this position and serve Tennessee taxpayers in this capacity,” Haslam said. “He has been critically important in helping us establish the systems and organizational structure to begin recruiting, attracting and retaining the best and brightest to serve in state government, and I look forward to continuing to work with him as interim commissioner of F&A.”

From September 2006 to December 2011, Martin, 65, served as deputy to the mayor in Knoxville for both Haslam and Mayor Daniel Brown. He was responsible for Finance, Public Works, Community Development, Information Systems, Purchasing and Risk Management for the City of Knoxville.

Prior to joining city government, Martin was an executive of First Horizon/First Tennessee Bank, joining the company in 1969 and serving in various capacities before retiring as the chief operating officer for First Tennessee Financial Services with responsibility for all Tennessee Regional Bank Markets; Merchant Services Processing; Hickory Venture Capital; and the Commercial, Corporate, and Middle Market Divisions of the bank. A native of Jackson, Tenn., Martin received his bachelor of science from the University of Tennessee’s College of Business.

“Under Gov. Haslam, Tennessee has taken incredible steps toward making state government more responsive to its customers, the taxpayers, and I want to thank him for this new opportunity to serve the state,” Martin said.

The search for a permanent replacement is ongoing.

April Continues 9-Month Positive Growth Trend for TN Revenue Collections

Press release from the Department of Finance & Administration; May 9, 2013:

NASHVILLE, Tenn. – Tennessee revenue collections continued their positive growth trend in April with a net growth of 9.31% over April collections one year ago. Finance and Administration Commissioner Mark Emkes reported today that overall April revenues were $1.5 billion or $160.9 million more than the state budgeted.

Total collections in April marked the ninth consecutive positive growth month this fiscal year. Corporate Franchise and Excise taxes and collections from the Hall Income Tax contributed substantially to the large over collection in April. Sales tax collections, however, recorded the second negative growth month this year.

“We expect one very large Franchise and Excise tax month remaining in this fiscal year, but with sales tax collections performing below budgeted expectations, we need to closely watch our revenue and expenditure patterns,” Emkes said. “National economists are warning states not to get overly confident during peaks of the slow recovery, so we are going to continue conservative budgeting to maintain stable financial conditions.”

On an accrual basis, April is the ninth month in the 2012-2013 fiscal year.

The general fund was over collected by $142.8 million, and the four other funds were over collected by $18.1 million.

Sales tax collections were $5.8 million less than the budgeted estimate for April. The April growth rate was negative 0.70%. For nine months revenues are under collected by $38.9 million. The year-to-date growth rate for nine months was positive 1.48%.

Franchise and excise taxes combined were $111.3 million above the budgeted estimate of $360.8 million. For nine months revenues are $267.8 million over the budgeted estimate. The year-to-date growth rate August through April was positive 13.42%.

Hall Income tax collections for April were $46.6 million more than the budgeted estimate. For nine months collections are $49.3 million above the budgeted estimate. The growth rate for the nine month period was positive 46.29%.

Inheritance and estate tax collections were $2.3 million below the April estimate. For nine months collections are $10.5 million above the budgeted estimate.

Privilege tax collections were $7.9 million more than the April budgeted estimate, and for nine months collections are $25.7 million above the budgeted estimate. The year-to-date growth rate for the nine month period was 15.67%.

Gasoline and motor fuel collections for April increased by 6.69%, and were $0.6 million more than the budgeted estimate. The growth rate for nine months was negative 0.49%, and collections are $14.6 million below the budgeted estimate of $631.0 million.

Tobacco tax collections were $3.8 million over the budgeted estimate of $22.3 million. For nine months revenues are under collected in the amount of $6.9 million.

All other taxes for April were under collected by a net of $1.2 million.

Year-to-date collections for nine months were $288.1 million more than the budgeted estimate. The general fund was over collected by $284.4 million and the four other funds were over collected by $3.9 million. The FY 2013 revised budget assumed an over collection of $305.9 million in General Fund Taxes. Therefore, the amount of under collection, August through April, compared to what’s in the revised FY 2013 budget is $21.5 million ($284.4 million minus $305.9 million).

The budgeted revenue estimates for 2012-2013 are based on the State Funding Board’s consensus recommendation of December 19th, 2011 and adopted by the second session of the 107th General Assembly in April 2012. They are available on the state’s website at http://www.tn.gov/finance/bud/budget.html.

The State Funding Board met on December 14, 2012 to hear updated revenue projections from the state’s various economists. The board met again on December 19th and adopted revised revenue ranges for 2012-2013. The revised ranges assume an over collection from the July 2012 budgeted estimate in the amount of $203.0 million to $287.3 million in total taxes and in the amount of $224.2 million to $305.9 million in general fund taxes for the current fiscal year.

Emkes Departs Finance & Administration

Press release from the Department of Finance & Administration; April 15, 2013:

NASHVILLE – Tennessee Gov. Bill Haslam today announced that Finance and Administration Commissioner Mark Emkes will be leaving the administration at the end of May to enjoy retirement and spend more time with his wife in her home country of Spain.

“I am grateful to Mark for the job he’s done as the state’s chief financial officer during the past two and a half years,” Haslam said. “We’ve presented three responsible, thoughtful and strategic budgets, and he has played a significant role in those efforts.

“Mark has brought a fresh perspective to state government with a focus on running it like a business,” Haslam continued. “He has overseen our customer-focused government initiatives and lean management training to help shift our culture to a results-oriented, customer-service organization. I most appreciate his willingness to mentor and develop talented people in state government.”

Before joining the Haslam administration, Emkes, 60, spent his entire professional career at Bridgestone Americas, working his way up from a trainee to chairman, chief executive officer and president before retiring in February 2010 after 33 years at the company.

“I will always be grateful to Gov. Haslam for giving me the opportunity to serve as commissioner of Finance and Administration,” Emkes said. “It has been a unique and once in a lifetime experience. Having had the chance to participate on a team that helped make government more effective and efficient is truly a great feeling.”

He has lived in Nashville since 2000 and serves on several boards of directors in Middle Tennessee. He is past president of the Middle Tennessee Boy Scout Council and served as chairman of the American Heart Association’s 2010 Nashville Heart Walk. He is also a member of the American Cancer Society’s CEOs Against Cancer, Tennessee Chapter.

Emkes and his wife, Conchi, have a son, Jonathan, and a daughter, Astrid. They are members of the Holy Family Catholic Church in Brentwood.

The commissioner’s last day will be May 31. The governor has begun a search for his replacement.

State Takes in Nearly $1B in Revenue Collections for December

Press release from the Tennessee Department of Finance & Administration; January 10, 2012:

NASHVILLE – Tennessee revenue collections for December came in stronger than the same month a year before. Finance and Administration Commissioner Mark Emkes reported today that state revenue collections for December were $982.2 million, which is 1.71% above December 2011. December sales tax collections represent consumer spending that occurred in November.

“Total revenues in December were higher than expected due to over collections in the sales and corporate tax categories,” Emkes said. “We believe the December sales tax growth rate, which includes ‘Black Friday’ and after-Thanksgiving sales, may reflect renewed consumer confidence, but January’s report will give us a fuller picture with Christmas retail activity.

“Because of anticipated requirements for Fiscal Year 2014, we will closely monitor our spending for the balance of this year, working closely with the Legislature in order to end this year with a balanced budget.”

On an accrual basis, December is the fifth month in the 2012-2013 fiscal year.

December collections were $22.0 million more than the budgeted estimate. The general fund was over collected by $24.8 million and the four other funds were under collected by $2.8 million.

Sales tax collections were $11.7 million more than the estimate for December. The December growth rate was 5.01%. For five months revenues are under collected by $18.3 million, and the year-to-date growth rate is 2.51%.

Franchise and excise taxes combined were $12.6 million above the budgeted estimate of $230.4 million. For five months revenues are over collected by $91.4 million.

Gasoline and motor fuel collections for December decreased by 7.52% and they were $3.4 million below the budgeted estimate of $66.1 million. For five months revenues are under collected by $11.8 million.

Tobacco tax collections were $2.2 million below the budgeted estimate of $24.9 million, and for five months they are $6.7 million below the budgeted estimate.

Privilege tax collections were $3.8 million more than the budgeted estimate of $14.5 million. Year-to-date collections for five months are $10.8 million above the budgeted estimate.

Inheritance and estate taxes were under collected by $1.6 million for the month. For five months collections are $4.4 million above the budgeted estimate.

All other taxes were over collected by a net of $1.1 million.

Year-to-date collections for five months were $73.6 million more than the budgeted estimate. The general fund was over collected by $84.1 million and the four other funds were under collected by $10.5 million.

The budgeted revenue estimates for 2012-2013 are based on the State Funding Board’s consensus recommendation of December 19th, 2011 and adopted by the second session of the 107th General Assembly in April 2012. They are available on the state’s website at http://www.tn.gov/finance/bud/budget.html.

The State Funding Board met on December 14, 2012 to hear updated revenue projections from the state’s various economists. The board met again on December 19 and adopted revised revenue ranges for 2012-2013. The revised ranges assume an over collection from the July 2012 budgeted estimate in the amount of $203.0 million to $287.3 million in total taxes and in the amount of $224.2 million to $305.9 million in general fund taxes for the current fiscal year.

Emkes: September Sees Positive Growth in Corporate Tax Revenues for State

Press release from the Department of Finance & Administration; October 9, 2012:  

NASHVILLE – Sales tax collections in Tennessee continued to show marginal growth in September revenue figures. Finance and Administration Commissioner Mark Emkes reported today that overall September revenues were $1.1 billion, which is 5.45% above the budgeted estimate. September sales tax collections reflect spending that occurred in August.

“The sales tax is the ‘bread and butter’ of our revenue collections in Tennessee, and it’s our leading economic indicator,” Emkes said. “September sales tax collections continue to reflect the sluggish national economy, but we are very pleased with the positive growth rates reported in corporate franchise and excise taxes.

“Leading economic indicators on the national level continue to reflect mixed results, which calls for continued scrutiny of expenditures for the balance of this fiscal year, so we can keep the budget in balance and conservatively manage the state’s spending.”

On an accrual basis, September is the second month in the 2012-2013 fiscal year.

September collections were $55.8 million more than the budgeted estimate. The general fund was over collected by $57.7 million and the four other funds were under collected by $1.9 million.

Sales tax collections were $2.2 million less than the estimate for September. The September growth rate was 2.84%.

Franchise and excise taxes combined were $54.9 million above the September budgeted estimate of $254.2 million. The September growth rate was positive 22.31%.

Gasoline and motor fuel collections for September decreased by 2.12% and were $3.0 million below the budgeted estimate of $71.5 million.

Tobacco tax collections for the month were under collected by $2.9 million, and the growth rate was negative 7.51%.

Privilege tax collections were $5.3 million more than the budgeted estimate of $15.4 million.

Inheritance and estate tax collections were $0.1 million above the budgeted estimate.

All other taxes were over collected by a net of $3.6 million.

Year-to date collections for two months were $41.9 million more than the budgeted estimate. The general fund was over collected by $51.4 million and the four other funds were under collected by $9.5 million.

The budgeted revenue estimates for 2012-2013 are based on the State Funding Board’s consensus recommendation of December 19th, 2011 and adopted by the second session of the 107th General Assembly in April 2012. They are available on the state’s website at http://www.tn.gov/finance/bud/budget.html.

State Reports 24th Consecutive Month of Positive Revenue Growth

Press release from the State of Tennessee; April 12, 2012:

NASHVILLE – Tennessee revenue collections continued to exceed budgeted expectations in March. Finance and Administration Commissioner Mark Emkes said today that overall March revenues were $916.1 million, which is $78.6 million more than the state budgeted.

“March sales tax collections, representing February spending, recorded the 24th consecutive month of positive growth,” Emkes said. “We believe this to be a clear indication of continued consumer optimism, and represents an upswing in the state’s economy.

“Year-to-date corporate tax collections are very encouraging. However, this item needs to be carefully followed because about one-fourth of all collections typically occur in the month of April and these numbers have been extremely volatile in the recent past.

“In addition, we need to monitor a number of national and global issues, including resolution of the federal budget and the Patient Protection and Affordable Care Act, escalating gas prices and potential for rising inflation as well as the European financial crises and turbulence in the Middle East. We’ll need to be extremely diligent for the remainder of this year in order to keep the budget in balance and financially posture ourselves for the future.”

On an accrual basis, March is the eighth month in the 2011-2012 fiscal year.

The general fund was over collected by $79.2 million and the four other funds were under collected by $600,000.

Sales tax collections were $34.6 million more than the estimate for March. The March growth rate was positive 7.58%. For eight months revenues are over collected by $140.5 million. The year-to-date growth rate for eight months was positive 7.06%.

Franchise and excise taxes combined were $50.2 million above the budgeted estimate of $141.8 million. For eight months revenues are over collected by $198.6 million. The year-to-date growth rate for eight months was positive 26.65%.

Gasoline and motor fuel collections for March increased by 5.30% but were $157,000 below the budgeted estimate. For eight months revenues are under collected by $3.7 million.

Tobacco taxes collections were $1.0 million under the budgeted estimate of $25.1 million. For eight months revenues are under collected in the amount of $12.0 million.

Inheritance and estate taxes were under collected by $4.2 million for the month. Year to date collections for eight months are $284,000 less than the budgeted estimate.

Privilege tax collections were $1.4 million more than the March estimate, but on a year to date basis, August through March, collections are $470,000 below the estimate.

All other taxes were under collected by a net of $2.2 million.

Year-to-date collections for eight months were $330.1 million more than the budgeted estimate. The general fund was over collected by $316.9 million and the four other funds were over collected by $13.2 million. The FY 2012 budget assumed an overcollection of $209.6 million in General Fund taxes. Therefore, the amount overcollected above and beyond what’s already in the budget is $107.3 million ($316.9 million minus $209.6 million).

The budgeted revenue estimates for 2011-2012 are based on the State Funding Board’s consensus recommendation of April 15, 2011 and adopted by the first session of the 107th General Assembly in May. They are available on the state’s website at http://www.tn.gov/finance/bud/budget.shtml.

The State Funding Board met on December 9th and 14th to hear updated revenue projections from the state’s various economists. The board met again on December 19th and adopted revised revenue ranges for 2011-2012. The revised ranges assume an over collection of $187.8 million to $220.5 million in total taxes and $177.0 million to $209.6 million in general fund taxes from the fiscal year 2011-2012 budgeted estimate.

Haslam’s Budget Amendment Aimed At ‘Right-Sizing,’ Not Reducing, Government

Gov. Bill Haslam ran on the mantra of reducing the size of government, but acknowledges his most recent edits to the budget don’t completely achieve that end — at least when it comes to adding back spending he originally said he’d cut.

And he says that’s OK because his goal is more about trying to “right-size” state government rather than shrink it.

“I’m a conservative Republican, and I don’t apologize for that,” Haslam told reporters after moderating a discussion about higher education goals at the Spring College Completion Academy in Franklin Tuesday.

“But I don’t think government’s evil. I don’t even think it’s a necessary evil. I think it’s a critical way that we provide needed services. We just believe in doing that in as small a way and as cost-effective way as possible,” he said.

The governor released his latest round of budget adjustments to the Legislature Monday, such as cancelling $12 million in cuts he built into the spending plan earlier this year.

In total, though, his administration’s budget tinkering doesn’t move the  bottom line much. It saves almost $279 million through projected increases in revenue and budget reductions, but puts most of that back into the budget, to the tune of about $265 million in new spending and backtracking on earlier cuts.

For example, the administration has backed off a $795,000 proposal to adjust class sizes and offer merit pay for teachers, and also deleted a $2 million miscellaneous fund while adding $1 million for land acquisition and maintenance at Radnor Lake State Natural Area in Nashville.

Haslam characterized the changes as “actually adding to the size of government because we’re actually adding costs” that weren’t in his original plan.

But the price tag for next year’s budget still looks to be lower than the current year’s. The proposed budget is $31.1 billion, about $900 million less than this year’s expected bottom line.

Haslam was quick to point out he is still aiming to lower state taxes on inheritances and groceries this year, as are other legislative leaders.

“When government receives more money — which we have, revenues are up — our goal is not to spend that money. Our goal is to return it to the taxpayers, the rightful owners,” said House Speaker Beth Harwell.

She and other House Republicans are pushing for a reduction in the gift tax, which kicks in when someone gives an expensive item like a car or a boat. The move has a $14.9 million annual price tag the governor did not include in his budget.

Neither did the Haslam administration factor in the cost of increasing the exemption to seniors who pay income taxes on their interest from bonds and stock, a plan near and dear to Lt. Gov. Ron Ramsey, who admitted Wednesday he may have to wait until next year to reduce that tax.

“If we give a tax cut, we have to cut somewhere else in the budget to make that happen. We have to have a zero bottom line to make it work,” said Ramsey. “Is it still a priority of mine? Absolutely. But is it as big of a priority as restoring some of the cuts the governor put back? Probably not.”

State tax revenues this year have so far exceeded what the governor built into his budget by $28 million, Finance Commissioner Mark Emkes said, but the governor plans to hold that money, and any other overages, in reserves for future budget years.

“I believe in smaller government,” said Haslam, “but I also think some of those things, some of those services, are really vital ones. … If we can do that under our current tax structure, or our future lower tax structure, than I want to try to do that.”

The night he won his Republican primary in August 2010, Haslam made a point of saying one of the key things the next governor has to do is make government smaller.

“We need a governor that understands that right now, facing the challenges, it’s about shrinking the size of state government and making do with less,” he said.

Alex Harris contributed to this report.

Harwell: Contingency Budget Plans Prove TN’s ‘Serious’ About Fiscal Responsibility

Press Release from House Speaker Beth Harwell, R-Nashville; Aug. 19, 2011: 

Following the release of a memo from the Department of Finance and Administration concerning the development of contingency plans should federal spending levels be reduced for Tennessee, House Speaker Beth Harwell (R—Nashville) released the following statement:

“For years, Washington has conducted itself in an irresponsible manner with our hard-earned taxpayer dollars. Now that those free-spending habits have pushed our country to the brink, we finally see signs that D.C. may be ready to make the tough decisions necessary to get our nation’s fiscal house in order.

“This means Tennessee may see reductions in federal spending. Given that, the Governor and the Finance Commissioner have asked for proposals from the respective agencies as to how those reductions would be carried out. It is helpful to keep in mind these are merely projections and they would only affect those areas receiving federal funding.

“Ultimately, I believe this is a responsible move by the Governor and I look forward to reviewing the proposals he receives. Tennessee is well-known for having a strong financial rating and this move shows we are serious about maintaining our status as a fiscally-responsible State. If only Washington could conduct itself in the same manner.”

Administration Wants Agencies’ Plans for 30% Cuts in Federal Funding

Memo from Department of Finance and Administration Commissioner Mark Emkes; August 18, 2011: 

TO: All Agency Heads and Budget Officers

FROM: Mark A. Emkes, Commissioner of Finance and Administration

SUBJECT: Federal Program Reductions — Please Respond by Wednesday, August 24

Because about 40 percent of the state budget is funded by federal aid and because of the recent federal law that will reduce federal spending, the state is developing contingency plans for significant federal aid reductions that most certainly will affect state fiscal year 2012-2013 services and possibly 2011-2012.

The bond rating agencies have advised that, in the not too distant future, all states will be receiving fewer federal dollars. They would like to know how the State of Tennessee would respond. We have to provide a very quick turn around to them and, for that, we would like to apologize up front. However, we need your help in developing a plan to be submitted to the Budget Office by August 24th.

The U.S. Budget Control Act of 2011 (U.S. Public Law 112-25) establishes mechanisms to restrain federal spending and decrease the projected federal deficit through the year 2021. The law places limits on federal spending and establishes a committee of Congress, which by November 23 is directed to submit recommendations and legislation to Congress on program reductions. The act requires a vote by Congress by December 23, with no amendments permitted. If the committee fails to report or Congress fails to endorse the legislation, then automatic across-the-board reductions would be applied to programs.

While it is not possible for the state to know now what specific program reductions will be implemented by the federal government, we must plan. In order to assist us in understanding the impact of potential federal reductions and in developing contingency plans, I am requesting that all state agencies submit contingency budget reduction plans for 15 and 30 percent reductions in federal aid. The reductions are to be submitted in two tiers, the first 15 percent and an additional 15 percent of recurring federal aid in the current-year work program. The Budget Office today is providing a template for development of the plans and the estimate of recurring federal revenues in the first draft of the work program. The reduction plans should be developed from those recurring federal revenue estimates, identify by state program the reduction amount, describe what programs and services are being reduced, and describe the impact.

All agencies receiving federal aid and agencies receiving interdepartmental or other departmental revenues which are derived from federal aid should submit the reduction plans. In developing the plans, you must assume that state revenues will not be used to maintain federal programs at the current funding level. That is, you are not to supplant federal funds with state revenues as a funding source for continuing services. In the reduction plan template, you are to identify the matching state funds that would be no longer required to match the reduced federal sources. This will enable the Administration to recommend priorities for the use of the unmatched state funds for continuing services.

Thank you for your attention to this priority matter and for your continuing extraordinary efforts.