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Legislature Unanimously Approves State Budget

The Senate passed a $30.8 billion budget on Saturday, making it a clean sweep in the Tennessee General Assembly, with both chambers unanimously approving a budget that could have easily been a contentious battle given the state’s economic constraints.

The House approved the budget 96-0 on Friday.

Republican Gov. Bill Haslam and lawmakers benefited from recent revenue increases that allowed Haslam to restore many cuts that mattered most to Democrats, and in the end the bill was still roughly 3.9 percent less than the previous year’s budget. The state is constitutionally obligated to pass a balanced budget.

Haslam, in his first year as governor, had stated relentlessly during his campaign that the state was going to suffer massive losses of federal economic stimulus money, and his estimates on that count proved fairly accurate. All told, the state will have about $1.8 billion less in federal funds than a year ago, and of that total about $1.4 billion was attributed to the loss of stimulus funds.

There is no tax increase in the budget, although it includes a hospital assessment fee of $449 million meant to draw down double that amount in federal funds.

The most problematic issue between the House and Senate had been the Senate’s reluctance to extend unemployment benefits another 20 weeks for about 28,000 people. But the extensions prevailed in the Senate on Saturday, after leadership reached an agreement on Friday with Haslam’s involvement.

The administration’s budget outline is based on a revenue growth rate estimated at 3.7 percent for the fiscal year that begins July 1 and projects revenue growth of 4.5 percent for 2012-13 and 5 percent for each of the following two years.

Those projections are in stark contrast to the revenue patterns in the last term of Democratic Gov. Phil Bredesen. The state’s revenue figures at one point had reached 22 consecutive months of negative growth in sales tax collections during the nation’s economic downturn.

The recent rebound enticed Haslam to submit an amendment to his original budget presentation from March. The added revenues allowed for devoting $71 million for disaster relief following recent storms in the state, $8.5 million to restore cuts to mental health providers in TennCare and millions more to restore other health care cuts.

Haslam was also able to budget for reimbursement of about $82 million in federal funding errors that affected TennCare, the state’s Medicaid program.

The budget, SB2090/HB2139, includes a 1.6 percent increase in pay for state employees.

One notable cut that stands is the elimination of the local planning division in the state Department of Economic and Community Development.

Democrats expressed their appreciation for many of the restorations to the budget bill.

“I must say, I’m very pleased with the bill,” said Rep. Craig Fitzhugh, D-Ripley, the House Democratic leader.

“We applaud the majority party for the budget and the governor for the proposal of it and for acceding to our requests on a lot of different things.”

Fitzhugh especially noted his appreciation for restoration of TennCare funding and the extended benefits for unemployment, which will cost the state about $3.1 million to draw down about $60 million at the federal level.

Fitzhugh said the budget is actually bigger than last year but doesn’t appear so because of the lack of stimulus money.

Lt. Gov. Ron Ramsey said it was the first time in his memory a budget had passed unanimously.

“I’d like to congratulate Governor Haslam,” said Ramsey, who ran against Haslam in the Republican primary last year. “He did a good job of presenting this budget, and I think it took care of most of the problems.

“And we tried to include those across the aisle in our discussions.”

The lack of a single vote against the budget was attention-grabbing.

“No red lights, and I take great pride in that,” said Sen. Mark Norris, R-Collierville, the Senate majority leader.

Norris, who carried the bill for Haslam in the Senate, took time on the Senate floor Saturday to thank Democrats who worked with Republicans to craft the legislation.

“It’s very inside baseball, but that’s something that has never been done in my 12 years,” Norris said after the vote. “It always sort of hurt my feelings, if you really want to know the truth. We all worked together. Even though we’ve had the majority for several years in the Senate, when the previous governor was in office they would never acknowledge our work on the budget, so I wanted to share that appreciation today, even though they have only 13 members. I appreciated the collaborative effort.

“I spent a lot of time on that budget all year long down in the basement. I’m really … I’m tickled.”

“The governor presented an excellent budget,” said Rep. Charles Sargent, R-Franklin, chairman of the House Finance Ways and Means Committee. “That was one of the highest vote counts on a budget in a long time.”

Speaker of the House Beth Harwell agreed with the call to include unemployment benefits, which will draw down the extra money.

“I think it was the right thing to do,” Harwell said. “It was money that was just sitting there. I think it was good for our state to pull it down. I think it will be spent in this state, and that’s going to produce sales tax revenue.”

The Senate vote on the benefits was 20-11.

“There was always a pretty solid level of support,” Norris said of the unemployment issue. “These are people who were employed, after all. Yes they’re unemployed now, but these are people who lost their jobs. These are former workers who are still looking to regain their worth.

“I have several counties — Lauderdale, Tipton, Dyer, Shelby — that are well above the national unemployment average, and this is sort of their last best hope.”

Norris noted the state’s commitment to helping fund economic expansion projects and portrayed the unemployment vote in that light.

“With the funding in this year’s budget for new economic development projects, it will take a little time for those projects to come on line,” Norris said. “We are helping companies expand and create new job opportunities, and I’m hopeful that these 28,000-30,000 people will be the beneficiaries of that new work. It takes time.”

Ramsey was among Republicans who voted for the extension.

“That’s one I could argue either side of,” Ramsey said. “I can see why that needed to be extended. I wish it hadn’t been, in a way. At the same time, there are those in our caucus, too, that represent those rural areas that have better than double-digit — about 20 percent — unemployment, so I understand that. People are truly looking for jobs. Do I wish we didn’t have to do this? Absolutely. But I can see both sides.”

Governor Announces SBA Disaster Loans

Press Release from State of Tennessee, March 24, 2011

Knox and surrounding counties eligible for low-interest loans to individuals and businesses

NASHVILLE – Tennessee Gov. Bill Haslam announced today the U.S. Small Business Administration (SBA) has granted his request for a disaster declaration for Knox and eight contiguous counties in Tennessee following the severe storms and flooding in February.

“The notice we received from the federal government is welcome news for Tennesseans in these counties,” said Haslam. “I’m pleased the federal government has granted this declaration to provide them some relief.”

An SBA disaster declaration makes homeowners and businesses affected by the disaster eligible for low interest loans. In this case, the rate for homeowners will be 2.56 percent or 5.12 percent, depending on whether they can get credit elsewhere, and business rates range from 4 to 6 percent.

SBA declarations make victims in adjacent counties eligible for aid as well, so the declaration includes the Tennessee counties of Anderson, Blount, Grainger, Jefferson, Loudon, Roane, Sevier and Union.

Those affected have until May 23, 2011, to apply for relief from physical damage and until Dec. 23, 2011, to apply for relief from economic injury caused by the Feb. 28, 2011, storms and flooding.

Applicants can contact the SBA’s Disaster Assistance Customer Service Center at (800) 659-2955, email disastercustomerservice@sba.gov or visit SBA’s website at www.sba.gov. Hearing impaired individuals may call (800) 877-8339.

Applicants may also apply online using the Electronic Loan Application (ELA) via SBA’s secure website at https://disasterloan.sba.gov/ela.

Memphis Charter Schools Face Uncharted Waters

Amid the uncertainties surrounding the proposed merger of the Memphis and Shelby County school systems is the question of what would happen to the city’s 25 charter schools.

The answer changes depending on who you talk to.

It would be up to the county school board to decide the future of those charter schools contracted with Memphis City Schools, Shelby County Schools Superintendent John Aitken said.

“Our understanding of the laws as they exist today is if the city school board goes out of business due to the referendum … then that would become a decision of our board, the existing Shelby County School Board, and they would have to make that determination in terms of the charter schools,” he told TNReport.

But Sen. Reginald Tate, a Memphis Democrat and the Senate Education Committee’s vice-chairman, struck a more hopeful note — saying that in the event of a merger, there’s a chance nothing would dramatically change with existing charter schools.

Those schools would likely have to meet with Shelby County officials and may have to tweak some terms of their contracts with the school district, but the issue of their continued operations shouldn’t automatically or necessarily be jeopardized, he said.

According to Tennessee state law, a charter school can be discontinued for only three reasons: violating the conditions, standards or procedures of the charter agreement; failing to meet adequate yearly progress towards achievement; or failing to meet financial standards of operation.

While the language suggests the charter schools would continue to function, the Tennessee Department of Education wouldn’t comment on whether those guidelines mean that Shelby County Schools would have to accept the schools in the event Memphis ultimately hands over the school system.

“The state wants to ensure the least amount of disruption for students and staff,” Department of Education spokeswoman Amanda Maynord Anderson said in an e-mailed statement. “Obviously, we are anticipating the plan forthcoming from Shelby and Memphis. It is our hope the plan will lay out the best course of action for all involved.”

Voters in Memphis will go to the polls March 8 to decide whether the 103,000-student Memphis City Schools will merge with Shelby County Schools, home to 47,000 students.

The already touchy issue heated up this week when Gov. Bill Haslam and Acting Education Commissioner Patrick Smith directed local schools officials to submit a plan for the merger’s transition and for how teachers would be affected.

Charter school backers say the schools would remain intact regardless of any changes to the district structure, but have noticed that nervous parents and teachers are already considering applying to new schools.

“It’s difficult enough to run these schools in these environments without having these politics chasing them around,” said Matt Throckmorton, executive director of the Tennessee Charter School Association. “These schools need to not focus on politics but on academics.”

Sen. Mark Norris, who is spearheading an effort to delay the potential takeover by two and a half years with a piece of legislation that zipped through the Senate Education Committee Wednesday, said he isn’t sure exactly that the future holds for the charter schools.

“I don’t know the answer to that,” said Norris. “I mean, in the final analysis, there may be some need to renegotiate the contracts given some of the financial realities, but I don’t know enough about the contracts or how they interact to really say.”

The drama surrounding the merger began late last year when the Memphis City School Board decided to dissolve the school district in hopes to merge with Shelby County. Since then, the situation has been in constant flux and is now heading to Memphis voters in a referendum.

Norris’ bill calls for the two school districts to develop a comprehensive transition plan with the help of a state-appointed commission before the actual merger could take place. Under the plan, the districts could merge no earlier than 2013.

Some Democrats are criticizing the plan, saying it represents an unwanted state government attempt to butt in on a local issue. The transition plan and its timeline should be left to the Memphis and Shelby County school systems, they say.

“It seems to me that I’ve listened for the last several years to people complaining about Washington controlling us. And here we are, Nashville, trying to control Memphis. That’s a serious issue,” said Sen. Andy Berke, D-Chattanooga, just moments before a party-line 6-3 vote of Republicans approving the legislation.

The measure will go before the House Education Committee Thursday and is expected to be voted on in the House and Senate chambers Monday.