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State Employee Retirement Reboot Headed to Haslam

An overhaul of the state’s pension fund that changes the contribution system for future employees to one more closely resembling private-sector retirement plans has passed the Tennessee General Assembly.

The bill, HB948/SB1005, sponsored by Rep. Steve McManus,R-Cordova, and Sen. Randy McNally, R-Oak Ridge, intends to change the state employee retirement plan to a hybrid system to safeguard against possible future insolvency, as faced by many other states around the country.

The legislation, which goes into effect July 1, 2014, would require new state employees going forward to contribute a portion of their income to their pension fund. The employees can also decide whether to choose their own investments, or allow the state to continue managing the pension investments.

It applies to government employees hired after the law takes effect; current state employees and retirees would remain under the old plan.

“The fundamental goal of a hybrid plan is to require employers and employees to share in the investment risks and costs equitably,” McManus said on the House floor, after explaining the new contribution and benefit rates under the measure.

McManus added that another purpose of the bill was to allow Tennessee to continue to provide competitive benefits for “career public employees,” while protecting the state from “unfunded liabilities.”

The proposed change to the state’s pension fund received some pushback from Democrats on the House floor.

Although this legislation might be good for some states around the nation, House Minority Leader Craig Fitzhugh said that he did not think that it was necessary to make these changes to the Tennessee Consolidated Retirement System.

“This is a $35 billion TCRS that we collectively, and through the years, have worked hard to maintain,” said the Ripley Democrat. “It is in good shape. And, if we had to do something to split it and start over with new-hires having only a partial defined contribution plan and a partial defined benefit plan, that would be fine. But ladies and gentlemen, at this stage in the game, we don’t need to do that.”

However, according to McManus, the desire to overhaul the pension program comes from several factors considered by the Treasurer’s office.

These factors include things such as the volatility of the financial markets, new federal requirements for pension fund reporting and the strain placed on these programs by the increased life-expectancy of Americans.

The changes to the pension fund are also opposed, for reasons similar to those voiced by Fitzhugh, by representatives from state employee advocacy groups, such at the Tennessee Education Association.

“It puts an employee’s retirement security in jeopardy,” said Jerry Winters, a former lobbyist for the Tennessee Education Association who now works on government employee retirement issues. “Again, the only good thing here is that the current participants are protected, but going forward, I think young people are going to have to really look at where they’re going to be 20 and 30 years from now.”

The bill passed the House 71-16., and passed the Senate 32-0.

It’s now headed to Gov. Bill Haslam for his signature.

Press Releases

NFIB Picks Favorite Incumbents to Support In August Primary

Press Release from the National Federation of Independent Business, Tennessee Chapter; July 6, 2012: 

NFIB Endorses Candidates in 5 Senate, 20 House Primaries

NASHVILLE, July 6, 2012 – The National Federation of Independent Business, Tennessee’s leading small business association, today said it has endorsed candidates in 25 state legislative primary races. The endorsements were made by NFIB/Tennessee SAFE (Save America’s Free Enterprise) Trust, which is comprised exclusively of NFIB members. State primaries are scheduled for Thursday, Aug. 2, with early voting beginning July 13 and ending July 28. NFIB expects to announce general election endorsements later this summer. The general election will be held Nov. 6.

“NFIB supports candidates who understand how important it is to reduce burdens on small business,” said Jim Brown, state director of NFIB/Tennessee. “These candidates have consistently supported less taxation and have worked diligently to improve our unemployment and workers’ comp systems.”

Endorsements by Senate and House Districts (NFIB members bolded)

Senate District, Name

2, Doug Overbey

14, Jim Tracy

18, Ferrell Haile

28, Joey Hensley

32, Mark Norris

House District Name

2, Tony Shipley

5, David Hawk

6, Dale Ford

8, Art Swann

10, Don Miller

11, Jeremy Faison

12, Richard Montgomery

20, Bob Ramsey

22, Eric Watson

24, Kevin Brooks

27, Richard Floyd

31, Jim Cobb

45, Debra Maggart

48, Joe Carr

61, Charles Sargent

66, Joshua Evans

71, Vance Dennis

90, John DeBerry

96, Steve McManus

99, Ron Lollar

NFIB’s endorsement is critical to these campaigns. Small business owners and their employees vote in high numbers and are known for actively recruiting friends, family members and acquaintances to go to the polls. NFIB has pledged it will activate its grassroots network on behalf of these campaigns. NFIB’s political support is based on the candidates’ positions and records on small business issues.

Business and Economy Environment and Natural Resources Tax and Budget Transparency and Elections

House Republicans Hear Business Complaints on Workers’ Comp, Unemployment Benefits

Republican lawmakers are expected to address the state’s workers’ compensation system next year and revisit the issue of extended unemployment benefits, based on a meeting of the GOP’s House small business task force in Nashville on Wednesday.

The task force heard anecdotal evidence of people who are currently accepting unemployment benefits but are not willing to apply for jobs. Democrats lobbied hard for an extension of unemployment benefits in the waning hours of negotiations on the state’s $30.8 billion budget passed in May.

But Democrats are not members of the House group that met Wednesday. The task force is comprised entirely of Republicans, who have a 64-34-1 majority in the House. The task force heard from several small business operators from across the state.

Workers’ compensation issues have come up frequently at business roundtables held by Gov. Bill Haslam, and the governor has said the matter should be addressed. Several people spoke of the workers’ comp issue at Wednesday’s meeting of legislators.

“We’re not (going) to get in front of the governor,” Rep. Jimmy Matlock, R-Lenoir City, chairman of the task force, said after the meeting. “We’re working hand in hand with them. What you’ll see come from this committee is recommendations back to the Assembly of what we heard today, what we’ve found out through our investigations.”

When asked if Tennesseans could expect to see workers’ comp legislation surface when the General Assembly convenes in January, Matlock said, “I think we will.”

Rep. Pat Marsh, R-Shelbyville, who is in the trucking business, said workers’ compensation insurance is one of the problems his business faces. Marsh introduced Raymond Farmer, vice president of the American Insurance Association, a trade group based in Atlanta, as an expert.

Farmer told the group his organization analyzes the insurance environment in different states and that Tennessee is a business-friendly state but that it should focus on workers’ compensation. Farmer said the state should reform its adjudication process, moving from a court-based approach to an administrative format.

“Tennessee is one of only three states, the others being Alabama and Oklahoma, with a cumbersome court-based approach to adjudicating workers’ comp claims,” Farmer said. “Although administrative systems can, and do, have their own shortcomings, eliminating a court-based approach is a significant step in the right direction for a system not based on fault, as is the court system.

“Tennessee should adopt a purely administrative system.”

Farmer said Tennessee currently reimburses based on multiple conversion factors that undermine the system by politicizing physician reimbursements and increasing medical costs, including pharmaceutical expenses. Farmer also said Tennessee should modernize its funding of the compensation system.

Wyatt Owens, a contractor from Paris, Tenn., said trouble with workers’ compensation is the biggest complaint he and other contractors have.

“The really biggest problem I have with it is Owens Construction has to be the policeman,” Owens said. “Every sub we hire, we’ve got to make sure they’ve got their paperwork right. We’ve got to make sure they pay their dues, they pay their whatever. And if we don’t do that, we’re penalized.”

Owens said he believes there should be workers’ compensation but that rules and auditors keep changing.

House Majority Leader Gerald McCormick formed the task force in July, saying the state needs to identify regulations that impede job growth. McCormick sat in the audience through much of Wednesday’s meeting, as did House Majority Caucus Leader Debra Maggart, who spoke briefly to the task force.

After the meeting, Matlock said there seems to be a common theme in the group’s work, including workers’ comp, unemployment benefits and job creation.

“We’ve got to get people incentivized to get back out and want to get back in the workplace,” Matlock said.

“What these business owners are telling us is, ‘Folks, there are some barriers out here. There are some things that are causing us not to take risk, not to get out and look for employees, because there is this overwhelming data that shows us we’ve got too many pages of issues we’ve got to compile, too many things we’ve got to, as business owners, be responsible for.’

“And at the end of the day it’s all about job creation. It’s all about seeing our communities grow.”

Matlock said he opposed extension of unemployment benefits this year but emphasized that he is just one member of the Legislature. Rep. Steve McManus, R-Cordova, said he voted for it.

“There really are an awful lot of people out there that are just trying so hard to work,” McManus said. “Yet today it was so interesting that we heard that people are turning work down when they’re unemployed.”

McManus said he believes the group’s homework is just beginning. He said there is a need to distinguish between state regulations and federal regulations and then get specific with state regulations that are hurting businesses.

“We write an awful lot of legislation up here. It’s time to rescind some of this legislation, too,” McManus said.

Press Releases

McCormick’s Next Task Force to Tackle Economic Development

Press Release from Rep. Gerald McCormick, R-Chattanooga; July 14, 2011:

Representative Jimmy Matlock Named Chairman; Group Will Explore Ways to Reduce Government, Allow Private Sector to Expand

(July 14, 2011, NASHVILLE) – With the 2011 Southern Legislative Conference coming up this weekend in Memphis, giving Tennessee legislators the opportunity to learn about the best practices from other States and share our own, House Majority Leader Gerald McCormick (R—Chattanooga) announced the formation of what is expected to be the final task force of the House Majority.

The Republican Caucus Small Business and Economic Development Task Force will consist of ten Members of the House Majority. In a letter announcing the appointments to the task force, Leader McCormick outlined specific duties for the working group. They include:

  • Identifying regulations that are impeding job growth in Tennessee’s private sector and developing measures to remove those hurdles;
  • Ascertain the best practices of other States when it comes to paving the way for job creation by small businesses and companies;
  • Develop strategies and potential policy initiatives to make Tennessee’s environment better for business expansion and recruitment.

Representative Jimmy Matlock (R—Lenoir City) was given the responsibility of chairing the task force. The other Members include: Representative Charles Sargent (R—Franklin), Representative Curtis Johnson (R—Clarksville), Representative Steve McManus (R—Cordova), Representative Jon Lundberg (R—Bristol), Representative Pat Marsh (R—Shelbyville), Representative Sheila Butt (R—Columbia), Representative David Alexander (R—Winchester), Representative Bill Sanderson (R—Kenton), Representative Ryan Williams (R—Cookeville), and Representative Tim Wirgau (R—Buchanan). The group intends to meet when other scheduled legislative committees meet such as the Fiscal Review Committee or summer study meetings.

“With unpredictable policies that affect businesses coming out of Washington, I believe it is our responsibility to create good policies that will have a positive effect on job development for Tennesseans,” said Majority Leader McCormick. “This task force will conduct a thorough review of our Code and find places where we can eliminate burdensome government regulations that are hurting Tennessee businesses. While Democrats are the Party of income taxes and ineffective government solutions to our challenges, I believe the proper path to sustainable, long-term economic growth is by unleashing the power of entrepreneurs and our business community.”

Rep. Matlock agreed and added, “We had a successful 2011 that included a number of pro-growth reforms for Tennesseans. However, there is much work to be done. This task force will be responsible for presenting a package of recommendations to the full Majority that will form the basis of our next economic development package. I appreciate the opportunity to lead this group and look forward to getting to work.”

“Since Governor Haslam and our Republican Majority were elected last fall, we have been consistent in our efforts to reform the way government operates and to create a consistent environment for Tennessee businesses. This task force is the next logical step in that cause and I look forward to hearing how we can help Tennessee’s job creators,” said Rep. Johnson.

“Small business is the backbone of the American economy and our economy here at home,” said Rep. Wirgau. “Job development is the number one issue on the minds of Tennesseans and, as a business owner myself, I look forward to identifying ways we can get government out of the way so our job market can start growing once more.”

House Speaker Beth Harwell (R—Nashville) concluded, “This is a smart undertaking for our Majority. 2011 saw us institute a number of critical reforms that will help businesses grow. We reformed education for our children, implemented tort reforms for the business environment, and we reduced the size of government. Next session, I believe we can drill down and identify some specific policies that will have a positive impact on Tennessee’s job market. I look forward to hearing the results of this task force’s work.”

Leader McCormick announced the appointments in a letter to all Members of the House Republican Majority. The full text of the letter is below:

July 14, 2011

Fellow Caucus Members:

I sent a letter to each of you yesterday announcing the appointment of a Republican Caucus Firearms Issues Task Force. This task force, along with the Energy Task Force that was formed earlier this year, will provide a vital service to our Caucus and to our State by conducting significant research on complex issues.

The main goal of the House Republican Caucus is to implement good public policy that will benefit all of Tennessee’s citizens. Without a doubt, the greatest issue for Tennesseans is the lagging economy that our nation is currently experiencing. Since our Majority was formed, our number one concern has been economic development for Tennessee. This includes job development, business expansion, and private sector growth. Though we had a successful 2011 legislative session, we can do more. That is why I am excited to announce the formation of a final task force that will concentrate squarely on that issue.

I have asked ten of our members to form the Republican Caucus Small Business and Economic Development Task Force. This group will develop strategies and potential policy initiatives to make Tennessee’s environment better for business expansion and recruitment, as well as identify regulations that impede job growth in Tennessee’s private sector and develop measures to remove those hurdles. Another key task of this group will be to ascertain the best practices of other States when it comes to paving the way for job creation by small businesses and companies. Providing a great business climate is a process of constant improvement, and I look forward to hearing the task force’s report to the Caucus at the conclusion of their research.

The Republican Caucus Small Business and Economic Development Task Force will consist of the following members:

Rep. Jimmy Matlock, Chairman

Rep. Charles Sargent

Rep. Curtis Johnson

Rep. Pat Marsh

Rep. Tim Wirgau

Rep. Steve McManus

Rep. Jon Lundberg

Rep. David Alexander

Rep. Sheila Butt

Rep. Ryan Williams

Rep. Bill Sanderson


News Tax and Budget

Casada’s Local Employment Policy Measure Falters in Committee

Not all Republican measures will be a slam dunk this year, apparently.

The former favorite for the Tennessee House speakership watched on as a subcommittee loaded with fellow GOP House lawmakers rejected his attempt to blanket the state with uniform regulations on discrimination, “living wage” and family-leave policies.

Casada blamed the HB598’s setback on “special interests,” but he stopped short of pointing fingers at any one group or another.

“I’m concerned special interest might have gotten the attention of some folks, and they didn’t listen to the majority of voters in the district. That’s purely opinion on my part,” said last legislative session’s House Republican caucus chairman.

Casada is proposing to ban local governments from imposing any anti-discrimination practice or employment policies mandating health insurance, a minimum wage or family-leave requirements more restrictive on businesses than state or federal law.

The bill fell, 7-6. Republican Rep. Steve McManus, the Commerce Committee chairman from Cordova, and GOP Rep. Dennis Roach of Rutledge voted against the measure, along with Independent Rep. Kent Williams, Elizabethton, and four Democrats. Rep. Charles Curtiss, D-Sparta, voted in favor of the legislation with five Republicans.

Gay and lesbian advocates say the bill would have erased any locally enforced discrimination policy or other local rules protecting them based on their sexual preference.

“I think the bill was aimed at our community, the gay, lesbian, bisexual, transgender community,” said Chris Sanders, a spokesman for the Tennessee Equality Project who added that the bill meddles in local government’s ability to govern.

Both sides of the issue say the fight is far from over.

“This bill is actually about limiting the growth of big government at a local level,” said former state senator David Fowler, now president of Family Action Council of Tennessee. “Just because you can’t win at the state or the federal level doesn’t mean you should run to the local governments and create 348 different sets of laws businesses have to figure out to comply with.”

The issue caught momentum this year when Metro Nashville officials began discussing adding special protections for the GLBT community in its ordinances, an issue FACT believes is bad for both business and taxpayers.

Casada, who has two other versions of the bill sitting in committee, said he plans to talk to the subcommittee’s no-voters to find out what they took issue with and what, if anything, he can change in the bill to win their approval, he said.