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Haslam Expects Federal Belt-Tightening to Squeeze Tennessee

Gov. Bill Haslam said Thursday that state and local governments should be prepared for less money coming from Washington as Republicans and Democrats feud over federal debt issues. He reasoned that Tennessee will take a hit regardless of how the matter is resolved.

In a speech to the Rotary Club in Fayetteville, Haslam also left the door open for possible expansion of pre-kindergarten classes in Tennessee, although not soon. He pointed to reasons for his regional jobs approach in the state and said while he thinks the economy is improving it is still “a long way until we get out of the woods” financially.

After making brief remarks, Haslam took questions from the audience and was asked what impact the budget battle in Washington could have on the state.

“I do think it will get worked out, but there will be less money coming out of Washington than there used to be,” Haslam said. “There just will be. For all programs. Whether that’s money aimed toward education or health care or building roads or helping folks with mental health issues or workforce development issues. There will be less Washington dollars going forward.

“That’s why I say while we’re working our way out of some budget issues we’re not out of the woods yet, because we still have some economic challenges, and I’m not sure what the Washington changes will mean for us.”

President Obama and Democratic leaders in Congress have been deadlocked with Republicans over a debt-reduction plan.

Haslam pointed to warnings about the state’s bond ratings even though Tennessee has strong ratings from the three major bond agencies — Moody’s, Fitch and Standard & Poor’s.

“We would love to have three AAA ratings, because we have a great balance sheet as a state,” he said. “They kind of sent a warning out to all the states, saying, ‘We’re thinking about downgrading every state’s debt because we’re worried about the federal government.’”

Haslam said since states receive a large amount of revenue through federal funds, the federal budget issue would have a domino effect on all states. The governor will be traveling to visit the rating agencies in a few weeks.

After his appearance, Haslam said he had talked recently with both Sen. Lamar Alexander, chairman of the Senate Republican Conference, and Sen. Bob Corker, who has been especially vocal on getting the nation’s debt under control, about the impasse in Washington.

“It depends on what day you catch them about their optimism about where we are on it,” he said. “At times they get a little frustrated with the politics of that, but I don’t know that I have any insight there beyond what anybody else does.”

When asked Thursday about the state’s pre-K program, which currently operates on a limited basis, Haslam hinted he might like to add more pre-K classes.

“Right now, I’m in favor of leaving it where it is,” he said. “We funded it in the schools where it currently exists. I actually think there’s a chance we will expand it down the road. But I think we’re waiting for more data to come in and our revenue situation to change.

“To put it in every school would cost us about $300 million, and we just don’t have it right now.”

Haslam said the lack of funds makes the decision easy to wait for more information about the effects of pre-kindergarten classes. He said the delay could mean more time to figure out where pre-K is effective and where it may not be effective. The issue has become politically charged in Tennessee, with many Republican lawmakers wanting to draw the line on pre-K, pointing to a series of state-funded studies that indicate limited long-term impact on students’ performance.

Since Fayetteville, in Lincoln County, is in a border county with Alabama, about 30 miles north of Huntsville, Ala., the issue of sales taxes and how they apply across state lines came up Thursday. Further, Haslam said Tennessee loses an estimated $500 million-$600 million each year in revenue because of Internet sales.

“I’m confident everybody in this room has bought something off the Internet recently, and you probably bought more this year than last year, and you’ll probably buy more next year,” he said. “So we have to address that issue.”

He renewed his call for Congress to step in and settle the matter nationally.

Haslam pointed to Lincoln County’s proximity to Huntsville, saying in some ways the county has more in common with Huntsville than Nashville, which has implications when recruiting jobs. But he said he didn’t think borders should stop economic development partnerships.

“There are a lot of things happening in northern Alabama we can partner with them on, and we’ve had some very preliminary conversations about how we might make that happen,” he said.

Haslam’s comments came the same day House Minority Leader Craig Fitzhugh, D-Ripley, announced he had appointed a task force dedicated to creating more jobs in the state.

Haslam said when he speaks to business leaders they comment frequently on how nice people in Tennessee are but that the state’s ranking in the 40s among the 50 states in education is “the one drawback we have.”

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Labor Complaint Against Boeing Opposed by Haslam

Gov. Bill Haslam is among 16 Republican governors to sign a letter to the National Labor Relations Board asking it to dismiss its complaint against aircraft maker Boeing, which plans to operate a plant in South Carolina.

Like Tennessee, South Carolina is a right-to-work state. The NLRB claims Boeing chose to establish an assembly plant in North Charleston, S.C., as retaliation for past labor problems the company has experienced in the state of Washington.

The NLRB formally issued a complaint against Boeing in April.

Republican Gov. Nikki Haley of South Carolina has written to Lafe Solomon, acting general counsel of the NLRB, taking issue with the agency’s action. The letter was dated June 16, and Haslam is among the signers.

The letter says that although South Carolina is a right-to-work state and Washington isn’t, the aircraft maker continues to invest and create jobs in both states regardless of their different policies on labor. The letter begins by saying the best announcement a governor can make during the recovery from recession is one about new jobs.

“When a company chooses to come to a state, it does so because the state has a low cost of doing business, a trained workforce and a favorable regulatory climate,” the letter said. “If the company chooses to locate in a right-to-work state, that is an added bonus.”

Haslam has repeatedly listed the fact that Tennessee is a right-to-work state as being among the state’s top selling points in attracting new jobs. Haslam has said his top priority is to make Tennessee the No. 1 state in the Southeast for jobs.

The letter initiated by Haley says the NLRB has “overstepped its mandate” to protect workers and has instead chosen to protect only “the interests of organized labor.”

“This undermines the principles of free market capitalism upon which this nation is built,” the letter said. “It is clear that if the NLRB can charge Boeing and punish South Carolina, then it can do so to other companies and other states.”

The letter further states, “When we, as governors, are fighting to improve the economic interests of our states, the federal government should not stand in our way. While governors are trying to break the ties that bind free enterprises from doing business, the federal government should not tell Boeing where it can build airplanes.”

A hearing on the charge opened in Seattle on June 14 before an administrative judge.

On April 28, eight state attorneys general wrote to Solomon, calling on him to withdraw the complaint. Earlier this month, 16 attorneys general filed an amicus brief opposing the NLRB’s action. Tennessee’s attorney general, Bob Cooper, has not been among those signing onto the opposition.

Boeing selected Charleston in 2009 for an assembly line for the company’s 787 Dreamliner.

Tennessee recently found itself in a controversial jobs issue similar to one in South Carolina. Tennessee has struck a deal with Amazon.com to build two distribution centers, with the agreement that Amazon will not have to collect sales taxes in Tennessee on its transactions. The decision was made by former Gov. Phil Bredesen’s administration, and Haslam has agreed to abide by the agreement. South Carolina lawmakers balked at a similar arrangement with Amazon on collecting taxes, before reversing their decision after Amazon threatened to pull out of the state.

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