Capitol Hill Conversation – A Glimpse at the State of the State

Governor Bill Haslam delivers his 2012 State of the State address. Image courtesy TN Photo Services

Governor Bill Haslam delivers his 2012 State of the State address. Image courtesy TN Photo Services

Monday night Governor Bill Haslam will make his annual State of the State address, when he gives his assessment of Tennessee’s state of affairs. The speech is largely about money and policy, and the governor has $300-$400 million in new tax revenue to play with this year.

If past years are any guide, Haslam will enumerate what kind of raise state workers will get. They haven’t been thrilled with one and two percent increases in the last couple of years, mostly because they went three years without a pay hike.

The governor has hinted the state may put more money into higher education, not less. Colleges and universities get about 30 percent less money from the state than they did 10 years ago.

However, the Haslam Administration has warned that much of this new revenue is already spoken for because of rising costs associated with TennCare, which takes up the largest share of the state’s $32 billion budget. Primarily, state officials say, this is more people enrolling in the health insurance program for the poor.

Last year Haslam talked tax cuts. And more are expected.

The governor proposed cutting the food tax over three years. Last year it went down from 5.5 to 5.25 percent. The end goal is 5 percent.

Haslam proposed cutting the estate tax on inheritance last year, which the legislature decided to phase out completely. Now there’s talk about getting rid of something called the Hall income tax. This is a 6 percent levy on investment income. Republican leaders say it hits more than rich people. They say run of the mill retirees are often getting pinched too.

From Money to Policy

In terms of policy changes, the first words from folks in Governor Haslam’s office are “workers comp,” as in the insurance employers have to pay in case their workers get hurt.

The governor hasn’t shown his cards on coming changes, but small businesses have been pushing hard to keep disputes out of court by establishing a special commission to handle workers comp issues, thereby saving time and money for business owners.

The education issue guaranteed to be in the governor’s agenda is one that took him some time to come around to in the first place. Haslam says he will put forward a proposal for school vouchers, which he terms “opportunity scholarships.”

This is money that the state would give to families so they could send kids to private schools. While many Republican lawmakers would like to see vouchers for just about any family, Haslam has indicated they would be for low-income kids only.

The difficult question is how a program would work, and what would be required of private schools who take this state money. That level of detail probably won’t find its way into the governor’s speech.

Surprises and Odds of Passage

There is apparently a public safety component to what the governor wants to do this year. Hard to know if schools are the specific subject, but Tuesday morning the state is hosting a summit on school safety in response to the Newtown shootings which would be a perfect setting to talk about new legislation.

The governor’s office says he’s also focused on increasing the efficiency and effectiveness of government. This could mean all sorts of things, but last year he consolidated or reorganized several boards. He’s hinted that he’d prefer to pay employees based on performance not just seniority, which could be in the cards.

Last year the governor made a huge announcement about getting rid of a lot of civil service rules that didn’t make sense to him. There could be a follow up as part of the speech.

Whatever the governor proposes, he knows he’ll have support from House Speaker Beth Harwell who says his agenda is of “paramount” importance to get through the General Assembly.

Senate Speaker Ron Ramsey doesn’t give off the same enthusiasm. But with Haslam’s party having super majorities in both chambers, it’s a safe bet the governor is trying to avoid any big intraparty blowups during this year’s legislative session.

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