Governor Bill Haslam laid out a plan in his third state of the state address to cut taxes, pay state employees more and still save money for a rainy day. Hot button policy proposals were mentioned, but far from fully fleshed out.
“Tennessee is different” – Haslam’s theme for the night. Different from other states in a low cost of living and relatively low unemployment. Different from Washington D.C. because Tennessee has made cuts instead of raising taxes.
“We did not raise taxes,” he told the crowd applauding in the state capitol. “In fact, we lowered them.”
While the theme was “different,” Haslam’s speech was more of the same.
He proposed lowering the food tax another quarter percent. Haslam was very specific in outlining a tax cut on investment income meant to help retirees.
“We’re proposing to cut the Hall income tax even further this year, by raising the exemption level for seniors from $26,000 to $33,000 for individuals and $37,000 to $59,000 for joint filers,” he said.
But other proposals were intentionally vague, such as a plan to allow school vouchers. This would redirect state education money to pay private school tuition.
The governor didn’t say the word “vouchers” or even his preferred term – “opportunity scholarships.”
What Haslam did say is that he plans to add options for low income students in the lowest performing schools.
“I expect this proposal will be hotly debated,” he says. “But after taking a careful look at the issue and how a program might work in Tennessee, I believe a limited approach that gives more choice to parents and students stuck in difficult situations makes a lot of sense.”
Haslam won’t find much resistance to vouchers in his own party. They just want to open vouchers beyond low income and low performing schools.
“I’ll be honest with you, I want it broader than that,” says Senate Speaker Ron Ramsey. “Parents know what’s best for their kids, and whether you’re in a failing school or not failing school, if there’s a better school that you could go to, then you ought to be able to do it.”
Ramsey says he plans to talk with the governor to make his case, but he says in the end a bill will pass that is “good for the state.”
Besides vouchers, the governor was also light on details with his overhaul on workers compensation for people injured on the job. He says he just wants a system that’s fair to both the employer and the worker.
House Speaker Beth Harwell says lawmakers have room to put their stamp on several priorities of the governor.
“One thing I’ve found about this governor, he seems open to listen to what the legislature offers,” she says. “Ultimately, it is the legislature’s responsibility. He doesn’t do anything without legislative approval.”
But much of what the governor outlined is likely set for smooth sailing.
The governor introduced new programs meant to increase the state’s college graduation rate to a stated goal of 55 percent. One initiative sets aside money from the state lottery to fund so-called “last dollar” scholarships for students close to finishing a degree.
“I want to learn a little more about how they’re going to administer it,” says Tennessee Board of Regents chancellor John Morgan. “But that last dollar can be the thing that really creates an opportunity, so yeah, they really do work.”
And for the first time in a decade, universities would get more money instead of less in the governor’s proposed budget. In exchange, they agreed to hold tuition increases to six percent or less.
In K-12 education, Haslam is offering big money for local districts to upgrade technology as well as $34 million that could be used to help fund more police officers in schools.
Sidestepping Medicaid Expansion
Another controversy that the governor’s budget sidesteps is whether or not to expand the state’s Medicaid program for the poor as envisioned in Obamacare. Haslam still hasn’t made a final decision and says he’s hesitant to commit because of the long-term costs. But he also acknowledges rural hospitals might be forced to close without the additional Medicaid money.
“Most of us – not all of us, but most of us in this room – don’t like the Affordable Care Act, but the decision to expand Medicaid isn’t as basic as saying, ‘No ObamaCare. No Expansion.’”
Democrats say expanding Medicaid is one of their top priorities this year. House minority leader Craig Fitzhugh says he’s encouraged to hear the governor’s thinking.
“It seems to be a little easier decision the way I see it than the way he sees it. But that’s fine,” Fitzhugh says. “At least he’s going to consider it because it’s something that really has not much downside to Tennessee.”
The federal government would pay all of the cost the first few years, and 90 percent after that. But Democrats will have very little say about what happens on this or any other proposal from the governor.
Republicans have two-thirds majorities in both chambers. Their work on the governor’s agenda begins in earnest Tuesday.