I hope all is well in your world and that you are having a Happy New Year. It is my further hope that you are staying safe from the winter weather we are experiencing.
As with every new year, our Tennessee General Assembly returns to Nashville with an array of issues to tackle. Some issues are new, while other issues are renewed or ongoing. In addition, we have local, statewide, and federal concerns that may need addressing in state government.
This year shapes up to be no different as the 114th Tennessee General Assembly is set to gavel in on January 14th. In our first Capitol Checkup of the 2025 session, I wanted to take a few moments to go over five of the top issues that I see coming before us and along with a few more issues that we may face.
Bad Bills
The two top issues that we have to address every year are the budget and disposing of bad bills. As President Calvin Coolidge once said, “It is much more important to kill bad bills than to pass good ones.” So, one of our main jobs, year in and year out, is disposing of a slate of bad bills that just need to die. Whether it is a poor understanding of an issue, legislators trying to make a name for themselves, or legislators trying to pander to extremists or special interests, a wide array of bad bills get filed every year. Luckily, the majority of these bills go by the wayside, but, unfortunately, there is often some consternation over the bills as the media or activists spread a lot of misinformation on the issue.
As the chairman of the House Health Committee, it has been part of my duty to filter out which bills have merit and which do not. I have a process by which I address legislation, not only for my own bills, but for those before me and my committee. For the bills we would like to pass, we try to minimize unintended consequences while reaching the goals to address the issue. If I am fortunate enough to continue to serve as a chairman, I will continue to utilize my process for bills. Thus far, I have heard of a few bills already that have been filed or floated that probably need to go away rather quickly.
Budget
Balancing a budget is the only constitutional requirement of the General Assembly. So, the budget process and passing a balanced budget is always the top priority of our state officials. Since COVID and the Biden Administration, this process has not been as easy. During the Trump Administration, Tennessee was seeing significant budget surpluses despite record tax cuts. However, with inflation and the depressed mood of the country over the past few years, Tennessee has seen a significant reduction in revenues leading to a tight budget process.
Tennessee’s revenues are primarily based on consumption which include sales, gas, and grocery taxes. The more one spends, the more one contributes to taxes and the economy. Economists often speak of the “velocity of money” which is a marker of a depressed or vibrant economy.
During a good economy, a dollar may circulate eight times during a year. Whereas, under a depressed economy, that circulation may only be four or five times. If one understands that the state receives seven cents in sales tax for every dollar spent in Tennessee and a dollar could circulate eight times, then the state would take in around 50 cents per dollar spent when the velocity of money is high. With a lower velocity of money due to inflation and lower consumer confidence like during the Biden Administration, the state may only take in 35-40 cents.
The mood of the nation and consumer confidence appears to be on an upswing with Trump’s re-election. It remains to be seen how much the circumstances will impact our budget this year, but there is considerably more optimism.
School Choice
School choice is a priority of Gov. Bill Lee and is an issue supported by President Trump. This issue will be at the forefront in Tennessee, with discussions ongoing about the possibility of the General Assembly holding a special session to take up school choice.
Gov. Lee has proposed the Education Freedom Act which establishes statewide school choice and offers scholarships to help Tennessee families pursue an education that best suits their child’s needs. The Act has several parts including historic investments in public education with bonuses for teachers and an opportunity for local education agencies to apply for grants to assist with infrastructure.
Tax Reform
Tax reform will be on the table this session, as well. There are also ongoing discussions of a potential push to completely ban any state property tax. While the state currently doesn’t have a state property tax, Tennessee could enact one. I don’t see any attempt to enact a state property tax happening while Republicans are in office, but, unless we make a change, another governor or General Assembly could do so.
In addition to the state property tax issue, I expect there will be an effort to place a cap on how much a county could raise a property tax. The world’s most renowned economist, Art Laffer, is supportive of limiting property taxes and I’ve spent time meeting with him on this issue. I do believe that most folks are supportive of limiting property tax hikes, but locals need alternatives for providing services. Therein lies the quandary on this issue.
Solid Waste
For years I have sounded the alarm on the statewide issue of solid waste. Middle Point landfill in Rutherford County accepts waste from around 33 counties including Davidson County. Based on engineering estimates, it is on track to close in 2028. I have fought the expansion of the landfill and both our county and Murfreesboro are taking steps to have an alternative solution to using Middle Point.
The problem for the state and surrounding counties is that it takes about five years to build a new landfill and, in theory, the window for another landfill to open before Middle Point closes has arrived without any action. Other counties appear to now understand the issue and seem inclined to try and address their own failures. Unfortunately, that may mean a push to find a way to extend the lifespan of Middle Point. To this point, I have not seen any new bills that would do that, but I will push back on any effort to burden our community with their solid waste.
Other Issues
With the growth that Tennessee has seen, problems of various natures have arisen. If there is revenue available, I am expecting additional funds to go towards infrastructure including roads and schools. Tennessee Investment in Student Achievement (TISA) funding includes two avenues to help with growth. There is a growth stipend and a growth infrastructure fund.
Last year marked the first year of this type of funding, and there was a shortfall in the revenue available to allocate to the funds. I’ve had discussions about getting these fully funded and am hopeful that it will be in Gov. Lee’s proposed budget.
Additionally, there is a Real Estate transfer tax which is applied to each property sale. Tennessee collects around $20 million per year from Rutherford County. There is likely going to be a push to return half of those funds back to the counties of origin which would result in Rutherford County receiving about $10 million per year.
In health, the country is facing a physician shortage of potentially 90,000 physicians in the next ten years. Tennessee is one of a handful of states that are still seeing a growth in the number of physicians. However, we are lagging behind our population growth rate. I’m working on legislation to recruit and retain physicians in order to be more competitive during this looming physician shortage crisis.
I appreciate the community sending me back to Nashville to be our voice. I’m looking forward to the challenges ahead.