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Tennessee passes $52.8B budget as discussions linger on school choice and business taxes

Lawmakers passed the budget with $1 billon earmarked for two big bills that haven’t yet passed.
Rachel Iacovone
Lawmakers passed the budget with $1 billon earmarked for two big bills that haven’t yet passed.

State lawmakers agreed on a $52.8 billion budget Thursday. Of that, more than $1.5 billion could be put aside for businesses that are expected to request refunds under the state’s previous franchise tax rules, and a school choice bill.

What’s in the budget

There are several items in the budget that will likely go unnoticed, here are some items that made it in:

  • $1.5 billion for businesses that have paid franchise taxes
  • $15 million for charter school facilities
  • $3 million for crisis pregnancy care centers
  • $10 million for a new roof on the State Capitol
  • $50 million for Rural Health Resiliency grants
  • $5 million for Military Border Deployment
  • $2.8 million for vehicles for state troopers

What’s not in the budget

Democrats were upset when they saw the majority of what they asked for was not funded. The two items that were totaled under $3.5 million (or 0.007% of the total budget). Here’s a list of some of items that didn’t make it:

  • $67,000 to exempt feminine hygiene products during annual sales tax holiday
  • $7,500 for Beautiful Spirited Women, a Memphis group that provides mentorship to girls
  • $500,000 for Room in the Inn in Memphis

Also missing from the budget are a few of Gov. Bill Lee’s items. That includes a $3 million Maternal Health Pilot program, $25 million for a Farmland Preservation Fund and his $144 million school voucher plan. While talks are still ongoing on vouchers, the writing on the wall says the so-called Education Freedom Scholarship Act is not going to happen. Lawmakers included it in the budget, but unless the House and Senate come to an agreement soon, it likely won’t happen.

Unresolved budget issues

It’s unclear how exactly legislators are going to reform the state’s franchise tax. As of now, both sides haven’t publicly started negotiating, though members of the press were told there have been some conversations.

The House’s version sets aside $700 million for tax rebates going back two years. The Senate’s allows for $1.5 billion for rebates going back three years.

One of the other sticking points is the transparency clause included in the House version. It would require that businesses be publicly named if they choose to accept the rebate. Senate Speaker Randy McNally, R-Oak Ridge, says that’s just not how the state usually does business.

“We’ve never done that before. When somebody applies for (a refund) where either the law has changed — or in most cases, they’ve overpaid —they can request a refund and that information is confidential,” said McNally.

That bill is headed to conference committee, where both sides elect a group to negotiate the terms of agreement in order to come to a compromise. It’s not clear that one will happen, though both sides do seem to believe at least reforming the franchise tax is necessary.

The other big issue is the voucher bill. This one is not headed to a conference committee as of yet, and both sides seem further apart on this issue. (In fact, some started to say this week that the bill is dead, but Rep. William Lamberth, R-Portland, refuted that claim, saying it is “not dead yet.”)

Both versions do the basic part of what Gov. Bill Lee wants: 20,000 school vouchers for kids to use to attend private schools in Tennessee.

However, the Senate would allow the vouchers to be used for public schools. Currently, students who attend an out-of-district public school can be charged a fee. The voucher would help the families pay that fee.

The House version is far more expansive: changing to state-mandated standardized testing, reforming teacher evaluations and putting more state money toward funding teacher health insurance.

If it doesn’t pass this session, lawmakers have already said it isn’t the end of the discussion. In fact, Sen. Bo Watson, R-Hixson, says it just makes things easier next time around.

“I think regardless of what happens to this piece of legislation — and again, we’re still hopeful to see something happen — the amount of awareness going into a campaign season has been significantly elevated,” Watson said. “And we believe it favors the folks who would support school choice.”

Sen. Raumesh Akbari, D-Memphis, disagrees.

“This conversation started a long time ago when, the former Sen. (Brian) Kelsey was moving this legislation, and time after time, they failed to have the votes in the House to pass it. So I don’t necessarily agree with that sentiment, because I think it’s been a long, ongoing conversation,” Akbari said. “And again, you have so many counties and school boards, rural and urban and suburban, that are against this legislation. I don’t see that changing.”

Blaise Gainey is a Political Reporter for WPLN News. He is the youngest of three siblings, husband and father of two. He previously held the State Government Reporter position for WFSU News in Tallahassee. He is from Apopka, Fla., and graduated from The School of Journalism at the Florida A&M University. He previously worked for The Florida Channel and WTXL-TV. He is excited to move to another capital and report on state government. In his spare time, he enjoys watching sports, outdoor activities and enjoying family time.
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