Legislative Update

As I am sure you have heard, the General Assembly adjourned Thursday night with a plan for both the House and Senate to come back into session next Tuesday. The speakers of both houses indicated that they intend for the legislature to finish its business that day and adjourn for the year. This week the legislature was working through long calendars and long days in an attempt to complete its work, but ultimately that was not possible. Much controversy and many questions arose over the Governor's proposed budget cuts unveiled on Monday night and legislators who had planned to stay through Friday to pass a budget ultimately decided to go home Thursday night and come back next week.

The biggest impact on county governments in the budget changes are that proposed improvements to the Basic Education Program funding formula have been shelved. School systems will get normal inflationary growth in education funding provided by the state, but there will be no more phase-in of the BEP 2.0 reforms that began last year. A provision in a bill promoted by the Dept. of Revenue that would have closed a loophole in state franchise and excise taxes and generated $15 million was rejected in committee this week. This created another budget gap that legislators were trying to fill Thursday. It appears that members are looking at raiding more of the earmarked funds from the state real estate transfer tax. Of the dedicated revenue from this tax, counties may be impacted by cuts to the Local Parks Acquisition fund. But generally speaking, apart from postponing the improvements to BEP funding planned for this year, counties have not been otherwise hurt by state budget changes. There has been no talk of cutting state shared taxes. We continue to watch these issues as the State attempts to deal with major budgetary problems.

In terms of good news, before adjourning Thursday evening the House passed the Energy Efficient Schools Initiative which creates a council that will distribute $100 million in lottery excess funds to K-12 school systems through grants and loans for projects that enhance the energy efficiency of school buildings. The Senate had passed the proposal earlier in the week. The bills ended up with some slight differences in amendments which will have to be worked out next week but the differences appeared to be non-controversial. A last ditch effort was made to amend the bill in the House and convert it to the Hawk/Tracy capital expenditure plan. That competing legislation which was first proposed and discussed last year would have distributed a flat dollar amount from lottery excess funds to school systems on a per pupil basis without any requirement for the money to be spent on energy efficiency. Ultimately, the energy efficiency provisions of the Winningham/McNally bill convinced some members of the legislature to support the proposal who were otherwise against the idea of using lottery funds for capital expenditures.

Legislation that could have added more requirements on a county regarding local education funding appears to be shelved for the year. As an alternative, the Senate Education Chair, Sen. Jamie Woodson introduced a resolution to ask the BEP Review Committee to study the issue of local maintenance of effort requirements this summer. TCCA was concerned about the potential effect of some provisions proposed in amendments to the bill and prefers this option to study the issue.

More details on legislative developments will be forthcoming after next week and of course there will be much more information distributed at the Post Legislative Conference in Gatlinburg the first week of June.