Lawsuits Over Determination of Bail in Tennessee Counties

Several counties in Tennessee have been sued over the process used to determine bail. A federal district judge in Nashville granted class action status to the group of plaintiffs. The lawsuit alleges that bail is not being determined on an individual basis and is therefore arbitrary. For more on this legal action, see the USA Today article here.

Energy Efficient Schools Initiative

Grants from the Energy Efficient Schools Initiative (EESI) have been announced. According to this article from the Chattanooga Times Free Press, Rhea and Polk County are among those receiving grants. The EESI is funded with $90 million in excess lottery money. This initiative was supported by TCCA and other county associations two years ago when it passed the General Assembly.

For more information about the EESI, see the Department of Education's website www.tn.gov/eesi/.

Tracking National Unemployment

The link listed below connects you to a telling map that tracks unemployment rates by county throughout the nation from January of 2007 to September of 2009.


http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html

State Budget Hearings Concluded Yesterday

The Governor's preliminary budget hearings concluded yeterday afternoon. We are working through the presentations to identify areas that could potentially impact county government. As has been noted before, to access streaming audio and video of the hearings, go to http://www.tennesseeanytime.org/gov/budget/.

Comptroller's Update on Revenues

The State Comptroller's office has issued an update on the state's tax collections reflecting October's figures. That report is posted on our main website here:
http://www.tncountycommissioners.org/files/Investor_Update_November_2009.pdf

Archived reports are available through the Comptroller's site:

http://www.tn.gov/comptroller/

The reports are under the tab for "Investor Information" and are arranged by fiscal year.

Tennessee Behind in Revenue, but It Could Be Much Worse

According to a nationwide survey of states, Tennessee is one of at least 35 states that are behind in revenue collections during this budget year. However, Tenessee's revenue gap is only 0.7% of the general fund budget. Of those states experiencing a gap, only Florida has a smaller gap at 0.6%. Arizona was worst at 20.5%.

For the full report, go to the Center on Budget and Policy Priorities website at this link: http://www.cbpp.org/cms/?fa=view&id=711

NACo Publications on County Economic Status

According to the National Association of Counties, the nation’s midsize and smaller counties are experiencing the full effects of the down economy and are struggling to cope with declining revenues. The latest survey results published by NACo can be accessed here The survey includes responses from three Tennessee Counties: Campbell, Gibson and Scott.

Nearly half of the responding counties, 47 percent, said that their anticipated budget shortfall was worse than expected and 4 out of 5 respondents (82 percent) said the shortfalls will continue into their next fiscal year. Further, the survey showed that counties are taking any and all actions to cope with sharply declining revenues – from travel restrictions and delaying purchases to more drastic actions such as cutting services, increasing taxes, furloughs and layoffs.

One hundred thirty eight counties from 34 states responded to the survey in late October sent randomly to 1,500 counties across the country. The sample group was made up primarily of midsize to smaller counties by population. The survey showed how counties are taking an “all of the above” approach to address shrinking revenues and continue to provide essential public services. For example, less severe budget actions counties are taking include:

• delaying purchases or repairs (60 percent of responding counties);
• delaying capital investments (54 percent);
• use of rainy day/reserve funds (44 percent);
• travel restrictions (41 percent); and

However, a significant number of responding counties said they are taking more severe actions to cope with declining revenues, including:

• salary and/or pay freezes (59 percent);
• hiring freezes (49 percent);
• increasing property taxes (15 percent).
• layoffs (26 percent); and
• furloughs (12 percent).

Other actions include renegotiating labor contracts (13 percent), increasing the local option sales tax rate (2 percent), reorganizing county fleets (13 percent) and implementing four-day work weeks (7 percent).

The NACo survey also aimed to determine how counties are being affected by the $787 billion American Recovery and Reinvestment Act which was signed into law by President Obama in February. About two-thirds of the responding counties (61 percent) said they expect to receive funding as a result of the Recovery Act. However, most counties said they have received less than half of the expected funds so far. The majority of anticipated funds are through the new Energy Efficiency and Conservation Block Grant program, the Community Development Block Grant Program, and various transportation programs.

America’s metropolitan counties are suffering with declining revenues as well. An October 2008 NACo survey of larger counties (more than 100,000 residents) found that two-thirds of those responding counties anticipated a shortfall this fiscal year resulting in budget fix remedies such as salary and hiring freezes, service cutbacks, furloughs and layoffs. (See survey links below)

Related resources:
A previous report on this topic from a June 2009 survey is available here and another report from October 2008 is available here.

Additionally, NACo also has available a report from June 2008 on foreclosures and their impact on counties here.

Commercial Appeal reports on the First Day of Budget Hearings

In a worst-case scenario, the state budget could face over a $1 billion gap between rising non-discretionary spending and the tax revenue available to fund those programs. See the full article on the first day's budget hearings from Rick Locker, the legislative beat writer for the Memphis Commercial Appeal
here.

Governor's Budget Hearings Begin

The Governor's budget hearings began this morning with the proposed budget for the Department of Education. Several other Commissioners will present proposed department budgets today and over the coming days. For a full schedule of these hearings and to access live streaming audio and video of the hearings, go to http://www.tennesseeanytime.org/gov/budget/.

In case you miss some of the hearings, you can also access archives of the meetings.

Bredesen to Hold Open State Budget Hearings

Governor Phil Bredesen will hold his eighth round of open state budget hearings beginning Monday, November 16, at the State Capitol in the Executive Conference Room. The hearings can also be viewed live at www.tn.gov. The schedule for department budget hearings is as follows:

Monday, November 16
10:45 a.m. – 11:45 a.m. Education
11:45 a.m. - 12 p.m. Books from Birth Foundation

1:30 p.m. – 2:15 p.m. Correction
2:15 p.m. – 2:45 p.m. Revenue

3 p.m. – 3:30 p.m. Veterans Affairs
3:30 p.m. – 4 p.m. Military

4:15 p.m. – 5 p.m. Environment and Conservation
5 p.m. – 5:30 p.m. Cover Tennessee

Wednesday, November 18
1:30 p.m. – 2 p.m. Finance and Administration
2 p.m. – 2:45 p.m. Commerce and Insurance

3 p.m. – 3:45 p.m. Economic and Community Development
4 p.m. – 5 p.m. Bureau of TennCare
5 p.m. – 5:30 p.m. Tourist Development

Thursday, November 19
12:30 p.m. – 1 p.m. Safety
1 pm. – 1:45 p.m. Division of Intellectual Disabilities Services
1:45 p.m. – 2:30 p.m. Human Services
3:30 p.m. – 4 p.m. Labor and Workforce Development

Friday, November 20
12:30 p.m. – 2 p.m. Higher Education
2 p.m. – 2:30 p.m. Tennessee Education Lottery Corporation
2:30 p.m. – 3 p.m. Agriculture
3:15 p.m. – 4:15 p.m. Children’s Services

Monday, November 23
12:30 p.m. – 2:30 p.m. Health
2:30 p.m. – 3 p.m. Tennessee Bureau of Investigation
3:15 p.m. – 4 p.m. Mental Health and Developmental Disabilities
4 p.m. – 4:30 p.m. Transportation
4:30 p.m. – 5 p.m. General Services
5 p.m. – 5:30 p.m. Human Resources

October Revenues Continue Downward Trend

For the third consecutive month in the fiscal year that began July 1, state tax collections fell below budgeted estimates. Finance & Administration Commissioner Dave Goetz today announced that state revenue collections for October were $698.2 million, which is 1.53% below October 2008 collections. October collections reflect consumer spending in September.

“October is the 17th consecutive month in which sales tax collections have experienced negative growth,” Goetz said.

October collections were $31.7 million less than the budgeted estimate. The general fund was under collected by $24.2 million and the four other funds were under collected by $7.5 million.

Sales tax collections were $38.6 million less than the estimate for October. The October growth rate was negative 7.80 %. Year-to-date the growth rate is negative 8.47%.

Franchise and excise combined collections for October were $11.9 million, and they were $9.6 million above the budgeted estimate of $2.3 million.

Gasoline and motor fuel collections were $2.1 million more than the budgeted estimate of $71.8 million. However, the sales tax allocation to the Transportation Equity Fund was a negative $7.8 million. The net result was a shortfall in the highway fund estimate.

Year-to date collections for three months were $101.3 million less than the budgeted estimate. The general fund was under collected by $88.2 million and the four other funds were under collected by $13.1 million.

UPDATE:
According to a news report by Tom Humphreys of the Knoxville News Sentinel (find the article here), while these collections failed to meet estimates of the Department of Finance and Administration, they exceed a different set of estimates used by the Fiscal Review Committee of the legislature. The Fiscal Review Committee and the Department basically project similar revenue collections for the entire fiscal year, but they differ when it comes to projected revenues by month. Fiscal Review projected lower collections than F&A for the first 3 months, but then their estimates are higher for the period of November through April. The projections are fairly similar for the last quarter of the year. At any rate, the first two months collections were behind both sets of estimates. However, if Fiscal Review's month by month projections are more accurate, then revenues are not as far off pace as reported by F&A.

TCCA Survey Responses

Thanks to all of you for sending the compensation and benefits survey back so quickly. We have already received 25 responses back and they continue to come in. Hopefully we are on pace to get the results back and have them compiled in time to include the information in our December newsletter.

NACo Publication: What do County Commissioners Do All Day?

The National Association of Counties has put out a two page pamphlet on what it means to be a county commissioner.

Find it here.

State Retirement Fund Recovering

According to State Treasurer David Lillard (former Shelby County Commissioner and past president of TCCA), the state retirement fund has recovered a significant portion of the losses it suffered during the economic downturn. The pension fund fell from a high of $32 billion worth of assets in early 2008 to a low of $23 billion. The fund's assets are now worth approximately $28.5 billion, having recovered over 60% of its losses. These gains and losses can potentially impact future contribution rates for local governments participating in the Tennessee Consolidated Retirement System. It is widely expected that higher contribution rates will be required after the next assessment in order to shore up the fund, but improvements now will help soften the impact.

TN State School Bond Authority Finalizes Plans on School Construction Bonds

The TSSBA finalized plans to sell up to $184 million worth of Qualified School Construction Bonds (QSCBs) as part of a program created by the federal American Recovery and Reinvestment Act. The authority selected a bond underwriting team, approved a final bond resolution and finalized documents needed to move forward with the bond sale. The TSSBA had preliminarily approved the loans in September and, after some revisions in loan amounts and the addition of the City of Kingsport as a new borrower, the revised list of project loans were approved by the TSSBA.

The communities authorized to receive portions of the bond money will be required to spend the proceeds on qualified projects within three years of the bond sale and comply with federal Davis-Bacon regulations. The sale is expected to be completed with bond proceeds available for disbursement in early December. Additionally, the communities are required to enter into binding contracts for at least 10 percent of their allocation of the bond proceeds within six months after the bond sale.

TACIR Publication on School Capital Projects

TACIR’s latest publication, Capital Expenditures for Public Schools, is available on the Internet. The report finds that in the 5-year period centered on the year in which the smaller class-size mandate of the Education Improvement Act (EIA) of 1992 became a requirement (fiscal year 2001-02), Tennessee school systems spent

• $2,100,000,000 on capital projects; and
• $1,400,000 on debt service.

The TACIR report describes those expenditures and compares them to the growth in school enrollment, the increase in the number of schools, the condition of school buildings as reported to TACIR in its annual inventory of infrastructure needs, as well as the overall cost of needs reported in that inventory.

The report closes with a suggestion that the legislature consider expanding the authority of the Tennessee State School Bond Authority to extend its lending support to school systems. It also suggests that the state consider re-establishing technical and administrative assistance services for school capital outlay programs in the Department of Education. The full report is available here.

Video of Energy Block Grant Application Workshop Available On-line

ECD recently hosted two Energy and Efficiency Conservation Block Grant application workshops. The meetings reviewed the guidelines and application process and offered suggestions for completing a competitive application. It is my understanding that few county officials attended these workshops. These grants are the ones discussed in our membership meeting at the TCSA fall conference in Chattanooga and mentioned in some of our recent newsletters.

For those unable to attend the meetings, a video of the workshop is now available in three parts on ECD's YouTube Channel. You can find part one here: http://www.youtube.com/watch?v=SSFijORtFco There are links to parts 2 and 3 on that page.

County Commission Survey Going Out Today

The Tennessee County Commissioners Association periodically surveys all 95 counties to determine who currently chairs the commission, how often it meets and on which days it meets, the compensation paid to county commissioners and whether or not commissioners are eligible for county health insurance and retirement benefits. These surveys are being sent out today to chairs of county commissions and to county mayors. Please help to ensure these are filled out and returned promptly. County commissions across the state frequently ask the association for this information, so we try to keep it as accurate as possible to help you, our members. We hope to collect the data and make it available to you before the end of the year, but that is dependent upon how quickly we receive responses back.

Thanks for your assistance with this project.

Voter Confidence Act Lawsuit

Davidson County Chancellor Russell Perkins today denied an injunction to force the Secretary of State to comply with the Tennessee Voter Confidence Act immediately. For more information, see the Nashville City Paper article here:

http://nashvillecitypaper.com/content/city-news/chancellor-denies-injunction-paper-ballot-case

Possible Good Economic News for Tennessee

According to an analysis by the Federal Reserve Bank of Philadelphia, Tennessee is one of 7 states that has demonstrated an improvement over the last three month period in an economic index compiled by the bank. The bank developed a "conincident index" that creates a single statistic out of four factors used to determine economic conditions. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP. For the Federal Reserve bank's analysis, click here.

A separate report by Stateline.org shows that 11 states and the District of Columbia are emerging from recession and that only Nevada is still in deep recession. Unfortunately Tennessee is not yet among those 11. The Stateline analysis can be found here. It is based on a Moody's analysis that includes an interactive "Recovery Status" map. The map can be found here. This map connects to a wealth of data. It shows Tennessee as "moderating." Clicking on the state on the map opens a forecast and a link to more information for ten metropolitan areas in the state. Of the ten, 9 are moderating and the Cleveland metropolitan area is listed as "recovering."

These reports are highly technical, but I offer them as a source of info for any county officials wanting to more closely track economic trends in our state and their communities.

Associated Press Economic Stress Index

There is a very interesting interactive map available here that has been created by the Associated Press to show economic stress on a county by county basis. The map uses statistics focused on unemployment, foreclosure and bankruptcy to measure overall stress levels. Unfortunately, many West Tennessee counties and several other rural Tennessee counties score very high on this stress measurement compared to the rest of the nation. It's not something we didn't already know, but it is chilling to see the big picture.

Education System Report Cards

Ironically, I signed my daughter's report card Tuesday, the same day the Tennessee Department of Education released its annual comprehensive report card on pre-K – 12 education. (She did much better on hers.) The Department of Education report card includes state, district and school-level information on achievement, demographics, and discipline. This year’s report card demonstrates fundamental changes to the calculations of Value Added and Achievement scores. The method of calculating scores and the scale used to determine letter grades have been revised to allow for a transition to the new standards and assessments required by the Tennessee Diploma Project.

“Because we have been on an aggressive path of improvement with the Tennessee Diploma Project, it was necessary to utilize this transition year to change our calculation methods and more accurately demonstrate student progress in an effort to pursue higher standards,” Education Commissioner Timothy Webb said.

Essentially this means some of our systems may get a bad grade this year compared to last year, but it is due to the fact that the test is much tougher. To see the full report and evaluate information on a state, school system, and individual school level, go to http://tn.gov/education/reportcard/index.shtml.

17 Months of Bad Revenue Collections

Speaking in East Tennessee, the Deputy Governor John Morgan indicated that Tennessee is on the verge of its 17th straight month of revenue declines. For the full article from the Knoxville News Sentinnel, click here.

Tennessee Manufacturing Job Losses

According to an article from the Memphis Business Journal, Tennessee lost more manufacturing jobs last year than in the previous twelve years. For the article, click here.

Residential Building Codes Presentation

At the TCSA annual conference in Chattanooga last month, there was a class dealing with building codes, planning and other land use issues. Members have requested copies of the power point presentations used in that class. We have copies of most of them. If you are interested, e-mail me at tcca.connor@tncounties.org and I'll be happy to forward them to you.

Tennessee Rural Opportunity Fund

Last legislative session an act was passed by the General Assembly to create the Tennessee Rural Opportunity Fund. This fund is a first-of-its-kind public-private partnership between Governor Bredesen's Administration, the Tennessee Bankers Association and its Member Banks, and Southeast Community Capital Corporation to create a $10,000,000 perpetual revolving loan fund for small, disadvantaged, and start-up businesses in rural communities throughout Tennessee. Once established, this fund will provide below market rate loans to targeted businesses in rural Tennessee in need of capital to facilitate business growth and job creation. The Fund will target businesses unable to access traditional credit due to lack of collateral, poor credit scores, inconsistent earnings, and being identified as a start-up business. The program is in development, but if you know of a someone in your county that could benefit from this opportunity, you may wish to pass this information on to them. Economic development in the current economic environment is very challenging, particularly in rural areas. For more information visit http://www.sccapital.org/funds/tn-rural-opportunity-fund.html

Comptroller's Update on State Revenues

Tenessee state tax collections for September once again failed to meet budget estimates. Overall revenues were $920.0 million, which is 5.7% less than collections for the same month last year. These collections were $41.8 million below budget. Sales tax makes up the bulk of the under-collection, coming in $37.8 million below estimates with a 9.4% decline over prior year's collections. The next few months will be interesting as the impact of the "Cash for Clunkers" program is determined and as we enter the point in the year where collections began to really drop last year. September gas tax collections, which were a bright spot last month, decreased by 5.7% and were off estimates by $7.6 million. For more detailed information about reveneus collections, you can go to the Department of Revenue's website here:

http://www.tennessee.gov/revenue/statistics/index.htm

Also, for a chart of the State's budget estimates for Fiscal Year 2009-2010, go to:

http://www.tngove/finance/bud/budget.html.