Action on Capitol Hill continued to shift from committees to the floor of the Senate during the week of April 12th as lawmakers worked diligently to approve many important bills. The State and Local Government Committee, Health and Welfare Committee and Government Operations Committee joined four other standing Senate committees which have completed their business for the 2021 legislative session. Only the Judiciary Committee, the Commerce Committee, and the Finance, Ways and Means Committee remain open. Meanwhile, it is the state budget that will be the central focus of attention during the final weeks before adjournment.
Governor Lee proposes new budget amendment — Finance and Administration Commissioner Butch Eley briefed members of the Senate Finance Committee regarding Governor Bill Lee’s proposed additions to the state budget for the 2021-2022 fiscal year that will begin July 1. The supplemental appropriations amendment recognizes $580 million in available funds as a result of the General Assembly’s fiscal prudence.
The new amendment reflects Gov. Lee’s pre-pandemic priorities and includes record investments in broadband, economic development, safety and law enforcement, increasing reserves and education. A key provision of the budget amendment is a $250 million investment in a Mental Health Trust Fund to assist K-12 families who are facing significant mental health issues in the wake of COVID-19. This proposal creates strong mental health services for school-aged students through a systemwide, evidence-based approach.
Other highlights of the new budget amendment include:
•$18.5 million to transport students for summer learning;
•$79 million to eliminate current TCAT waitlists statewide, currently at 11,400 students;
•$17 million for a new radio communication system for state troopers;
•$18 million to improve the statewide disaster communications system;
•$5 million to provide grants to restore and preserve historic downtowns across the state;
•$3 million to increase employment in Tennessee through the Small Business Innovation program;
•$3 million to provide additional funding for rural projects as part of the Rural Economic Opportunity Fund in addition to $21 million in original budget proposal for this purpose;
•$3 million recurring and an additional $10 million nonrecurring funds to provide additional direct funding to airports across Tennessee through the Transportation Equity Fund (total $50 million investment in air infrastructure);
•$100 million for a two-week sales tax holiday on grocery sales, purchases at restaurants, and all prepared foods with more details, including the time period, forthcoming; and
•$16 million to reduce Tennessee’s professional privilege tax by 25 percent.
Legislation makes COVID-19 relief tax deductible for businesses in Tennessee — Tennessee businesses will be eligible to receive more pandemic assistance through a bill that will exempt relief funds from state taxes. Senate Bill 775 will ensure recipients of coronavirus relief grants administered by the Department of Revenue will not pay Franchise and Excise (F&E) taxes. The legislation provides F&E tax deduction for Tennessee businesses or entities that have received or will receive such payments in 2020 or 2021.
Businesses that received funds from the following programs are eligible for the deduction: Tennessee Business Relief Program; Tennessee Supplemental Employer Recovery Grant Program; Coronavirus Agricultural and Forestry Business Fund; Hospital Staffing Assistance Program; Emergency Medical Services Ambulance Assistance Program; Tennessee Small and Rural Hospital Readiness Grants Program; and payments issued by Tennessee from the federal Child Care and Development Block Grant. COVID-19 relief payments must be deducted from the tax year in which they were awarded. Once the legislation becomes law, taxpayers who have already filed an F&E tax return for the 2020 tax year will be able to amend the return to take the deduction for eligible relief payments received in 2020. The legislation now goes to Governor Lee for his signature before becoming law.
In other COVID-19 business relief, the Senate approved the Essential Workers Act. Senate Bill 1573 creates the Essential Workers Act which would prohibit a local government from issuing an executive order, resolution or ordinance establishing categories or classes of essential and non-essential businesses for the purpose of requiring them to cease operations unless the fire marshal of a court deems them to a public safety hazard. The bill awaits final action in the House of Representatives.