Tennessee

On May 25, Tennessee Governor Bill Haslam, signed HB 511, the Appropriations Act for 2017-18. The FY 2018 annual budget appropriates $37.1 billion and follows a fiscal year that garnered an approximate $1.4 billion surplus from higher-than-budgeted tax revenue and other savings, most of which can be applied to non-recurring expenditures in FY 2018. Since becoming governor of Tennessee, Haslam has sought to improve workforce readiness by linking enhanced educational opportunities to an expanding business infrastructure in the state. According to the governor, the amendments to the FY 2016 budget and the new budget reflect these priorities.

Budget amendments from the FY 2016 surplus included $120 million transferred to the Highway Fund and another $67 million for Fast Track Infrastructure and Job Training Assistance ($25 million). Other FY 2016 budget supplemental appropriations focused on the importance of the Smoky Mountains tourism to the state economy, including matching funding for the Foothills Parkway ($15 million) and wildfire suppression costs ($10 million) among others.

In a separate action one of the most controversial initiatives considered by the legislature was increasing funding for the IMPROVE Act ("Improving Manufacturing, Public Roads, and Opportunities for a Vibrant Economy") first introduced by the governor two sessions ago. Although the plan extends out to 2020, the initiatives in the 2017 legislative session were to improve Tennessee's transportation network through a balance of tax increases and cuts. Taxes were increased on transportation related enterprises including gasoline, diesel fuel, and personal vehicle registrations garnering about $254 million for the state Highway Fund and city or county transportation projects in lieu of incurring debt. Gasoline taxes will increase 6 cents per gallon over the next three years and diesel fuel will increase 10 cents per gallon over the same period. Taxes on groceries were decreased from 5% to 4% (-$125 million). Franchise and Excise taxes on businesses were decreased (-$102 million) and the Hall income tax on dividends and interest above a prescribed threshold continued toward complete phase-out expected in 2020 (-$54 million). The IMPROVE Act also includes an increase in property tax relief for veterans, the elderly, and individuals with disabilities (-$6 million).

FUNDING PRIORITIES FOR P-12 AND/OR HIGHER EDUCATION

• • The Tennessee State Board of Education raised the minimum teacher salary 4% to $33,745. Although this initiative does not affect teachers whose districts already pay above the state minimum, it does affect 1,553 teachers in 46 districts across the state with a mean raise of $750. This initiative is expected to cost $1.17 million.

• • $200 million in funding for the Basic Education Program (BEP), which includes increases compensation in teacher and other BEP funded positions ($100.4 million), enrollment growth and inflationary costs (nonrecurring $18 million), extended health insurance coverage increases ($12.5 million), increase the number of English Language Learner teachers and translators (recurring $22.2 million), and Year 2 of Read to Be Ready statewide literacy coaching and intervention (nonrecurring $4.5 million).

• • $15 million non-recurring funds for career and technical education equipment.

• • $6 million non-recurring funds for "High Quality Charter Schools."

• • $2 million in non-recurring funds in training on the new science and fine arts standards.

• • $2.6 million in non-recurring funds for the statewide implementation of the PreK / Kindergarten Portfolio model.

• • $1 million in nonrecurring funds for "Save the Children" literacy grant.

• • Increases in recurring funds for the University of Tennessee system ($7.3 million increase) and the Tennessee Board of Regents system ($17.7 million increase).

• • Higher education salary pool funding ($30.1 million) and other salary increases ($11.9 million).

• • UT Health Science Center – Pediatric Physician Scientists Recruiting match with St. Jude (non-recurring $3 million).

• • UT Bredesen Center – ORNL Partnership: Ph.D. in domain inspired data science (non-recurring $6 million).

• • Tennessee Reconnect coordinator (recurring $100,000) and Expand Community Advisor Program that does pre-enrollment counseling and support for students in Tennessee Reconnect (recurring $250,000).

• • Continuation of the $1 million in non-recurring funds to establish competitive grants to two-year and four-year institutions to develop initiatives...