31 May Sine Die: The Tennessee General Assembly Completes its 109th Session
By: Nicole Osborne, Government Affairs Counsel, Chambliss, Bahner & Stophel, P.C.
And, another one is in the books as the Tennessee General Assembly concluded its 109th legislative session on Friday, April 22. From drones to deannexation, there was no shortage of interesting and important legislation. The 2016 session was the last year in a two-year session; so any bills that did not progress during the 2015-2016 session are officially dead and will have to be reintroduced as new legislation next year. Some highlights from the 2016 session: the General Assembly passed a $35 billion balanced budget, formed a task force to study the insurance gap in the state, gave teachers a pay raise, and approved a slew of bills pertaining to the July 16, 2015 terrorist attack in Chattanooga affirming that Tennessee is Chattanooga Strong!
As legislators leave and return to their districts, some will not return in 2017. This is an election year, in which all 99 members of the House and half of the members of the Senate (16) are up for re-election. Locally, all members of the Hamilton County delegation have an opponent, except House Majority Leader Gerald McCormick and Sen. Bo Watson is not up for re-election this cycle. One prominent figure that will not be returning to the Capitol in 2017 is Lt. Gov. Ron Ramsey. After serving nearly 25 years in the General Assembly, Ramsey announced his retirement last month. A new Speaker of the Senate/lieutenant governor will be elected by the Senate when the Legislature reconvenes next January.
Below is a few of the hot topics discussed this year.
Chattanooga’s love for all things related to startups received an inadvertent boost from the General Assembly this session. Both the House and Senate unanimously approved SB2539 / HB1536, establishing a tax credit for angel investors in startup companies. The credit is equal to 33 percent of the value of a cash investment in an innovative small business that has been in business for less than five years and had under $3 million in annual revenue the prior fiscal year. This is a positive for the Chattanooga community relative to accessibility to the Gig and the city’s investment in an Innovation District.
Broadband expansion legislation made no progress this year. Sen. Janice Bowling and Rep. Kevin Brooks introduced legislation in 2015 allowing municipalities that operate an electric plant to provide services outside its electric system service area. Such legislation would have specifically allowed locally-operated EPB to expand services beyond its current service territory. This topic spurred much debate between large internet providers such as AT&T, Comcast, and Charter and municipally-owned systems.
“Let them eat cake,” quoted Sen. Bo Watson as he pushed for SB749 / HB779, allowing citizens to deannex from a city if a majority of qualified voters in the area agree in a referendum. The legislation drew backlash from the mayors of the four major cities in the state, including Chattanooga Mayor Andy Berke. Mayor Berke testified before a Senate committee and contended that this legislation would encourage debt and the voting process would be confusing to citizens.
Numerous amendments to the bill were adopted, including raising the percentage of voter signatures needed for a referendum vote to deannex from 10 percent to 20 percent and allowing cities to continue taxing deannexed property owners for a proportional share for costs of public employee pensions and OPEB obligations. Ultimately, the Senate State & Local Committee decided not to vote on the measure and instead sent it to summer study for further review. Since this is the last year in a two-year legislative session, this means the bill is dead. In order to be revived it will have to be reintroduced as new legislation to be considered again next year.
NOTE: Tennessee is one of only 10 states that do not allow residents to initiate deannexation proceedings.
It’s a bird! It’s a plane! Nope, it’s a drone. A new law, adopted by the legislature this session, goes into effect on July 1, 2016, prohibiting the use of a drone flying within 250 feet of a critical infrastructure facility for the purpose of conducting surveillance, gathering information about the facility, or electronically recording critical infrastructure data. The bill’s definition of a critical infrastructure facility is extensive and includes electrical distribution substations, water or wastewater treatment facilities, any facility that distributions natural gas, petroleum or chemical storage facilities and more.
One to the biggest media, attention-getting stories of the legislative session was the funding of the University of Tennessee Office of Diversity and Inclusion. Ultimately, the Legislature passed legislation stripping the office of state funds – a total of nearly $337,000. The Legislature instead reallocated the funds to be used for minority engineering scholarships.
A bill making it a Class C misdemeanor to drive a car and talk on a hand-held mobile telephone failed in the General Assembly this year. The bill attempted to impose harsher standards for teen drivers. The proposed legislation would have made it a delinquent act, with a fine up to $50, for any person under 18 years old to knowingly operate a motor vehicle and talk, read, or write a text message on a mobile telephone that is equipped with a hands-free device while the vehicle is in motion.
HALL INCOME TAX:
Going, going, gone… by 2022. In the last week of legislative session, the General Assembly passed legislation, SB47 / HB813, decreasing the Hall Income Tax rate on unearned income, from six percent to five percent starting January 1, 2016. The legislation set forth intentions to eliminate the tax all together by January 2022. The Hall Income Tax was established in 1929, named after Sen. Frank Hall who sponsored the legislation creating the tax, and applies to interest and dividend income received by people who maintain their legal residence in Tennessee, including part-time residents. Dividends subject to the tax are dividends from corporations, investment trusts, and mutual funds, including capital gains distributions from mutual funds. With this intent to eliminate the tax completely, Tennessee becomes one step closer to truly being an income tax-free state.
This is a simple rundown of happenings at the Tennessee General Assembly this year. If you have questions about specific legislation, please reach out to me at email@example.com or by phone at 423-757-0257.