TennesseeThe Journal The weekly insiders newsletter on Tennessee government, politics, and business Vol. 45, No. 5 February 1, 2019 High-growth counties struggle to find school funding sources Finding money to build more schools in counties ignation would require two-thirds approval by the experiencing rapid population growth has been an issue county commission or city council. that has vexed Tennessee officials at the state and local It’s unclear how much appetite lawmakers from levels for decades. other areas of the state would have for creating a special Voters in usually tax-averse Williamson County last funding mechanism for just a handful of Middle Ten- year overwhelmingly approved hiking the local option nessee counties, so supporters may tweak the qualifica- sales tax by half a percentage point to raise about $60 tion threshold to let the bill apply to more districts. million over the next three years to pay for school con- The state’s largest districts in Nashville and Shelby struction. But in Wilson County, a similar effort was County, which are currently suing the state over what rejected by 52% of the voters, leaving officials scratching they call inadequate funding, would not be covered in their heads about how to meet demand for classrooms. the legislation as introduced, though that could change Some counties like Rutherford and Williamson have as well. The advantage of the sales tax approach is that turned to fees imposed on new home construction to the money wouldn’t have to be funneled through the help cover the increased education costs associated with state’s complex Basic Education Program formula, more people moving to those areas, but those are fought which tends to favor smaller school districts. bitterly by home builders and Realtors, who argue the Prickly politics. Municipal and county govern- extra fees unfairly inflate prices. ments trying to cope with growing education costs have Developers in Williamson County want a judge to limited options when it comes to generating new reve- throw out a $2-per-square-foot educational impact fee nue. Tax bills requested by local officials were once con- in a case that had been headed for a summary judgment sidered routine in the General Assembly, and legislators hearing last month. But Circuit Judge James Martin from outside the affected city or county almost always rescheduled those arguments until Feb. 25. Meanwhile, approved what colleagues proposed on behalf of com- nearly $10 million collected under the scheme has been munities in their districts. held in escrow until the case is decided. But that started to change in the mid-1990s, when Legislative fixes. A bill last year seeking to redirect ads began to be run against sitting lawmakers claiming up to $7 million in locally collected state sales taxes to they had voted hundreds of times to raise taxes. That school districts posting growth of at least 250 students count would invariably include the numerous routine annually since 2014 (that would be Montgomery, Ruth- votes authorizing city councils and county commissions erford, Williamson, and Wilson counties) failed to gain to enact hikes. As such, lawmakers from one end of the traction. A $30 million fiscal note didn’t help. state could find themselves under attack for voting to A new version introduced this year might not ordi- allow another town hundreds of miles away to decide narily merit a second look, but this time its Republican whether to impose a hotel-motel or wheel tax. sponsors — Sen. Jack Johnson of Franklin and Rep. Nervous incumbents began abstaining — or even vot- William Lamberth of Cottontown — have some addi- ing against — local tax bills. And then newly-elected tional clout: Both were elected majority leaders of their Republican Gov. Don Sundquist made it his policy to let respective chambers before the start of the session. local tax bills become law only without his signature Under the new proposal, a designated “rapid growth (causing then-House Speaker Jimmy Naifeh and other school district” would receive up to 2% state sales taxes. Democratic leaders to go through the roof). collected in the county. The annual amount would be Sundquist uttered one of the most memorable lines capped at $7 million and earmarked for school-related of his eight-year tenure amid that dispute when he debt service or capital improvements. Seeking that des- defended his hands-off approach by telling reporters he THE TENNESSEE JOURNAL (ISSN 0194-1240) is published weekly except for one week in June, one in September, and Christmas week by M. Lee Smith Publishers®, a divi- sion of BLR®,100 Winners Circle, Suite 300, Brentwood TN 37027, 615/373-7517 or 1-877-826-5297. Periodicals postage paid at Franklin TN and at additional mailing offices. POSTMASTER: Send address changes to THE TENNESSEE JOURNAL, P.O. Box 5094, Brentwood TN 37024-5094. Copyright 2019 M. Lee Smith Publishers, a division of BLR. Photocopying or reproducing in any form in whole or in part is a violation of federal copyright law and is strictly prohibited without the publisher’s consent. Editor: Erik Schelzig ([email protected]) • Vice President/Legal: Brad Forrister • Editorial Coordinator: Savannah Gilman was “irrelevant to the process” (a phrase that is now Casada’s office clarified that the rules apply only to widely misremembered as describing his pariah status legislators serving on the committees in question and among fellow Republicans after he proposed the intro- that audiences (and the media) were not covered by the duction of a state income tax in his second term). ban unless they are “disrupting the legislative process.” The local tax issue has only become more prickly as The issue was further muddied when word came Republicans began their march from being the bomb- down that livestreaming could be banned from the throwing minority to the governing supermajority in pubic galleries in the House chamber. But when Rep. both chambers of the General Assembly. Terri Lynn Weaver (R-Lancaster) used the opportunity Handing it off to locals. Lawmakers in 2006 of leading the chamber in prayer on Thursday morning passed a bill enabling governing bodies in high-growth to break into song, several members lifted their phones counties to impose an “adequate facilities tax,” which to capture the moment. So apparently the recording ban can only be used to pay for school construction, includ- doesn’t apply to the House floor. Stay tuned? ing debt. Previously, those taxes could be enacted only Know when to furl ’em. Gov. Bill Lee’s adminis- through private acts passed by the General Assembly. tration will no longer issue “flag letters” to raise objec- That power was shifted to local governments under tions about legislative proposals pending before the the new law, and restrictions on increases — no more General Assembly. The letters have long chafed law- than 10% every four years — were imposed on all ade- makers, who found them heavy-handed. Sometimes quate facilities taxes. The law was limited to counties they were also duplicative, as often more than one state that met population growth thresholds, and initial taxes agency would register concerns in separate letters, mak- were capped at $1 per square foot of residential space. ing sponsors feel like the executive branch was piling on. Too much, too soon. The Bedford County Com- Under the new policy, Lee administration liaisons mission took a preliminary vote last month to increase plan to meet personally with sponsors to discuss con- its adequate facilities tax from the $1 adopted when the cerns. Weekly lists of flagged bills will also be produced new state law was enacted in 2006 to $1.33 going for- for legislative leadership in the interest of transparency. ward, the Times-Gazette of Shelbyville reported. But the Heartbeat bill. Lee campaigned for governor on a county’s financial management committee last week staunch pro-life platform, so it comes as little surprise voted to call for that step to be rescinded after the Mid- that he agrees with the concept of a bill introduced by dle Tennessee Association of Realtors raised strong Rep. Micah Van Huss (R-Jonesborough) seeking to objections to the hike. make it a crime to perform or obtain an abortion after a The group argued the county fell just short of popula- fetal heartbeat is detected. tion growth rates required to qualify for the increase and The speakers of the House and Senate declared their that state law allows for up to a 10% hike every four support for the measure despite concerns about its con- years — not the 33% increase the commission had envi- stitutionality raised over previous versions of the bill by sioned implementing in one fell swoop. the attorney general’s office and similar state laws run- Now what? While Lamberth and Johnson will ning into legal trouble elsewhere around the country. carry Gov. Bill Lee’s legislative agenda in their roles as Lee appeared undaunted by any legal challenges, tell- majority leaders, they are quick to stress their school ing reporters he will “support any bill that reduces the funding proposal is not among the new governor’s ini- number of abortions in the state” and he will leave it to tiatives. Though they hope to gain a sympathetic ear the courts to decide “whether it’s constitutional or not.” given Lee’s roots in Williamson County. Attorney general. Proposals to amend the Ten- Legislative roundup nessee Constitution to change the way the attorney gen- eral is selected are back after failing last year. Senate A failure to communicate over live- Republican Caucus Chairman Ken Yager (R-Kingston) streaming committee meetings and Rep. Mike Carter (R-Chattanooga) want to give the During legislative debates last year about efforts to General Assembly the power to reject the person the legalize medical marijuana and reform criminal justice state Supreme Court nominates for the position.