Capitol Update
March 18, 2022
The legislative battles were contentious this week as a final push was made on several controversial bills to get them out of committees before they close down for the year. Meanwhile, despite a long presentation and discussion in a rare joint meeting of the Senate Education and Finance committees, the Governor’s TISA education funding proposal was deferred for another week. Talk of proposed amendments and rewrites of the legislation circulate, but so far there have been no committee votes on the proposal - only questions and discussion.
TISA
Although it is the talk of the legislative complex, this week was quiet in terms of official action on the Governor’s rewrite of education funding. After a discussion in the K-12 Subcommittee on March 8th, the bill was scheduled for consideration again this week. However, Chairman Kirk Haston cited the fact that the subcommittee received a new 30+ page amendment rewriting the bill the day before when he announced that his subcommittee would defer the bill for a week to allow legislators to work through a lengthy list of other bills on the calendar. The bill is scheduled for this coming Tuesday, March 22nd. TCSA has asked to be able to testify about questions and concerns of county officials at that meeting. This past Monday, the Senate Education and Finance Committees held a joint hearing at Noon to focus solely on the TISA funding proposal. The bill was slated for discussion in the Senate Education Committee’s Wednesday meeting, but the bill was also deferred for a week by the Senate committee.
Charter school facilities
The topic of charter schools acquiring property from county school systems had an eventful week that demonstrated the dangers that county associations constantly have to guard against. SB2168/HB2833 was recommended by the Senate Education committee back in February, but had not been scheduled for a floor vote as sponsors waited to see what happened with the bill in the House. The legislation has faced more scrutiny and opposition in the House Education Instruction Subcommittee, where it had been deferred multiple times. It was scheduled to be heard in that subcommittee on Tuesday, but when the chair asked the sponsor, Rep. Mark White, what he intended to do with the bill, it was taken off notice without being presented.
Less than two hours later, in the House K-12 Education Subcommittee, HB591/SB1134 (Williams, Stevens) was scheduled to be heard. This bill, as filed, simply changed a reporting deadline from Oct. 1st to Oct. 15th, but the caption of the bill opened all of Title 49 relative to education. The sponsor of the bill introduced a proposed amendment which sounded remarkably similar to the charter school bill which had just been taken off notice in the other committee. Rep. Scott Cepicky, who chairs the Education Instruction Subcommittee and serves on the K-12 subcommittee, expressed frustration at the tactics being used to circumvent the committee process. He was careful not to accuse the bill sponsor, but he outlined how lobbyists for charter schools had pushed this proposal for five weeks in his subcommittee while refusing to make changes requested by the subcommittee members.
When they couldn’t get their way, they omitted a small portion of the bill that had directed it to the other subcommittee so they could try pushing the bill in a different committee. One of the big issues Rep. Cepicky said he had raised in the other subcommittee related to a vacant property in his district that had problems with asbestos. He was worried that if the vacant property had to be made available to a charter school and the bill required the LEA to make necessary improvements to the property, the county could be forced to spend millions on asbestos abatement in order to make a vacant property suitable for use by the charter. As numerous questions and concerns were raised by several members of the subcommittee, the chair eventually called for a recess. Discussions continued off the mic for several minutes before the committee resumed and the sponsor asked for the bill to be rolled to the end of the calendar with hopes that he could work on an amendment to address concerns and perhaps have it ready for the next meeting of the subcommittee. Next week, this bill will be heard in the House K-12 sub again on Tuesday, and it is also on the calendar of the Senate Education committee on Wednesday.
Right of Ways and Property Owner Rights
On Tuesday, SB2849/HB2274 (Bailey, Williams) was heard in multiple committees. Both the House Property & Planning Subcommittee and the Senate Commerce and Labor Committee adopted an amendment that makes the bill. This bill was filed to carry an amendment that would hopefully end a multi-year controversy regarding right-of-way dedications. After county associations opposed a previous bill on this subject, it was referred to TACIR for study. During that study, representatives of TCHOA testified about concerns with the prior legislation. The study ultimately recommended against the legislation, but offered other possible solutions to clarify the law in Tennessee. One of those included codifying principles spelled out in U.S. Supreme Court cases that set protections around property rights.
County associations were in agreement with codifying the so-called Nollan-Dolan test, named for the court opinions, and requiring planning commissions to incorporate those guidelines into their policies related to land dedications by developers. In this form, TCHOA is not opposed to the bill and would like to see the issue resolved after arguing about the issue with the state surveyors’ association for several years. The bill as amended in this form passed out of both committees uneventfully and will next be heard in the House Local Government Committee on Tuesday, March 22. In the Senate, it will head to the Calendar committee on its way to the Senate Floor.
Appropriations for County Roads and Bridges
Finance subcommittees in both houses this week took votes on a proposal to appropriate excess state tax revenues for county highway department use, but the bill still has a long way to go before being considered for passage this session. SB1821/HB1915 (Southerland, Eldridge) would provide one-time direct grants to each county highway department for the construction, repair and improvement of county roads and bridges.
The Senate Revenue Subcommittee voted to send the bill to the full finance committee with a negative recommendation, a procedural move taken on bills that have large fiscal notes if they are not already included in the governor’s proposed budget. The Senate sponsor did amend the bill to lessen the amount needed to fund the bill. Originally proposed in both houses at $2 million per county for a total $190M needed to fund it statewide, the amendment changes that to a $500,000 grant for each county, or $47.5M statewide.
Likewise, the fiscal note means the House Finance Subcommittee moved the bill “behind the budget,” meaning it will have to wait until after the budget moves forward to see if it is funded or if revenue is left over that could pay for the proposal. The committees will consider the total state budget before it revisits this and dozens of other bills that impact the overall budget.
Support for the proposal continues to be strong, with 23 senators and 48 representatives signed onto the plan as of this week. While that does not guarantee passage, it does provide highway departments with a platform to talk about the impact of the pandemic and economic environment on county road programs. State fuel tax revenues remain volatile, even after the IMPROVE Act of 2017 passed to bring in additional monies for road construction and maintenance.
February 2022 revenues, the latest month available, were just reported by the state Department of Revenue and are the lowest combined collection of gasoline and motor fuel (diesel) revenues since this time last year.
Slaughterhouses and Dairies
For much of the session, a bill has been pending in the Senate State and Local Government Committee to declare dairies and slaughterhouses as “normal agricultural activities” which would be exempt from regulation as nuisances. The sponsor, Sen. Frank Niceley, has rightfully pointed out that the country is dealing with a shortage of meat processing facilities, creating long delays for some farmers to get their animals processed when the meat is ready to be harvested. His proposed solution however has raised many more concerns from local government associations, realtors, chambers of commerce and other groups that fear his bill would result in slaughterhouses being located adjacent to homes and subdivisions with local governments having no recourse to protect those homeowners.
The bill (HB2740/SB2622) by Rep. Holsclaw and Sen. Niceley moved out of the House Agriculture Subcommittee where proposals related to farming tend to get very favorable consideration. The bill was deferred for another week in the Sen. State and Local Committee where it has faced much more scrutiny and questions. It will be heard again in that committee next Tuesday and in the full House Agriculture Committee on Wednesday.
Loss of Value Due to Land Use Regulations
The Homebuilders association has been pushing legislation to create an additional cause of action for a landowner who believes their property value has been reduced as a result of a local government regulation. The bill (HB2435/SB2116) by Rep. Curcio and Sen. Bell, as amended, says that a landowner is entitled to just compensation for any reduction in value that results from a local government enacting or enforcing a land use regulation. If a county adopts new zoning regulations in an effort to manage growth or preserve the character of a residential or agricultural area, a landowner has three years to demand compensation for a change in the value of their property. If they can get an appraiser to say the property could have been worth more prior to the change, they can send notice to the county mayor demanding payment. Unless the county repeals the land use regulation or chooses not to enforce it against this property owner, they have to pay the landowner or deny that any compensation is due which then triggers a lawsuit. The landowner could have even requested that the land be down-zoned or have a lower density, then turn around and demand payment from the county for the change. The process is only available to landowners whose damages are a minimum of $50,000, so it is aimed at helping big developers while shutting the average citizen out of the process. It also creates a potential for abuse as the mayor could choose not to enforce the zoning against one particular landowner or could write a check using taxpayer funds to a developer for simply alleging a loss of value.
After a last minute change in sponsors, the bill was moved out of the House Civil Justice Subcommittee on a voice vote. It is scheduled for a hearing in the full House Civil Justice Committee on Wednesday, and it will be considered for the first time in the Senate Judiciary Committee on Tuesday. The fiscal note on the bill was set at “in excess of $50,000,” which is surprising as the minimum amount of damages that can be recovered under the bill is also $50,000. However, that threshold also is just at the limit of what can be passed in the Senate without having to be considered by the Finance Committee.
Waste Tires
TCSA supported legislation to give counties more flexibility on how to use the pre-disposal fee charges on tires is headed to the Governor for his signature. The bill (SB2450/HB2607) by Sen. Walley and Rep. Byrd passed both houses on the consent calendars. It allows the tire pre-disposal fee, which can currently only be used to pay for processing tires into a beneficial end use, to also be used for costs related to disposal of tires, such as shredding. The bill is scheduled to take effect July 1, 2022.
Sales Tax Administrative Fee
The bill (SB160/HB192) by Sen. Briggs and Rep. Wright to reduce the department of revenue’s administrative fee on collecting and remitting local option sales tax passed the Senate, but in a dramatically different form than how the bill was originally filed. The original bill proposed dropping the administrative fee from 1.125% to 0.5%.
An amendment placed on the bill in the Senate Finance committee stripped all that language from the bill, simply requiring the department to report each year on how much its costs to administer the tax. While we have known that the reduction of the fee would result in a shift of more than $20 million from the state to local governments, we have not had a clear indication of how much it costs the department to administer the tax to prove the argument that local governments are being overcharged.
Once this is reported (the first report is due before Jan. 1, 2023), local government associations will be better able to make an argument for reducing the fee. The bill is awaiting a hearing in the House Finance Subcommittee.