Capitol Update
March 25, 2022
As committees tried to work through the remainder of their calendars, county associations were in heated battles over bills to preempt local land use regulations while also testifying about potential effects of the Governor’s education funding proposal on county budgets. Many times, the most controversial bills are held off for votes in the rush of the session when committee calendars are the most full and legislators’ schedules are likewise packed. This year’s session is no exception. The next few weeks will be critical as committees shut down for the year, TISA is given close scrutiny in the Finance Committees, and the finishing touches are put on the state’s budget.
TISA
This week, the governor’s education funding bill (HB2143/SB2396) had much more activity. On Tuesday, TCSA Executive Director David Connor testified before the House K-12 subcommittee about county officials’ concerns regarding the formula. In his allotted time, Connor reiterated the importance of education funding and urged legislators to proceed cautiously in revising the multi-billion dollar formula. He highlighted certain problems that the proposed TISA formula does not remedy. He pointed out that the biggest frustration with the BEP from a local government perspective is that it does not fund all the positions a school system has to hire in order to adequately staff K-12 schools. The new proposal still does not fund thousands of additional positions currently hired by county school systems outside of the BEP formula. Since the TISA formula calculates funds on a per-student basis and no longer calculates the resources needed for schools, it will be more difficult to track whether this formula is adequately funding necessary expenditures such as increases in teacher salaries and benefits or hiring additional staff for needed positions like school nurses and social workers.
In response to legislators’ questions, Connor explained that by investing this large amount of money in the existing BEP, some potential problems with the TISA could be avoided. Other legislators were quick to point out that the BEP has had recurring issues, so the TISA at least solves some problems. Connor made sure to emphasize that TCSA supports allowing local schools to make decisions about how to use the funds the state provides. Another concern Connor raised in his testimony was that he fears the focus being placed on assigning a specific dollar value for each child in the public school system will create unintended consequences and put pressure on educators and administrators to make decisions that maximize the revenue a child generates, rather than focusing solely on what is most appropriate for the student.
Preemption of Local Land Use Regulations
Local government associations have faced multiple threats across an array of legislative committees this session that would preempt local decision making regarding land use decisions to plan for growth, regulate certain industries and preserve the character of their communities. Proponents of the various bills are all playing the “property rights” card, claiming that local governments are infringing on basic rights of landowners. However, local government associations have been joined by organizations like realtors, the hospitality industry and environmental groups who see these bills as efforts by special interests who are trying to use the state legislature to override a local community's self-governance. Instead of having legislation that deals with local government authority be considered by the State and Local Government Committee in the Senate or the House Local Government Committee, these bills have in some cases traveled instead through Civil Justice, Judiciary, Agriculture, or Commerce Committees that are more favorable to big business and industry.
Slaughterhouses and Dairies
County associations focused efforts this week on stopping a bill that would exempt facilities like dairies and slaughterhouses from zoning if they are located outside city limits and process no more than 100 animal units per week. An “animal unit” is defined as one cow, two pigs or 4 sheep. The sponsor, Sen. Frank Niceley, has rightly 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 who fear his bill would result in slaughterhouses being located adjacent to homes and subdivisions with local governments having no recourse to protect those homeowners. Proponents of the bill have identified facilities in Jefferson County and Loudon County that have been delayed or had difficulty complying with local regulations. According to officials in Loudon County, the problems have been caused by a business owner who has refused to comply with necessary upgrades to operate as a commercial facility and is now trying to preempt local regulations through statewide legislation.
The bill (HB2740/SB2622) by Rep. Holsclaw and Sen. Niceley moved out of the Senate State and Local Government Committee on a close 5-4 vote and out of the House Agriculture Committee on a voice vote, even though it clearly sounded like far more members voted “no” than “yes.” When the bill was brought up in the Calendar and Rules committee for scheduling, Rep. Lowell Russell, who represents Loudon County, made a motion to send the bill to the Local Government Committee as the legislation deals with zoning regulations and had not been considered by that committee. The motion prevailed to re-refer the bill to that committee for considerations. It is not currently scheduled for a hearing in the Local Government committee or for a vote on the floor of the Senate. While we believe the concerns of local government will get a fair hearing in the Local Government committee, TCSA has urged counties to contact their legislators and asked to have their counties removed from the bill if it makes it to the floor for a vote. The sponsors have already removed the four large urban counties from the bill to help get it out of committee.
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.
The bill was scheduled for a hearing in the full House Civil Justice Committee on Wednesday, and in the Senate Judiciary Committee on Tuesday. It was not heard in either committee, but was instead deferred for a week. Local government associations believe they had the votes to defeat the bill in the House Committee, so the proponents asked the sponsor to postpone discussion of the bill for a week in order to try and change legislators’ minds. We will continue to communicate with members of the committees to try and prevent this bill from moving forward.
Regulation of Pipelines
Legislation that began as a caption bill created a firestorm of concern from environmental groups earlier this session when legislators amended it to preempt certain local regulations of “energy facilities” like pipelines, transmission lines and storage tanks for natural gas and petroleum. The legislation appears to arise from a controversy last summer in Memphis when a facility called the Byhalia Pipeline met community resistance and was canceled. The bill (SB2077/HB2246) by Sen. Yager and Rep. Vaughan progressed quickly out of the Senate Commerce Committee and to the Senate floor for a vote where it passed 22-7. The bill as it passed in the Senate preempts local governments from enacting a prohibition or a moratorium on the siting, construction, expansion, or maintenance of energy, industrial, or related transportation infrastructure anywhere within the political subdivision, and it prohibits local regulation or enforcement of safety standards for pipelines that are set in federal law. It allows local land use regulations, so long as they facilitate “to the greatest extent possible” pipelines and similar infrastructure. County associations have expressed concerns over these limitations and have been working to seek improvements to the bill. Under a revised amendment expected to be presented in the House Commerce committee next week, the bill would include language to preserve a local government’s ability to enact land use regulations like planning and zoning so long as they are generally applicable to similar types of commercial and industrial activities. This new version removes the “greatest extent possible” language. The proposed amendment also preserves the ability to require franchises for providing electric or natural gas services in the political subdivision. Furthermore, it allows local governments to exercise reasonable police powers to regulate the siting, construction and maintenance of facilities in public rights-of-way and to prevent threats to human safety.
Governor’s Supplemental Budget Expected Next Week
In a sign that the legislative session is moving toward its final push to the finish line, the Finance Committees are scheduled next week to hear the presentation of the Governor’s supplemental budget amendment. Every session, an initial proposed budget is presented at the time of the State of the State address. Then, later in the session, the administration presents an updated budget that includes additional appropriations to cover the anticipated costs of legislation that is likely to pass as well as funding for additional priorities. On Tuesday next week, Finance and Administration Commissioner Butch Eley is scheduled to present an overview of this updated budget proposal. That usually kicks off a round of House and Senate negotiations as each chamber makes decisions about what it does and does not want funded in the budget. One major item we know will be discussed next week is the Governor’s announced intent to exempt grocery sales from state and local sales taxes for the month of July. We have confirmed with legislators and administrative budget personnel that the state intends to hold local governments harmless for the lost revenue that will result from removing the local option sales tax from grocery purchases for a month. Lee’s initial budget presentation received criticism from some lawmakers for not including any tax cuts, despite the state experiencing record revenue growth.