In his third State of the State address last night, Governor Bill Haslam laid out a plan to cut taxes, pay state employees more, and still save money for a rainy day.
“Tennessee is different,” Haslam told members of the Tennessee General Assembly, his cabinet, and the public gathered on the floor of the state Legislature. The governor said that Tennessee is different from other states because of its low cost of living and relatively low unemployment, and different from Washington D.C. because Tennessee has made cuts instead of raising taxes.
“We did not raise taxes,” Haslam told the crowd. “In fact, we lowered them.”
Haslam proposed further lowering the food tax and he was very specific in outlining a tax cut on investment income meant to help retirees, “We’re proposing to cut the Hall income tax even further this year, by raising the exemption level for seniors from $26,000 to $33,000 for individuals, and $37,000 to $59,000 for joint filers.”
The governor also addressed some hot-button policy issues, such as a plan to start issuing school vouchers. The proposal would redirect state education money to pay private school tuition. Even so, the governor didn’t say the word “vouchers” or even his preferred term for the measure “opportunity scholarships.” Instead, Haslam said that he plans to add “another option for school choice” for low-income students in the lowest performing schools.
“I expect this proposal will be hotly debated,” he said. “But after taking a careful look at the issue and how a program might work in Tennessee, I believe a limited approach that gives more choice to parents and students stuck in difficult situations makes a lot of sense.”
Haslam won’t find much resistance to vouchers within his own party. Many Republicans want to expand vouchers beyond low-income students and low performing schools.
“I’ll be honest with you, I want it broader than that,” said State Senate Speaker Ron Ramsey after listening to the governor. “Parents know what’s best for their kids, and whether you’re in a failing school or not failing school, if there’s a better school that you could go to, then you ought to be able to do it.”
Besides vouchers, the governor said he plans to overhaul the way workers’ compensation claims are handled, but he did not offer details on what he would like to change. Haslam just said he wants a system that’s fair to both the employer and the worker.
House Speaker Beth Harwell says lawmakers have room to put their stamp on several of the governor’s priorities.
“One thing I’ve found about this governor, he seems open to listen to what the Legislature offers,” Harwell said. “Ultimately, it is the Legislature’s responsibility. He doesn’t do anything without legislative approval.”
Much of what the Republican governor outlined is likely set for smooth sailing in the Legislature, where Republicans have two-thirds majorities in both chambers.
Haslam also introduced new programs meant to increase the state’s college graduation rate to a stated goal of 55 percent. One initiative sets aside money from the state lottery to fund so-called “last dollar” scholarships for students close to finishing a degree.
“I want to learn a little more about how they’re going to administer it,” said Chancellor of the Tennessee Board of Regents John Morgan. “But that last dollar can be the thing that really creates an opportunity, so yeah, they really do work.”
For the first time in a decade, universities would get more money instead of less in the governor’s proposed budget. In exchange, they would agree to hold tuition increases to six percent or less.
In K-12 education, Haslam is offering big money for local districts to upgrade technology as well as $34 million that could be used to help fund more police officers in schools.
One controversy that the governor’s budget sidesteps is whether or not to expand the state’s Medicaid program for the poor as envisioned under the Obama administration’s Affordable Care Act. Haslam still hasn’t made a final decision and said he’s hesitant to commit because of the long-term costs, but he also acknowledged rural hospitals might be forced to close without the additional Medicaid money.
“Most of us—not all of us, but most of us in this room—don’t like the Affordable Care Act, but the decision to expand Medicaid isn’t as basic as saying, ‘No ObamaCare. No Expansion.’”
State Democrats say expanding Medicaid is one of their top priorities this year. House Minority Leader Craig Fitzhugh said he’s encouraged to hear the governor’s thinking.
“It seems to be a little easier decision the way I see it than the way he sees it. But that’s fine,” Fitzhugh said. “At least he’s going to consider it because it’s something that really has not much downside to Tennessee.”
If Tennessee opts to expand Medicaid, the federal government will pay all of the cost for the first three years, and 90 percent of the cost after that, but Democrats will have very little say about what happens on this or any other proposal from the governor, because of the overwhelming Republican majorities in both the state house and state senate. The Legislature’s work on the governor’s agenda begins in earnest today.
Click here to watch Haslam's full speech.