Commerce Committee hears update on
Tennessee’s Unemployment Trust Fund

The Senate Commerce Committee heard testimony this week from Labor Commissioner James Neely regarding the status of Tennessee’s unemployment trust fund and the potential impact of stimulus money coming to the state as a result of the American Recovery and Reinvestment Act. Commissioner Neely urged committee members to take action to shore up the fund or face the possibility of borrowing from the federal government if it becomes insolvent. Neely predicts the state unemployment fund will be broke in just over a year if things continue to deteriorate at the current rate.

Tennessee’s statewide unemployment rate for January was 8.6 percent and is estimated to have now risen to over nine percent. Neely said rural communities have been particularly affected by the recession, with over 27% unemployment in the hardest hit county of Perry in West Tennessee. Cities have a more diverse workforce, many of which are service-oriented, a sector of the job market that has not taken as hard a hit as manufacturing and other jobs found in rural areas.

Due to the rise in unemployed workers, Tennessee’s unemployment fund has decreased from $609 million last July to its current level of $269 million. The federal government has urged Tennessee to have $1.2 billion in the unemployment trust fund to weather the three-year cycle prognosticators say it will take before an economic recovery occurs. Neely said the administration is drafting legislation that proposes increasing the taxable wage base employers pay to cover the unemployment benefits of laid-off workers from $7,000 to $9,000. They are also proposing an increase in the premium rates by .6 percent.

The plan would generate $220 million in revenues, a level which Neely says would keep Tennessee from going into the red and borrowing from the federal government at interest rates of up to 25 percent. He said borrowing money from the federal government would result in a costly surcharge to employers in addition to increasing taxes to keep the fund solvent.

Current law provides that taxes are raised on employers as the reserves in the trust fund decline based upon each business’s layoff experience. The average premium rate is 2.7 percent according to Finance & Administration Commissioner Dave Goetz, who said the administration’s proposal would likely move that median to 3.3 percent or $40 per employee.

Neely said the federal stimulus money coming into the state as a result of the American Recovery and Reinvestment Act “would help get employers off the highest tax table sooner.”

The stimulus package does, however, have strings attached in order to receive the funds. The federal act requires states to enact three options from a menu of five expansions of benefits. These include:

• providing unemployment benefits to part-time workers
• giving jobless benefits to some who voluntarily leave their jobs for a list of family reasons, such as quitting a job to relocate to another area if a spouse moves
• increasing benefits for applicants with dependents by $15 per dependent per week with a $50 limit
• extending benefits if job training is involved
• changing the time period in which applicants are determined to be eligible for unemployment to include the present quarter prior to being laid off

Neely said the administration’s bill, which will be ready for lawmakers to review next week, proposes changing the time period in which applicants are determined eligible, providing part-time workers with benefits, and adding the increased payment to applicants with dependents. The federal stimulus law does not allow states automatically to sunset the expansion of benefits when the stimulus money is exhausted. Neely said, however, there is nothing in the federal law that says Tennessee cannot come back and discontinue the expanded benefits after the money is gone.

Finance Commissioner Dave Goetz appeared before the Senate Finance Committee on Thursday to give notification of an expansion of the budget to provide an additional $25 per week in unemployment benefits under the federal stimulus plan, beginning immediately. In addition, the administration will bring legislation that will allow for the extension of unemployment benefits of up to 59 weeks. Presently, Tennessee provides 26 weeks of unemployment assistance, but additional benefits can be paid in times of high unemployment under federal extension programs.

New Crooks with Guns Law working says Public Safety Coalition Representatives

Group asks lawmakers for second step in strengthening laws for armed robbery

Tennessee’s “Crooks with Guns” law is working well, according to Chief Ron Serpas of the Metro Davidson County Police Department and Randy Nichols, District Attorney General for the 6th Judicial District. Serpas and Nichols testified before the Judiciary Committee this week about recidivism and asked members to support the second step of the Public Safety Coalition’s proposal to impose harsher sentences on criminals using firearms in the commission of a robbery.

Tennessee ranks second in the nation in the number of violent crimes.  These criminals are often repeat offenders.  Sixty-seven percent of those convicted of violent crimes are re-arrested within three years of being released from prison. The recidivism rate increases to 80 percent when you move past that three-year marker.

The legislation proposed this year would increase prison time for the most violent criminals convicted of aggravated robbery who use a gun in commission of the crime from a Class B to a Class A felony. A Class B felony carries a sentence of 8 to 12 years; whereas, a Class A felony carries a 15- to 25-year sentence. Nichols said, however, prisoners could serve a term as low as 30 percent of their sentence before being eligible for parole.

Nichols and Serpas also urged lawmakers to adopt a more realistic formula for determining the cost of imposing tougher sentences on repeat offenders that takes into account the full financial impact that violent crime has on Tennesseans and the resources of state and local government. Besides the cost of apprehending and prosecuting repeat violent offenders, each year Shelby County alone spends approximately $25 million in taxpayer money to treat gunshot wounds at The Med Regional Medical Center.

State Senate votes to prevent local governments from passing local minimum wage laws

The full Senate approved legislation this week that would prevent localities in Tennessee from passing ordinances which mandate businesses that contract with local governments pay employees a “local” minimum wage higher than the federal minimum wage. The bill, SB 83, aims to keep businesses from being at a competitive disadvantage in a tough economic climate. Three localities in Tennessee mandate a wage beyond the federal minimum wage for those who contract with them. The bill would not apply to contracts already in place within those areas.

Legislation to ban

“texting while driving” advances

Legislation that would ban texting while driving overcame its first hurdle this week with approval by the Senate Transportation Committee. The bill, SB 393, prohibits sending or reading text messages or emails on a hand-held mobile phone or personal digital assistant while a driver is operating a motor vehicle in motion.

Over two-thirds of those under the age of 24 who were polled have admitted to sending text messages while driving. Studies show that drivers of any age who text behind the wheel swerve out of their lane, with many running into head-on traffic.

Under the bill, a violation would be a Class C misdemeanor, punishable by a fine of no more than $50.00. The legislation would take effect on July 1 if approved by the full Senate and House of Representatives.

Senate Judiciary Committee votes to approve constitutional amendment concerning abortion

The Senate Judiciary Committee voted 6-2-1 on a proposed constitutional amendment regarding abortion rights under the Tennessee Constitution. The resolution, SJR 127, addresses a State Supreme Court decision in 2000 that struck down provisions in Tennessee law allowing women to receive “informed consent” information about the surgery and to wait 48 hours before they receive an abortion. The court also ruled against a state requirement that all abortions after the first trimester be performed in a hospital. According to proponents of the resolution, that ruling made Tennessee more liberal than the U.S. Supreme Court required in Roe v. Wade and made the right to abortion a “fundamental right” in Tennessee.

The resolution would allow citizens to amend Tennessee’s Constitution to say that the right to an abortion is only protected under the U.S. Constitution as interpreted by the U.S. Supreme Court and would allow the General Assembly to enact, amend, or repeal statutes regarding abortion, including circumstances of pregnancy resulting from rape, incest or life of the mother. Proponents say the practical effect of the legislation would be to bring Tennessee back into a position of neutrality so the people’s elected representatives can decide within the bounds of federal decisions what protections can be put into place.

The proposed amendment will be voted on in the same manner as the “Victim’s Rights Amendment” in 1998, the “State Lottery Scholarship Amendment” of 2002, and the amendment giving tax relief to the elderly adopted in 2006. If approved by the full House and Senate this year and by a two-thirds majority in the next General Assembly, citizens could expect to see the resolution on the ballot in November 2014.

Issues in Brief

Tuition cap at State’s Universities – The Senate Education Committee heard testimony this week from T.J. Mitchell, President of the East Tennessee State University Student Government and University of Tennessee at Knoxville Student Government Association President Jeff Wilcox regarding removal of the tuition cap at Tennessee’s colleges and universities. In December, the Tennessee Board of Regent (TBR) decided to remove the cap and start charging students for each hour beginning in the fall. The cap provides a maximum amount charged for tuition per semester, regardless of the number of credit hours unless it exceeds 21. Mitchell said the action would cause a great economic hardship for many students and their families and could add an additional year for those seeking a baccalaureate degree in universities impacted by the cap’s removal.

Wine sales — The Senate State and Local Government Committee on Tuesday voted to approve legislation that would allow citizens in the state to purchase up to five cases of wine from out-of-state wineries that have a Tennessee license and transport them back across state lines. The bill comes after a federal court decision ruled Tennessee’s current “Grape and Wine Law” is unfair to competitors outside the state. The legislation would correct the constitutional issues set forth by the federal court that threatens to end the sale of wine from Tennessee wineries. Wineries are a significant agricultural industry in Tennessee with $139 million in sales in 2007. Several other bills regarding the sale of wine are also pending in the Committee and are scheduled to be heard later this session.

State Election Commission — The full Senate has approved legislation to update the political composition of the State Election Commission to reflect a Republican majority as a result of the 2008 election. State law currently requires that the political composition of the five-member State Election Commission be three members of the majority party and two members of the minority party. Under the bill, SB 547, the new members would rotate off the Commission in two years when their terms of office expire. The make-up of the board would consequently return to a five-member status after that time. Tennessee law also requires county election commissions to reflect the change in majority status by giving Republicans three members of the five-member boards statewide. Those terms of office will be up next month.

Coal Fly Ash – Legislation, SB 1559 , was approved by the Senate Environment Committee this week calling for the safe storage of coal fly ash. The bill says that permits issued by the Department of Conservation and Environment for disposal of fly ash must require a liner for protection of groundwater, and a cap to make sure it is properly contained.

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This entry was posted on Thursday, March 12th, 2009 at 4:12 pm and is filed under Capitol Updates.
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