The second half of the 112th Tennessee General Assembly commenced on January 11th with a return to normalcy as the pandemic drifts out of sight. This session focused on Tennessee’s economic growth, fiscal security, and placed a priority on tax cuts for Tennesseans as inflation continues to trouble the nation.
The 2022-2023 fiscal year budget of $52.5 billion, a nearly $10 billion dollar increase from last year’s proposal, places significant emphasis on education, workforce expansion, welfare, and investments for Tennessee’s economic growth. Bearing in mind the struggles that all Tennesseans faced as a result of the pandemic, the Governor set out early in session to include a month-long grocery tax holiday in the budget. The grocery tax will exclude state-imposed taxes and give citizens a financial break on grocery items. This budget also provides funding for a one-year removal of the state fee for license plate renewals for all Tennessee drivers beginning July 1, 2022. The General Assembly also passed a broadband tax relief project that has the goal of dispersing $204 million in funding over a 3- year period. The Tennessee Department of Economic and Community Development (ECD) will issue $68 million per-year in grants to help bring internet connection to more Tennesseans.
Additionally, the legislature passed a new education funding formula, the Tennessee Investment in Student Achievement (TISA), which is set to replace the current Basic Education Program (BEP) funding formula, in the 2023-2024 fiscal year. TISA creates individualized funding for students, incorporating weights for students with unique learning needs. Furthermore, the funding formula provides districts with direct and outcome-based funding.
The state’s budget also includes $500 million dollars in state bonds for a newly designed, covered stadium for the Tennessee Titans which has an estimated total cost of $2.2 billion. The legislature proposed and passed a 1% increase for hotel-motel tax in Nashville, which is estimated to generate at least $10 million per year, if implemented. The bill allows Metro Nashville to have the option of using this as a tool to help pay for the new stadium. A domed facility will allow Nashville to host more events during colder months.
The legislature also passed an extensive campaign finance reform bill. The legislation was sent to a conference committee to be negotiated between members of the two chambers on Thursday morning. The final version aims to strengthen numerous disclosure requirements and makes various changes to current law to increase the transparency of certain election expenditures.
With the 112th behind them, members will now head back to their newly drawn districts to campaign for elections this fall. All members of the House and members in odd numbered Senate districts are up for reelection. Lawmakers will continue the work of the state through summer studies and committee hearings during the summer and fall, and will return to Nashville for the 113th General Assembly on January 10, 2023.
Tax Cut Highlights
Investment in Education: TISA Formula At-A Glance
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