Bredesen delivers ‘State of State’ and lawmakers begin 2009 session

With organizational tasks out of the way, state lawmakers returned to Capitol Hill last week to begin the work of the first regular week of the 106th General Assembly.

The first order of business was a joint session of the House and Senate to hear Governor Phil Bredesen’s State of the State address.

The governor had been scheduled to lay out his budget plans in the annual address, but due to the potential impact of the federal stimulus legislation, those details have been delayed until mid-March. Tennessee could receive up to $4 billion under the federal spending package. Legislators, however, are waiting to see what federal mandates and restrictions will be attached to the final plan approved by Congress.

The Governor emphasized that Tennessee has a rough road ahead with its state budget regardless of the stimulus package due to declining revenues. That point was echoed by State Finance Commissioner Dave Goetz who told members of the Senate Finance Committee on Feb. 11 that Tennessee’s year-to-date collections were $522.1 million less than the budgeted estimate. The January revenues reflected dismal holiday retail sales and is the eleventh negative growth month in sales tax collections, starting with January 2008.

The only new proposal called for by the governor in his speech was creation of a “Solar Institute” in Tennessee to position the state to be a research leader in making solar power practical. The governor said solar power is far too expensive but ripe for breakthroughs with scientific advancements that could be made through Tennessee’s leading energy research facilities, like the Oak Ridge National Laboratory.

Senate committees began meeting last week to chart the course ahead for the 2009-2010 legislative sessions and to hear from state officials about a number of issues on the agenda this year.

The State and Local Government Committee heard testimony this week from Executive Director of the Tennessee Alcoholic Beverage Commission Danielle Elks who discussed Tennessee’s laws govern-ing the sale of alcohol, including the distribution and sale of wine in Tennessee.

Legislation dealing with wine sales was deferred during the last legislative session for study until 2009. One proposal would allow grocery stores to sell the wine in cities or counties that already allow permits for package liquor sales.

Currently, Tennessee law only allows liquor stores to sell wine, while they are banned from selling beer. On the other hand, liquor stores cannot sell other products that might be associated with alcoholic beverages like napkins, props, stirrers, or cups.

The recession has not spared the tourism industry across the state according to Tom Lightsey, assistant commissioner of Administration for the Department of Tourism Development. Lightsey spoke to members of the Environment, Conservation and Tourism Committee about the state’s efforts to reboot the industry, which had been gaining momentum before the economic decline last year.

Tennessee had experienced billion dollar increases in the tourism industry for the past three years, boosting the state into the top ten for “person stays” in the nation. The Department of Tourism is ramping up its website to reach more vacationers in the most cost efficient manner. Approximately 80 percent of those planning a vacation visit the Internet to help them plan their trip. The Department has now developed a news bureau to assist local places of interest in publicizing their events or unique appeal.

Greg Gonzales, Commissioner Department of Financial Institutions, told members of the Senate Commerce and Labor Committee last week that Tennessee’s state banking system remains sound “despite the increased number of problem assets that we are seeing in the system resulting from the current economic environment.” He said state banks remain profitable as a whole and capital averages far exceed national averages.

Gonzales noted, however, the non-bank mortgage industry has had a reduction of mortgage loan originators by half. Delinquencies have been most dramatic in construction loans, particularly those in larger projects.

Gonzales’ testimony was followed by several representatives of the state’s banking industry who echoed his statement by saying their banks were sound “but under stress.” About 40 state banks have applied for money under the Troubled Asset Relief Program (TARP) passed into law by Congress last fall. TARP made $250 billion available to invest directly into financial institutions. Although the time for applications has not ended, Gonzales said only a handful have been approved and have received money up to this point.

The Senate Transportation Committee heard testimony from Tennessee’s Chief Road Engineer, Paul Degges, regarding the potential to fund highway projects under Congress’ stimulus package. There are 339 transportation projects that are “shovel ready.” The department expects to get the first half of the money disbursed within the first 90 to 150 days after the bill is signed by the President.

State and local governments have been working to be “ready to go” when the money is received. This includes such preparations as environmental studies, right of ways, utility installation and other required paperwork.

In the Senate Education Committee last week, members were given the latest revenue figures on the state’s Education Lottery. The Lottery funds specific education programs, including college scholarships, pre-kindergarten and after-school programs. Since the Tennessee Lottery began selling tickets on Jan. 20, 2004, it has raised more than $1.3 billion for these programs. Net proceeds from sales of lottery tickets are currently averaging over $5 million per week.

When asked about the future of sales of lottery tickets in Tennessee, Rebecca Paul Hargrove, CEO of the Tennessee Lottery Corporation, said that gas prices have a direct effect on the sale of tickets. To offset this, the Corporation is looking to expand the sale of tickets to certain retail outlets.

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