4/14/2019: In Brief…
Decoupling / Tax Cuts and Jobs Act — Legislation which ensures that Tennessee businesses are not unintentionally overtaxed due to recent changes in the federal tax code received final approval on Thursday. Tennessee currently uses the definition of federal taxable income as the base for computing a business’s excise tax liability. The Federal Government passed the Tax Cuts and Jobs Act of 2017 which expanded the definition of taxable income and required U.S. corporations to pay taxes on earnings they received from oversea affiliates’ investments. As a result of Tennessee’s excise tax being tied to the federal definition of income, such earnings would be subject to Tennessee’s excise tax.
Senate Bill 558 would decouple two parts of the new federally taxable foreign income from Tennessee’s definition for the purpose of excise tax. These two taxes include the global intangible low-taxed income (GILTI) which is entirely derived from affiliate activities in other countries and the repatriation transition tax which applies to certain foreign corporations that have a U.S. corporation as a shareholder. The bill exempts 95 percent of such income from Tennessee’s excise tax, while the remaining five percent would represent earnings reasonably estimated to be generated domestically. This legislation aims to uphold Tennessee’s business-friendly environment by effectively maintaining the status quo relative to the assessment and collection of the state’s excise tax.
Health Insurance Access / MEWAs — Legislation clarifying the means by which a Multiple Employer Welfare Arrangement (MEWA) is able to determine insurance rates passed the full Senate on Monday. A MEWA is a pool of two or more self-insured employers, in the same profession, who pool resources and contributions in order to provide their employees with healthcare benefits. Senate Bill 942 authorizes MEWAs to use case characteristics, claim experience, health status, or duration of coverage since issuance in determining the initial or adjusted premium rates for such employers pooling their liabilities. This legislation encourages and supports MEWAs as a way for small Tennessee businesses to offer employee benefits outside of the government-run health insurance by sharing risk and costs.
Health Insurance / Tennessee Right to Shop Act – The Senate Commerce and Labor Committee approved legislation this week establishing the Tennessee Right to Shop Act. Senate Bill 510 seeks to increase transparency to patients by allowing health insurance providers to disclose the cost of healthcare procedures from different in-network providers to patients enrolled in the plan. This legislation seeks to benefit consumers and insurance companies by allowing a patient to choose the lowest cost option for a procedure. The bill will now move to the floor to be approved by the full Senate.
Criminal Justice Reform / Reducing Recidivism – Legislation improving a law passed last year to reduce recidivism through innovative pilot reentry programs has been approved by the Senate Judiciary Committee. Senate Bill 782 revises the definition of recidivism so that outcomes can be measured more effectively for the local jail grant program. The legislation also gives more clarity to who is eligible for grants and ensures there is enough time for the program’s successful completion. Each year, about 5,000 Tennesseans leave Tennessee prisons after serving time for their crimes, with approximately 46 percent reincarcerated within three years. This criminal justice reform program seeks to help these individuals become productive, taxpaying citizens, to keep them from turning back to a life of crime. It also aims to identify and formulate better policies that can be scaled throughout the state.
Criminal Justice Reform / Electronic Monitoring Indigency Fund — In other criminal justice reform action this week, members of the Senate Judiciary Committee approved a bill providing a reinvestment in the state’s Electronic Monitoring Indigency Fund (EMIF). Tennessee courts may order a person convicted of Driving Under the Influence (DUI), for alcohol or drugs, to be monitored by an ignition interlock device or a transdermal monitoring device. If the court determines the person to be indigent, they order the person to pay a portion of the device’s cost of the device that they can afford. The remaining cost comes from the EMIF. While the fund currently covers ignition interlock and transdermal monitoring devices for alcohol or drug-related offenses, it does not provide for Global Positioning System (GPS) monitoring.
GPS, more commonly known as an ankle bracelet, is a supervision option for the court to provide to those assessed to be of low enough risk to remain in their community, rather than in jail. Due to the monthly fee that must be paid to the monitoring agency, it has not been an option that all eligible individuals are able to afford. Senate Bill 806 updates the EMIF to include GPS monitoring and provides the needed funding to local governments when matched. Governor Lee’s budget provides $1.5 million in new funds for the EMIF to further criminal justice reform efforts, in addition to $511,100 provided in the base budget.
Election Laws / Candidate Qualification — The Senate State and Local Government Committee approved legislation that gives a candidate who has been excluded from the ballot a right to respond to that decision. After the filing deadline, there is a seven day period to withdraw a candidate’s name. Under current law, a state executive committee can determine a candidate to be unqualified and remove his/her name from the ballot without providing any notice to the candidate or time to respond. Senate Bill 1354 requires that in the event a party’s state executive committee excludes a candidate’s name from the ballot, that candidate must be provided written notice within two days of the decision. It also authorizes the candidate to appeal the determination with the executive committee within two days of receiving the notice of exclusion, and establishes that unless the executive committee withdraws their disqualification determination within seven days of the original withdrawal deadline, the coordinator of elections must exclude the name from the ballot. The bill was unanimously approved by the committee and is pending final action by the full Senate.
Convenience Voting Centers – Senate Bill 726, authorizing Rutherford County to continue operation of their “Convenience Voting Center” program to increase voter turnout on Election Day, was approved in the Senate State and Local Government Committee. The successful pilot project allows citizens to vote at any of the county’s 28 polling locations on Election Day most convenient to their work, school, or travel. Convenient locations are generally only provided during the early voting period. The Convenience Voting Centers, also known as Election Day Vote Centers, received great praise from Rutherford County voters last year when a record turnout for a non-presidential year was recorded. Similarly, the committee approved Senate Bill 727, which expands the program to Monroe, Williamson and Wilson Counties upon approval by a supermajority of the county election commission.
Tennessee Sports Gaming Act – Legislation to legalize online sports betting, known as the Tennessee Sports Gaming Act, passed the Senate State and Local Government Committee this week. Senate Bill 16 creates the Lottery Corporation Gaming Advisory Council, which would oversee and promulgate rules and regulations in accordance with robust regulatory provisions laid out in the bill. The Advisory Council would consist of nine members; the Senate Speaker, House Speaker and Governor would each appoint three members. In 2018, the United States Supreme Court repealed the Professional and Amateur Sports Protection Act through its ruling in Murphy v. NCAA. This repeal gave the states the authority to regulate sports betting, prompting ten states to take action. It is currently not regulated in the State of Tennessee, but a large number of Tennesseans are already participating in sports betting on an off shore betting site, with no tax dollars being collected for the state. Upon passage, the Fiscal Review Committee estimates that online sports betting will amount to $50 million in revenue by the second year of enactment. The bill will now move to the Senate Finance, Ways and Means Committee.
Death Penalty / Fentanyl — The Senate Judiciary Committee voted this week to strengthen Tennessee’s death penalty law as it affects offenders who knowingly sell or distribute the most dangerous drugs, including fentanyl, with the intent and premeditation to commit murder. Senate Bill 1368 adds an aggravating circumstance for the imposition of the death penalty or life without the possibility of parole if the defendant knowingly sold or distributed a substance containing fentanyl, carfentanil, or other Schedule II controlled substances. The bill now goes to the Senate floor for final consideration.
Elected Officials / Ineligibility for Holding Office – The Senate gave final approval this week to legislation ensuring that an elected official who is convicted of an infamous crime committed while in their official capacity cannot run for office again. Senate Bill 731 closes a loophole in current law by forever disqualifying the person from holding office, regardless of any plea agreement or diversion process. The legislation is in keeping with the General Assembly’s previous actions to deal strongly with office holders who violate the public trust.
Tennessee Employees / Park Rangers — The full Senate approved Senate Bill 1482 extending health insurance benefits for two years to the families of park rangers killed in the line of duty. Health insurance benefits are already available to the surviving spouse and children of capitol police officers, Tennessee Highway Patrol, Tennessee Bureau of Investigation, and Tennessee Wildlife Resource Agency.
Election Integrity – The Senate State and Local Government Committee approved legislation to preserve the integrity of Tennessee’s election process, while encouraging voter registration and the work of well-intended voter activist groups. The proposal comes after election officials in Davidson and Shelby counties experienced a last-minute surge in voter registration applications. A large number of these applications were incomplete or contained incorrect and false information.
Senate Bill 971 would enhance election security by (1) requiring a person or organization conducting a supplemental voter registration drive of 100 people or more to be trained to properly complete applications and protect confidential information; (2) prohibiting organizations from paying individuals based on the number of voter registration forms submitted; (3) requiring applications collected by designated people or organizations to be filed in a timely manner, within ten days of receiving the voter registration; and (4) permitting the State Election Commission to assess a civil penalty to organizations paid to conduct voter registration that submit 100 or more deficient forms, excluding omission of Social Security numbers. This provision does not affect volunteer organizations which register voters such as the League of Women Voters, Boy Scouts, churches, college Student Government Associations and other similar organizations.
Tennessee voters may register to vote or change their information on their computer, tablet or mobile device at https://govotetn.com/.
Veterans — Two bills endorsed by the General Assembly’s Veterans’ Caucus advanced in the Senate this week. One bill approved by the full Senate increases the discount that disabled veterans receive at state parks. Currently, veterans get a 25 percent discount during the in season and a 50 percent discount in the off season in Tennessee state parks. Senate Bill 1119 gives 100 percent permanent and total service-connected disabled veterans a 50 percent discounted rate during all seasons at state parks. In order to receive the discount, such individuals will be required to provide certification of that status. The legislation now awaits approval from the House.
The second bill seeking to support and protect Tennessee veterans requires the Department of Veterans Services (DVS) to provide training in suicide prevention to their employees who directly interact with veterans. The training is available free of charge to DVS through suicide prevention networks and can be viewed in a few hours. Senate Bill 673 will prepare and arm DVS employees with prevention measures while responding to veterans in crisis.
Sex Offenders — Members of the Senate Judiciary Committee voted this week to make it a Class E felony to commit a new sexual offense while on the Sex Offender Registry. Senate Bill 1134 seeks to enhance community safety by keeping the worst sex offenders off the streets longer. Violations of Tennessee Sexual Offender and Violent Offender Registration, Verification, and Tracking Act of 2004 are a Class E felony and a violation eliminates an offender from eligibility for suspension of a sentence, diversion or probation until the minimum sentence is served in its entirety. The bill now travels to the Senate floor for a final vote.
Volunteer Fire Departments / Grants for Firefighting Equipment — Legislation establishing a grant program for volunteer fire departments to be used for the purchase of firefighting equipment overcame its first hurdle this week with passage in the Senate Commerce and Labor Committee. Under Senate Bill 1395, the program would be administered by the Department of Commerce and Insurance, with grants equally divided among the state’s three grand divisions. The proposal now goes to the Senate Finance, Ways, and Means Committee where members will look at its financial impact.
Medical Cannabis – Legislation that would have allowed Tennesseans to receive medical cannabis under the care of a physician and pharmacist was deferred until 2020. Senate Bill 572 would have allowed patients with certain conditions to obtain a state-issued medical cannabis card which they could take to an Agricultural Medical Center staffed by pharmacists to receive a monthly dose. Sponsors will continue their work in finding consensus on the legislation over the summer and fall months.
Budget – This week, Senate committees successfully completed 59 hearings to review the individual budgets of all departments and agencies of state government. State senators have been reviewing the budgets since the budget was presented to lawmakers in March. In other budget matters, the Senate Finance, Ways, and Means Committee has received 196 amendments to the appropriations bill before the deadline on Thursday. Attention will now turn to the amendments and to Governor Bill Lee’s supplemental budget appropriation amendment, which will be delivered to the Senate Finance, Ways, and Means Committee on Tuesday. The budget will be the central focus of the General Assembly during the remaining weeks of the 2019 legislative session.