The Tennessee General Assembly convened for the second session of the 113th General Assembly on Tuesday, January 9, 2024.

Notably missing from the Senate was Lt. Gov. Randy McNally, who is recovering at home from a recent ankle surgery. Speaker Pro Tempore Ferrell Haile, as well as Deputy Speakers Dawn White, Shane Reeves and John Stevens will preside over floor sessions in McNally’s absence.

Debating Legislative Procedures: House Adopts Rules Package

The House gaveled in with all leadership present and almost immediately engaged in the first lengthy debate of session. The House began the session by taking up the often-overlooked House Rules with scrutiny from Democrats still reeling from the expulsion of two of its members last year.

The House Rules address decorum on the House floor and include items such as limiting time for debates, restrictions on use of visual aids, and allowing the House Speaker to determine the order of whom can speak during debate on any particular piece of legislation. The members had a lengthy debate and, much to the chagrin of some in the minority, the body voted to adopt the rules package.

Education Freedom Scholarship Act

While each new session is filled with a multitude of issues across a wide spectrum of interests, there are always a few singular issues that are expected to be in the spotlight.

Governor Lee’s Education Freedom Scholarship Act is widely expected to be his chief legislative proposal and the most watched item of the legislative session. Through this program, Governor Lee hopes to establish statewide universal school choice by offering 20,000 scholarships during the 2024-2025 school year and universal eligibility for the 2025-2026 school year and beyond. As announced, students opting out of public schools would receive about $7,075 to be used toward private school tuition, fees, uniforms, textbooks, tutoring services, transportation expenses, and a host of similar fees.

Simplifying Franchise Tax Collection

Governor Lee is also poised to propose a policy simplifying the collection of franchise taxes. The specifics of the proposal remain largely unknown, but is expected to repeal the alternative minimum tax on property used in Tennessee and to authorize the Department of Revenue to issue refunds to taxpayers who paid the franchise tax based on this property measure. The financial impact of the repeal and refund is expected to cost the state approximately $1.4 billion this fiscal year. On a recurring basis, the new franchise tax collection method is projected to cost $300-$400 million annually.

Budget Constraints and Revenue Shortfall Predictions

The single, largest opponent of many bills needing state funds this year will not be a person. Instead, constraints on the state’s budget may be the downfall of many legislative objectives. In an update to the Senate Finance, Ways, and Means Committee this week, Department of Finance and Administration Commissioner Jim Bryson indicated that tax revenues are down, franchise taxes have come up short, and the professional privilege tax missed its mark. These missed projections recently prompted the state funding board to predict that revenue will fall short by more than $700 million. This lack of growth, taken together with the costs associated with the governor’s initiatives, will drastically limit the funds available for the Legislature’s priorities this year.

Upcoming Legislative Agenda: Bill Filing Deadlines Approaching

We anticipate a flurry of bills to be filed over the next three weeks as the House and Senate have both set bill filing deadlines at the end of the month. The House filing deadline will be January 31, while the deadline in the Senate will be February 1. These deadlines are consistent with deadlines set last year but are at least a week earlier than each chamber has traditionally set.

The next milestone will be Governor Lee’s State of the State address, with many eyes tuned in to learn more about his legislative goals for the year.

If you have any questions about the 113th General Assembly, please contact the authors.