School Funding Plan Advances in Both Chambers; Gov. Lee Plans to Propose a 30 Day Pause on Sales
Tax on Groceries

With committees continuing to close and the announcement of the Lee Administration’s budget
amendment, all indications are that the 2022 legislative session is now entering the glide path toward
conclusion. While there is still much to be done and a significant amount of legislation still in the
pipeline, the unveiling of the budget amendment often stands as the second major step – right behind
the closure of committees – that the end of session is on the horizon. With every passing day, Governor
Lee’s education funding plan and the state budget will draw increasing attention, and other legislation
will gradually ease into the background.
The other byproduct of committees closing is that more and more bills have seen their fate determined.
Any bill that is still parked in a closed committee is highly unlikely to move this year, and the same can
be said for any bill that is still parked in a committee and not on that committee’s final calendar. In the
past few weeks, the House Agriculture and Natural Resources Committee, House Insurance Committee,
House Education Instruction Committee, and Senate Education Committee have completed their work
and closed subject to the call of the Chair. A number of other committees are on final calendars,
including Senate Health, Senate State and Local, Senate Judiciary, the House Criminal Justice
Subcommittee, the House State Government Committee, and the House K-12 Subcommittee.

School Funding Plan Advances in Both Chambers

Governor Bill Lee’s K-12 education funding overhaul has started to clear critical hurdles, and its journey
through the legislative process is now underway. The legislation, which has been dubbed Tennessee
Investment in Student Achievement — or “TISA” for short — would allocate more than $9 billion in state
and local funds for education, including $1.8 billion for students with specific needs, such as those living
in substantial poverty or students with disabilities. The legislation (SB2396/HB2143) passed out of the
House K-12 Subcommittee on March 22nd after nearly three hours of testimony and questions. The
Senate Education Committee also advanced the bill a day later on the 23rd, along with five amendments
to the bill. The adjustments to the bill’s original language allude to the Lee administration having to
compromise on language with lawmakers and stakeholders in order to address increased feedback and
a growing number of concerns associated with the legislation. The bill moved on to the House Education
Administration on March 30th, and an additional five amendments were adopted. The legislation is set to
appear in the Senate Finance, Ways and Means Committee the week of April 4.

Gov. Lee Plans to Propose a 30 Day Pause on Sales Tax on Groceries

In the wake of the Governor’s State of the State address in February, the Lee Administration submitted a proposed initial budget that, while focused on conservative principles, did not feature any tax cuts. The messaging that followed indicated that tax cuts would be forthcoming in the budget amendment. The Lee Administration’s budget amendment was released on March 29th , and the details of the plan have emerged, including the Governor’s proposal to institute a month long pause to the state’s 4% tax on groceries. The proposal is being described as a direct response to nationwide inflation and viewed as a way to provide direct relief to Tennesseans. In 2020, Democrat lawmakers proposed a similar “food tax holiday” that was estimated to cost the state upwards of $100 million in revenue. That isn’t the only tax cut contained in the budget amendment, as it will also feature a reduction to the oft-criticized Professional Privilege Tax, which imposed a $400 per year tax on attorneys, physicians, financial planners, lobbyists and other professions. 

The amendment is far from the final product as it must then go through the legislative process and
endure the refinement and negotiation that process entails. The sole task assigned to the Legislature in
the state constitution is to pass the state’s budget, meaning that any legislation that is still pending at
the time the budget passes always runs the risk of having the legislature adjourn for the year before
taking final action on the legislation.

Looking Ahead

With more committee closures expected for next week, more and more legislation will either continue to move or meet its demise. That process has already begun as the volume of legislation before committees is significantly less than it was just two weeks ago. Given the amount of legislation that flowed through committees in the past few weeks, floor calendars are now at max capacity, and the Senate has now added a third floor session – to be held on Wednesday – to accommodate the volume.