The 112th General Assembly adjourned sine die Thursday 4/28 at 3:38 p.m., ending what has been a marathon legislative stretch with three different sessions over an eight-month span. With so much legislative activity packed into such a comparatively short period of time, many lawmakers expressed burnout and fatigue very early in the 2022 regular session, with many confiding that, combined with the special sessions that took place in the fall, it felt like they never really left Nashville in the first place. Layer that with the dynamic of having new legislative boundaries – that in some cases created dramatically different districts – and most lawmakers hoped for an early adjournment to allow them
ample time to return home to regroup and prepare for the August primaries. That may have also impacted the volume of legislation filed and the relative lack of contentious, high-profile bills that flowed through committees.

Looking back at the high points of 2022, Governor Bill Lee was able to close out the final legislative session of his first term by revamping the state’s educational funding model for the first time in three decades while also seeing most of his legislative agenda pass without much hand-wringing. Lawmakers passed a once-in-a-decade redistricting plan that looks to preserve GOP supermajorities in the state house while also giving the GOP one additional congressional seat. In its one Constitutionally-required task, the General Assembly passed a balanced, $52.8 billion state budget that managed to contain more than $418 million in tax cuts – always popular in an election year. Lawmakers will now return home and
in most cases will prepare for campaigns, as half of the Senate and all of the House seats are up for reelection. Moreover, with many legislators having to play get-to-know-you with entirely new communities and counties in their districts and many also having challengers in the August primaries, there is plenty of incentive to quickly flip the switch to campaign mode and hit the ground running.

Redistricting Drama: Republican Plans Spur Litigation, Supreme Court Appeal

There was no easing-in process when the General Assembly reconvened in January, as it quickly had to address its first order of business – the finalization and approval of Tennessee’s new legislative districts. Redistricting is a once-in-a-decade process that takes place upon conclusion of the census, and the majority party is given the privilege of running that process, thus ultimately controlling how the district lines are redrawn. In Tennessee, the GOP looked to capitalize on its supermajority in Tennessee and create an even greater numerical advantage over the Democrats. Immediately upon the release of the draft versions of Republican-drawn districts, Democratic leaders leveled harsh criticism at their
counterparts, arguing that the draft plans were illegal and unfair. Legislative Democrats noted that many Democratic incumbents had been drawn into the same districts, and alleged that the Republicans had engaged in gerrymandering. Other Democratic leaders alleged that the new districts reflected discrimination. The Democrats characterized their own draft plans as more fair, especially for Tennessee’s major metropolitan areas. Not surprisingly, Republicans denied these claims. They continuously defended their proposals as transparent and legal while also citing various times throughout history where both Davidson and Shelby counties have been split into multiple districts. In the end, the final Republican-drawn plans passed easily along party lines.

The redistricting process took on an even greater sense of urgency given the razor-thin margins that currently exist in Washington and the notion that every state and every seat counts. That dynamic played out in plain view in Tennessee’s congressional redistricting process, as the GOP currently enjoys a 7-2 advantage, but would very much like to expand that to 8-1. The Fifth Congressional district, which is currently held by Rep. Jim Cooper (D-Nashville) was creatively transformed to make the seat likely to fall into the hands of the Republicans, a move that drew harsh criticism from Democrats and also resulted in  Cooper’s announcement that he would not run for re-election. The drama did not stop there however, as the creation of a likely-Republican seat with no sitting incumbent drew Congressional hopefuls out of
the woodwork, creating a field that seemingly grew by the week and resulting in both state legislation and state Republican Party maneuvering that became a national story, as noted below.

It is not uncommon to see redistricting spur litigation, and this year’s effort was no exception. A lawsuit was filed in late February, backed by the Tennessee Democratic Party. The suit argued that the General Assembly unconstitutionally drew House and Senate maps to further entrench the Republican supermajority by dividing more counties than necessary in the House map and numbering Senate districts nonconsecutively. The lawsuit particularly focused on four districts in Davidson County, which were previously consecutively numbered. In early April, a three-judge panel – a new, legislativelycreated concept designed to handle election cases, Constitutional matters and cases where the state is a
party — blocked the General Assembly from enforcing the state Senate redistricting plan, ordering the body to fix issues with the map within 15 days. The decision shocked Republican leadership and led to an emergency appeal directly to the Tennessee Supreme Court due to the decision’s potential impact on filing deadlines and the election itself. In the appellate brief, Attorney General Herbert Slatery argued that the injunction could “wreak electoral chaos,” specifically noting the fact that it had been issued on the eve of the candidate filing deadline. The majority opinion of the Supreme Court agreed with that point of view, taking the position that in ordering the injunction, the three judge panel “failed to
adequately consider the harm the injunction will have on election officials who are detrimentally impacted by the extension of the candidate filing deadline, as well as the public interest in ensuring orderly elections and avoiding voter confusion.” Thus, the Republican plan was upheld, with the only real impact being a modest extension in the candidate filing deadline.

Legislators Approve $52.8 Billion Budget

Last week, the General Assembly passed a $52.8 billion budget, which is the largest in state history and a significant bump for Tennessee standards from last year’s $42.6 billion. Most of Governor Lee’s budgetary proposals, issued initially in February and capped by a proposed budget amendment in late March, emerged largely unscathed from the legislative process. The budget will go into effect on July 1.

The final budget contains a $250 million investment into the state’s Rainy Day Fund, which serves as Tennessee’s savings account to withstand economic downturns, raising the fund to an all-time high level of $1.8 billion. Another highlight, which reflects Tennessee’s historically fiscally conservative approach, is the $1.3 billion of Tennessee’s $3 billion revenue surplus that is set aside for future use. The budget also uses the surplus for many one-time expenditures to prevent the growth of state government while still providing resources and relief to important initiatives. The budget includes upwards of $400 million in tax cuts – important in an election year – including breaks designed to help Tennesseans battle rising inflation. It includes a one-year slash to the $35 license plate registration fee beginning July 1 and an
elimination of the tax on food items in the month of August. Gov. Lee has previously stated, “As Americans see their cost-of-living skyrocket amid historic inflation, suspending the grocery tax is the most effective way to provide direct relief to every Tennessean. Our state has the ability to put dollars back in the pockets of hardworking Tennesseans, and I thank members of the General Assembly for their continued partnership in maintaining our fiscally conservative approach.” The professional privilege tax – a $400 tax to attorneys, doctors, financial advisors and lobbyists – was cut, but only for physicians, thereby leaving the other professions in the tax to pay the full amount. The budget also featured a $68
million cut for a sales tax reduction on broadband supplies as well as a $3 million cut for agricultural machinery and equipment.

Education was a top priority for this year’s budget, as it includes the largest increase in K-12 education funding in the history of Tennessee. With an additional $1 billion in K-12 funding, Tennessee is investing a total of $6.5 billion in K-12 education. This includes $750 million for the Tennessee Investment in Student Achievement Act (TISA), along with $125 million to increase teacher salaries. Improvements for higher education include $200 million for TCAT infrastructure improvements, $500 million to career and technical education grants for high school and middle school students, $66.3 million for a 4% salary increase within higher education, and $88 million for GIVE and HOPE scholarship expansions, bringing the scholarship award to $5,700 per year for juniors and seniors and $4,500 per year for freshman and

There was also the issue of a new domed stadium for Nashville, which emerged late in the closing weeks of session and required extensive negotiation and drawn out debate. In the end the House and Senate compromised and included a $500 million bond appropriation for a new facility, to be built on the East Bank of the Cumberland River in downtown Nashville, right next to Nissan Stadium. As is the case with most stadium proposals, the plan drew both passionate support and criticism, with opponents criticizing such a large taxpayer investment designed to largely benefit Nashville. Meanwhile, supporters maintain that a new stadium will dramatically transform the East Bank, especially paired with the new Oracle campus that is being built just north of the stadium. Supporters also argue that with Nashville’s emergence as a worldwide destination, a new stadium is necessary to host events such as Super Bowls, Final Fours, and the College Football Playoff. Early estimations project that the overall cost will fall somewhere in the $2 billion range, meaning that both the Titans organization and the City of Nashville will also need to contribute substantial sums to the effort.

Governor’s Education Funding Reform Passes Both House and Senate; Headed to Governor’s Desk for Signature

In what marked as perhaps the crowning legislative achievement of his first term in office, Governor Bill Lee’s K-12 education funding formula — known as the Tennessee Investment in Student Achievement (TISA) Act – received its final approval on the last day of session. The current formula stems from a decades-old Basic Education Program, which has been criticized as being outdated and not properly in line with students’ needs. The new funding plan is the culmination of months of engagement that began in October with numerous education stakeholders convening to provide input to various committees.

Beginning in the 2023-24 school year, the TISA formula will invest $9 billion in total education funding, including state and local funds, and includes $1 billion in new recurring state funds and $750 million in one-time state funds this year. Under the new funding formula, local education districts will receive more funding than they do under the current BEP formula, and the total local contribution will not increase for four more years. The exact increases will depend on the student population being served in each district.

The plan features a base funding rate of $6,860 per student, weighted for districts with higher need students, such as those who are economically disadvantaged or have unique learning needs. TISA also includes a direct funding component that provides additional dollars for high-impact programs, such as K-3 literacy efforts, CTE courses and public charter schools.

As for price tags, the TISA formula allocates $6.6 billion for base funding for every K-12 public school student; $1.8 billion in additional funding allocated based on weights to address specific student needs; $376 million in direct funding to support learning opportunities beyond the classroom, like tutoring; and $100 million in outcomes funding to be awarded based on student achievement. Under this formula, $125 million will be allocated to fund an increase in existing teacher salaries this fiscal year, which will carry over to the TISA base component for salaries moving forward. This particular funding change aims to address a major frustration with the current BEP formula, which makes it difficult to provide
additional funding allocations specifically for teacher salary increases. TISA also allocates additional education funding for fast-growing school districts with at least 2% growth from the school year prior. Fiscal capacity will be calculated at the county level using the current 50/50 split between the TACIR and University of Tennessee CEBER models. The state board will periodically monitor whether additional changes to the fiscal capacity calculation are needed. TISA also has reporting and district accountability requirements, including an annual report prepared by the Department of Education to be delivered to the General Assembly that details academic analysis, accountability report cards, local district TISA
review requests, and a review by the state Comptroller. Additionally, local school boards will have an opportunity to provide input on student achievement each school year and describe how the local budget and expenditures enable districts to progress student outcomes. In a statement released yesterday, Governor Lee said, “Today is a tremendous day for Tennessee students. After months of engagement with thousands of Tennesseans, our state will have a new,
innovative K-12 funding formula that improves public education by putting our kids first.”

Smith Resigns and Pleads Guilty; Multiple Members Subpoenaed to Appear Before Grand Jury

In March, around the high-water mark of legislative activity, Capitol Hill was rocked by the stunning resignation and subsequent plea bargain of Rep. Robin Smith (R-Hixon), who pled guilty to federal wire fraud charges. Smith, a former House Insurance Committee Chair, had seemingly been a target in an FBI investigation since January, 2021, when federal agents raided her Chattanooga-area home and her office in Nashville, along with a few other lawmakers and legislative staff.

Smith’s resignation and guilty plea stemmed from her involvement and cooperation with a political consulting firm that is alleged to have been fronted by a former Chief of Staff for then-Speaker Glen Casada. The staffer, Cade Cothren, was alleged to have been operating the firm under the assumed name and identity of “Matthew Phoenix” and accused of offering campaign consulting and mail services for legislators – even though no legislator actually met “Phoenix” in person — in addition to acting as an approved vendor for the General Assembly’s mailing service program. It is alleged that the firm profited from taxpayer funds.

While the charging document against Smith identifies both Casada and Cothren as conspirators in the scheme, neither has been charged to date. Two legislative staff members that had been put on paid leave as a result of the investigation were terminated in the days after the Smith plea bargain was announced.

In conjunction with her guilty plea, Smith said in a statement, “There are no excuses. I intend to cooperate fully as a witness with the federal government and do whatever I can to assist the government in this regard. I have resigned as Representative of the Tennessee House. I did so out of respect for the honor of Tennesseans, my commitment to public service over the last several decades, and of course, my Christian faith. I believe in forgiveness and I hope to earn yours over time.” In Smith’s plea deal, prosecutors agreed to recommend a lesser sentence if she “provided substantial assistance to the government in the investigation and prosecution of another person who has committed an offense,”
though the court is not bound to follow the prosecution’s recommendation.

On the heels of Smith’s resignation, a number of lawmakers were subpoenaed to appear before a federal grand jury as part of an ongoing FBI investigation into Capitol Hill corruption. The list included House Speaker Cameron Sexton (R-Crossville), who stated he was called to give factual information and is not a target of the investigation. Sexton added that he has been cooperating with federal agents since he won election to the Speaker’s post in the fall of 2019 following Casada’s resignation, but has declined to reveal details about his testimony.

Fifth District Drama Becomes National Story

Despite the court battle over state level maps, the epicenter of the redistricting issue has been the 5th Congressional District, which is currently held by a Democrat, Jim Cooper. The old 5th District, which was largely comprised of Nashville/Davidson County – frequently described as an island of blue in a sea of red – is now divided into three parts. A large portion of the county is now combined with strong Republican suburbs such as Williamson County (Brentwood; Franklin) and Wilson County (Mt. Juliet; Lebanon), along with rural and conservative counties such as Lewis, Maury, and Marshal. With these changes, Democrats will have a tall task gaining a Congressional seat in the foreseeable future, subject of course to further population growth in the Nashville metropolitan area. The potential consequence is
that Republicans could dilute partisan support from their districts and open the door for a competitive and possibly losing race for them, as has happened before in states like Georgia, specifically in the districts surrounding Atlanta.

The announcement that the 5th Congressional district would be broken up – which was quickly followed by Cooper’s announced retirement – set off a feeding frenzy among Republican hopefuls. Several threw their hats into the ring in the following weeks. Some had well-known track records, such as former House Speaker Beth Harwell and retired Army Reserve Gen. Kurt Winstead. Others were either newcomers or relative unknowns, such as former U.S. State Department spokeswoman Morgan Ortagus, businessman Baxter Lee, and music video producer Robby Starbuck. Ortagus was immediately thrust into the spotlight, receiving an endorsement from President Trump before she even formally
entered the race, and quickly became a target of critics. Some labeled her as a “carpetbagger” given her newcomer status in Nashville, a charge that gained steam following a radio interview where Ortagus could not identify the interstates that run through Nashville or identify Tennessee’s legendary former football coach, General Robert Neyland.

Newcomers Ortagus and Starbuck faced their first major hurdle when the legislature passed a bill that imposed residency requirements on congressional candidates that would have knocked both out of the race, but that bill was not signed into law by Gov. Lee prior to the filing deadline for candidates – perhaps intentionally — and could not apply retroactively. Then last week, in a move that has drawn national attention and may have far-reaching consequences, the Tennessee Republican Party State Executive Committee voted to bar Ortagus, Starbuck and Baxter Lee from the race on a technicality. The TNGOP deemed them ineligible to run as Republicans for failing to meet the eligibility requirement of
having voted in three of the last four statewide Republican primaries. With the three removals, Harwell, Winstead, and Maury County Mayor Andy Ogles are among the most prominent remaining candidates. Current state Senator Heidi Campbell (D-Nashville), has entered her name into the ring on the Democratside.

It remains to be seen whether there will be any fallout from the decision to bar Lee, Ortagus and Starbuck, but it is possible. The move has been widely criticized by Republicans at the national level, including Donald Trump, Jr. With Nashville being a leading contender for hosting the 2024 Republican National Convention, it is possible that the move will impact Nashville’s prospects. Indeed, South Carolina Senator Lindsey Graham said in a tweet, “I can’t imagine having the 2024 Republican National Convention in a state that would allow this type of corrupt politics.”

Lawmakers Pass Legislation Raising Nashville Hotel-Motel Tax

Current negotiations have the state contributing $500 million in bonds, the Titans paying $700 million, and the city of Nashville contributing $700 million. The $500 million in bonds was passed as part of the budget, and the Adams Family, owners of the Tennessee Titans, are essentially investing everything that they have to come up with their $700 million to cover their share. As a way to help foot the bill for Metro Nashville’s share of the new stadium, state and local lawmakers have passed a bill raising Nashville’s hotel-motel tax, a move that has been supported by the hospitality community. Rep. Bill Beck (D-Nashville) has been leading the charge in this effort, which would pave the way for Nashville’s Metro Council to raise the tax from 6% to 7%, a move which would likely generate an additional $10- $20 million in revenue. The tax increase would be largely paid for by tourists and work hand in hand with other funding streams, covering most if not all of Metro’s estimated $700 million contribution over an extended period of time.

Team officials hope to have renderings and designs by this fall, which will determine whether the stadium will feature a fixed roof or retractable roof along with the number of seats and a final estimate. The Titans are targeting an opening by the 2026 NFL season. The economic impact for a domed stadium is estimated at $30 billion over the next 20 to 30 years, according to a Finance and Administration report, with sales taxes in and around the stadium projected at $400 million.

“Truth in Sentencing” to Become State Law

As the session reached the closing weeks, a criminal justice initiative that was labeled “Truth in Sentencing” began to attract considerable attention. The bill provided that individuals convicted of a number of felonies serve 85% to 100% of their sentence before release. Criminals convicted of nine different offenses including first-degree murder, criminally negligent homicide, aggravated vehicular homicide, and especially aggravated kidnapping would have to serve 100% of their sentence undiminished by any sentence reduction credits for which the person is eligible or earns, although a
person convicted of one of these nine offenses could still earn credits that can be used for increased privileges, reduced security classification, or for any purpose other than the reduction of the sentence imposed by the court. While very popular with the legislature, the bill stirred strong concerns with Governor Lee and other criminal justice reform advocates, and there were rumors that the Governor might veto the measure. That led to discussion that the session might need to extend into May to give the legislature an opportunity to override any possible veto. In the end the sides were able to compromise and the bill gained successful passage and made it into the budget. There are still concerns
about the price tag, as the Tennessee Department of Correction estimate it will cost $96 million over the next decade.

Other High-Profile Issues

A number of high-profile bills saw their fate determined this session. Those include the following:
• COVID-19 Vaccination Policy: Status: Passed. Requires an employer with a mandatory COVID-19 vaccination policy to grant exemptions for medical or religious reasons to any who files a request.
• Campaign Finance: Status: Passed. Requires 501(c)4 groups to report any campaign expenses of more than $5,000 within 60 days of an election.
• Critical Infrastructure: Status: Passed. Preempts local governments from taking action that would prohibit fossil fuel pipeline development or expansion. It does not prohibit local officials from taking action when there’s a conflict with a program administered or approved by the state, including groundwater and drinking water protections.
• Name/Image/Likeness for College Athletes: Status: Passed. Revises last year’s NIL law to, among other things, allow coaches and other college officials to take a greater role in developing NIL opportunities for athletes, including direct coordination with entities that serve to benefit a university’s athletic program. Also allows for group licensing.
• Transgender Pronouns: Status: Passed. Allows public school teachers to refuse to “use a student’s preferred pronoun” if the pronoun is “not consistent with the student’s biological sex.”
• Transgender Athletes: Status: Passed. Bans transgender athletes at the college level from participating in women’s sports in Tennessee.
• Tobacco Use: Status: Passed. Allows any municipality in a county having a population of more than 180,000 to prohibit bars and restaurants from permitting smoking. The bill exempts cigar bars.

Looking Ahead: Lee Looks to Have Smooth Sailing for Second Term; Multiple New Faces in General Assembly Following Resignations and Retirements

With the April qualifying deadline in the rearview mirror, candidates will quickly move into campaign mode, raising money for the primary and general campaigns and in many cases becoming familiar with their newly-reconstituted districts. Many legislators have primary opponents, which heightens the sense of urgency.

One candidate that looks to have a more relaxing summer this time around is Governor Bill Lee, who finds himself in a very strong position as he prepares to campaign for a second term, and will not face a primary opponent. For Lee, that is a welcome departure from the hotly-contested 2018 gubernatorial primary, where Republican candidates engaged in a spirited campaign and shelled out a combined a combined $49 million. Lee served as a dark-horse candidate in that primary, taking on the likes of wellknown figures such as U.S. Rep. Diane Black, House Speaker Beth Harwell, and Knoxville entrepreneur Randy Boyd, only to mount a stirring rally in the final weeks to score a victory that was seemingly
improbable at the beginning of the summer.

Four years later, Lee enjoys high approval ratings, a track record of leadership based upon his handling of the pandemic, a strong economy with tax revenues well exceeding budgeted estimates, and the enviable status of leading one of the top states in the country for economic development. Lee can point to worldwide brands such as Amazon and Oracle now building major headquarters facilities in Nashville and bringing thousands of high-paying jobs, not to mention a Ford electric-truck plant being built outside of Memphis that will be unprecedented in its size and scope. Lee has amassed a large campaign war chest that will only grow larger in the coming months, prepping him for November’s general election, where he will take on the victor from a field of relatively-unknown and lightly-funded Democratic candidates. Those candidates include community leader Carnita Atwater, Nashville physician Dr. Jason Martin, and Memphis City Council member JB Smiley Jr. To illustrate the scope of the challenge facing the Democratic nominee, according to April 11 campaign finance disclosure reports, Lee has 56 times more cash in the bank than the rest of the candidates in the field.
Tennessee’s congressional delegation looks to be relatively unchanged, with the exception of the Fifth Congressional district discussed above. Look for the GOP to increase their 7-2 advantage in the delegation to 8-1, a margin that still causes longtime political observers to shake their heads, recalling a time not long ago when the Democrats were Tennessee’s dominant party. Indeed, in 1993 the Democrats had a strong legislative majority, enjoyed a 6-3 advantage in Tennessee’s Congressional delegation, and also occupied both U.S. Senate seats as well as the Governor’s mansion. By November, the GOP will likely have every one of those positions, with the exception of a lone Congressional seat,
and have long held a supermajority in the legislature.

For its part, the General Assembly heads into election season with an abnormally high number of members having announced that they will not be seeking reelection, either in pursuit of other positions or retirement from politics altogether. The number of departures from the legislature is believed to be unprecedented, and along with new district maps, will present an interesting campaign season, as well as more than a few new faces for the 113th General Assembly.

Current House Members not seeking reelection:
District 18: Eddie Mannis (R-Knoxville);
District 24: Mark Hall (R-Cleveland). Running for the state Senate.
District 32: Kent Calfee (R-Kingston).
District 35. Jerry Sexton (R-Bean Station).
District 52: Mike Stewart (D-Nashville).
District 59: Jason Potts (D-Nashville).
District 61: Brandon Ogles (R-Franklin).
District 63: Glen Casada (R-Franklin). Former Speaker; running for Williamson County Clerk.
District 67: Jason Hodges (D-Clarksville).
District 69: Michael Curcio (R-Dickson); Chairman, House Criminal Justice Committee.
District 71: David Byrd (R-Waynesboro).
District 75: Bruce Griffey (R-Paris). Running for circuit judge.
District 79: Curtis Halford (R-Dyer); Chairman, House Agriculture and Natural Resources Committee.
District 91: London Lamar (D-Memphis). Appointed to Senate vacancy and running for the upper chamber.

Current Senate members not seeking reelection:
District 9: Mike Bell (R-Riceville); Chairman, Senate Judiciary Committee.
District 19: Brenda Gilmore (D-Nashville).
District 31: Brian Kelsey (R-Germantown); Former Chairman, Senate Education Committee.

Bill Tracking Report Update: The Slate Gets Wiped Clean

Finally, a note about the bill tracking reports — since 2022 is the final year of a two-year legislative session, any bill that did not pass in the 112th General Assembly is dead and will not carry over to the 2023 session. The 2023 session will be the first year of the 113th General Assembly, and will begin with a clean legislative slate, therefore any initiative from 2022 that did not pass will need to be reintroduced at that time.

On behalf of the Tennessee Government Relations Team at Adams and Reese, it has been an honor and a privilege to serve you before the Tennessee General Assembly, and we wish you and yours good health and a relaxing remainder of spring and summer. For our part, we will quickly turn the page to focus on fundraising season and preparing for the 2023 legislative session, so we will look to stay in touch as we move into the summer months. Best regards.