BREAKING: FORMER TENNESSEE HOUSE SPEAKER CASADA, CHIEF OF STAFF ARRESTED BY FBI FOLLOWING FEDERAL INDICTMENT ON THEFT, KICKBACKS, MONEY LAUNDERING
In a development that has been brewing for some time, former Tennessee House Speaker Glen Casada and his former Chief of Staff, Cade Cothren, were both arrested by FBI agents at their homes at 7 a.m. last Tuesday morning. The arrests come in the wake of a 20-count federal indictment charging the two with conspiracy to commit the crimes of theft, wire fraud, bribery/kickbacks, and money laundering. If convicted, the charges carry maximum sentences of 20 years in prison. Both Casada and Cothren appeared in court following their arrests, where they pled “not guilty,” and in a comment to the media Casada’s attorney promised to mount “a vigorous defense” to the charges. They were released from custody on Tuesday.
The arrests mark the latest development in the FBI’s ongoing investigation of a shadowy political consulting firm, Phoenix Solutions, which is alleged to have been secretly operated by Cothren and Casada. The FBI raided the offices and homes of a handful of Republican lawmakers and staff in January, 2021, as part of an investigation into the laundering of campaign finance money toward Phoenix, which was originally established to offer services to legislators facing primary challenges and was later expanded to act as a mail vendor for the General Assembly. Then in March of this year, former House Insurance Committee Chair Robin Smith (R-Hixson) resigned from the legislature a day before pleading guilty to a federal wire fraud charge for her role in the scheme. Federal prosecutors alleged that Smith, Casada and Cothren had schemed to set up and run Phoenix, with Cothren running the firm and operating under a false identity of “Matthew Phoenix.” Smith admitted her guilt and pledged to cooperate fully as a witness for the federal government.
Casada decided not to run for reelection this year, instead opting to run for county clerk in his home county, Williamson County. He lost that race by a landslide.
After first being elected to the legislature in 2001, the ambitious Casada quickly rose through the leadership ranks. He was elected House Republican Caucus Chairman in 2004, and went about aggressively fundraising and recruiting Republican candidates for office. He is credited for leading the GOP’s strategy that in 2008 helped it gain a majority in the House for the first time since Reconstruction. He followed that up by leading the efforts in 2010 to help the GOP obtain the supermajority that it still enjoys today. Casada ascended to the role of House Majority Leader in 2017, and two years later seized the opportunity to run for Speaker when Beth Harwell (R-Nashville) stepped down to run for Governor.
During the 2019 session, Casada quickly embraced the full power of the Speaker’s role. Among other things, he kept the vote for the school voucher bill open for 40 minutes as he worked to break a deadlock and ensure the bill’s passage. He also stripped certain members of leadership positions, and was accused of deploying staff members as “hall monitors,” acting as his eyes and ears in legislative hallways. By the last week of the 2019 session, Casada looked to be on the path to become one of the most powerful Speakers in Tennessee history, but was blindsided on the final day of session by a news story that alleged he had participated in a text message thread with Cothren that had contained both sexist and racist messaging. That was followed by a story alleging that Cothren had engaged in the use of illegal drugs. The onslaught of negative press continued on a frequent basis until July of that year when the House Republican Caucus delivered an overwhelming vote of “no confidence.” Casada resigned the next month, and he was replaced in the role by Cameron Sexton (R-Crossville). Casada spent the next three sessions relegated to back bencher status, and for the last 19 months has been hounded by allegations of impropriety stemming from the FBI raid in January of 2021. With Tuesday’s arrest, it effectively punctuates one of the more stunning downfalls in Tennessee political history.
Speaker Sexton released the following statement:
“In Tennessee, we will not tolerate public corruption, defrauding the state, or bribery at any level. I commend the Federal Bureau of Investigation for its hard work, diligence, and dedication that resulted in [Tuesday] morning’s arrests.
As I have previously stated on several occasions, shortly after becoming Speaker in 2019, I began assisting the federal authorities during and throughout the investigation — including leading up to today’s indictments, and I will continue to do so if a trial is needed.
Together, our legislative body has stood strong over the past two years to take significant actions during this investigation by passing laws to strengthen campaign finance regulations and new ethics laws for elected officials and staff.
Today is a good day for Tennesseans because we did not turn a blind eye to these criminal activities.”
Tennessee Mid-Summer Update: New Laws in Place; Congressional Race Heating Up
With all of the state House seats and half of the Senate seats up for re-election, not to mention a hotly contested Congressional race that will likely take the GOP’s numerical advantage in Tennessee’s Congressional delegation from 7-2 to 8-1, this summer has been far from quiet. Plus, with the overwhelming number of predominately blue or red districts across the state, the August primary is the only competitive race in many instances. That means that campaign ads are increasingly filling the airwaves, fundraisers are filling calendars, and more and more voters are starting to take interest in the races. And as is custom, a raft of new state laws took effect on July 1, including one law that adds new reporting requirements for Political Action Committees (PACs).
New Campaign Finance/Ethics Law Contains Changes for PAC Reporting
Tennessee’s latest finance and ethics reform law took effect on July 1, and among other things will require greater openness and transparency from political candidates and political action committees (PACs) in an attempt to curtail bad actors and to shine light on so-called “dark money” groups. Going forward, PACs will experience the following changes:
- The new law deletes the so-called blackout provision whereby a PAC is prohibited from making a contribution to any candidate after the 10th day before an election until the day of the election. Going forward however, PACs must disclose most donations, loans, or expenditures made or received within the window of the last ten days before an election by the end of the next business day. The threshold amounts requiring next-day disclosure are as follows:
- $5,000 for statewide offices;
- $3,000 for senate elections; and
- $1,000 for any other state or local public office.
- The foregoing reports must include the amount, date, and a brief description of the contribution, expenditure, or loan reported. For independent expenditures, the report must include the name of the candidate or measure supported or proposed. For loans, the report must contain the name and address of the lender, the recipient of the proceeds of the loan, and any person who makes any type of security agreement binding such person or such person’s property for the repayment of all or any part of the loan.
- Established PACs (those already in existence as of July 1, 2022) have until January 31, 2023 to submit certification of the name and address of all officers of the committee and of all persons who directly control expenditures by submitting valid government photo IDs to the Tennessee Registry of Election Finance. If a PAC designates a new person under this law, the committee shall submit evidence of identification within thirty days of the designation. New PACs (those registered on or after July 1, 2022) are required to provide the above disclosures prior to making any expenditures or taking contributions.
- The law also makes the officer in charge of the committee’s expenditures personally liable for any fines assessed by the Registry. However, it prohibits the PAC from paying a fine issued against a candidate by the Registry. These penalties must not be paid using PAC funds.
- PACs must now ensure that all funds in a campaign account remain separate and segregated at all times from other funds, including personal funds. A candidate or PAC found to be in violation of this provision commits a Class 2 offense and is subject to a civil penalty of up to $25 per day and a maximum penalty not to exceed $10,000.
- In order to comply with an audit, PACs must retain copies of all checks, money orders, wire or account transfer statements, withdrawal statements, credit or debit statements, bank statements, vendor receipts, and other documentation directly resulting from a financial transaction involving the receipt or disbursement of any funds subject to disclosure for two years after the date of the election to which the records refer.
The law, which was sponsored by Lt. Governor Randy McNally (R-Oak Ridge) and House Speaker Cameron Sexton (R-Crossville), came as a result of an FBI investigation of campaign funding and activity in Tennessee. The investigation, which is ongoing, has resulted in a number of highly-publicized raids of legislator and staff offices and homes, as well as Rep. Robin Smith’s (R-Hixon) guilty plea for wire fraud and subsequent resignation from the General Assembly.
In a release, McNally stated that the law is “aimed at bad actors,” as well as “the various shell companies and shadowy PACs used by certain legislators to line their own pockets.” McNally added, “if you are working to influence the outcome of an election, the voters deserve to know who you are and what you are doing. What could possibly be wrong with that? The fact this is even in question demonstrates the need for the legislation.”
As it relates to candidates, the new law requires disclosure of all expenditures and sets a cap on non-itemized expenses at $2,000 per statement period. A candidate’s contributions will be audited automatically for reporting periods beginning on or after January 16, 2023, if more than 30% of the report contains un-itemized contributions.
The law also prohibits candidates and political action committees from utilizing pre-checked or pre-marked boxes in a solicitation authorizing or requiring future contributions to that candidate or committee. Such a request must now be accepted and acknowledged in writing by the potential contributor in clear and precise language.
Further, the law mandates that nonprofit organizations classified as 501(c)(4), 501(c)(5), or 501(c)(6) disclose any expenditures of more than $5,000 made on communications that feature a candidate’s name or image which take place within 60 days of an election. However, there are exceptions for communications to the nonprofit’s members, lobbying during a special session, and communications to groups that have opted in to receive such communications.
Other New Laws of Note Include Sales Tax Compensation, Energy Infrastructure, and Suspension of License Plate Fees
The McNally-Sexton ethics reform law was far from the only law that took effect on July 1. Other laws of note include the following:
Compensating vendors for sales tax collections: Vendors in Tennessee are charged with hiring the personnel, investing in software, and devoting the time necessary to collect more than $11 billion in sales tax annually. Until 2000, vendors were compensated for their work, but have yet to receive any financial incentive since that year due to the state’s fiscal cutbacks. This newly enacted law restores compensation for vendors in the form of a 2% remuneration on the first $2,500 in sales tax collected and 1.15% on all sums over $2,500 on each report.
Energy Infrastructure: Under this new law, local governments are now prohibited from blocking the development of infrastructure while preserving municipal zoning power. The law applies to storage tanks, pipelines, gas transmission lines and other infrastructure essential to fuel the economy and meet transportation and industry demands. In addition to zoning, localities may still use their police powers to regulate certain aspects of construction and maintenance to reduce or prevent the risk of an imminent and substantial threat to human safety. This includes the localities’ right to charge reasonable, cost-based compensation for the use of the locality’s highways and streets. Supporters of the new law argued that given the highly regulated nature of the energy industry and the fact that energy infrastructure regularly crosses state lines, one municipality should not be able to block its development unilaterally.
License Plate Registration Fees Suspended: From July 1, 2022 until June 30, 2023, Tennesseans will not have to pay the state’s annual license plate registration fee of $23.75.
Certificates of Need: As of July 1, the Board of Licensing Healthcare Facilities merged with the Health Services and Development Agency to form the Health Facilities Commission. This change was a result of a recommendation from the HSDA to improve the state’s Certificate of Need process.
Truth in Sentencing: A rift developed between Governor Lee and Republican legislative leadership over this bill, which became law without the Governor’s signature. The law provides that individuals convicted of certain offenses must now serve the entirety of their sentence before being eligible for release. These offenses include: (1) aggravated assault; (2) vehicular homicide; (3) possessing a firearm during the attempt or commission of a dangerous felony; (4) aggravated kidnapping; (5) aggravated robbery; (6) carjacking; (7) aggravated burglary; (8) aggravated arson; and (9) the manufacture, delivery, or sale of controlled substances which carry an instant offense as a Class A, B, or C felony if the person has two or more prior convictions for this offense. The measure received strong bipartisan report in the General Assembly, which promoted the bill as showing that Tennessee is tough on crime; however, it ran into strong opposition from Governor Lee and criminal justice reform advocates, who argued that the legislation would result in significant operational and financial strain such as higher recidivism and prison overcrowding, with no reduction in crime.
Overdose prevention: Effective July 1, healthcare providers that offer a prescription for an opioid to a patient must also offer a prescription for naloxone. Naloxone can reverse an overdose if administered in time.
Tire dumping penalties: This law makes it a Class E felony charge for a first-time conviction when disposing of eight or more tires for commercial purposes. It also creates a Class A misdemeanor charge of aggravated littering for the unauthorized and willful disposal of two or more tires on public or private property.
Residential blasting: To address neighborhood concerns about residential blasting, this law updates blasting requirements, including the addition of safety processes and protocols. The law aims to reduce vibrations, improve communication with the public, and clean up and repeal standards that have been in effect since 1975.
Human trafficking prevention: This new law expands the mandatory training in school to detect and prevent human trafficking to all school employees, including personnel such as janitors, bus drivers, and cafeteria workers. Prior to the implementation of the new law, only teachers were required to undergo the training.
Public camping prohibited: This law makes it a felony for a person to camp on state property in areas that have not been designated as camping areas, and a misdemeanor to camp along areas such as an interstate highway, a ramp,or under an overpass. Critics argued that the law further criminalizes poverty and homelessness, and the bill became law without Governor Lee’s signature.
Election Update: TN-5 Has Become a Three Horse Race; Several Intriguing Races to Replace Departing Legislators
Early voting for Tennessee’s August 4th primary election began last Friday, and all eyes are on the newly-drawn 5th Congressional District. That seat, which has historically been considered “safely Democrat” and for the last 20 years has been occupied by Jim Cooper (D-Nashville), underwent a dramatic change in the most recent redistricting process. The district was redrawn by the GOP-dominated General Assembly in a fashion that should now make it “lean Republican,” a change that led Cooper to decide that he would not seek an additional term. Cooper did not spare his criticism of the legislature in the process. “Despite my strength at the polls, I could not stop the general assembly from dismembering Nashville. No one tried harder to keep our city whole,” Cooper said in a statement.
The approval of the newly-constituted district, paired with Cooper’s announcement, set off immediate, widespread interest in the seat as well as a feeding frenzy of prospective candidates. Even President Trump entered the fray to endorse a candidate. The field was narrowed somewhat in April when the Tennessee Republican Party eliminated three formidable candidates for a lack of bona fides, leaving voters with a race that essentially comes down to three candidates:
- Beth Harwell, the former Speaker of the state House;
- Andy Ogles, the mayor of Maury County; and
- Kurt Winstead, a retired Brigadier General in the TN National Guard.
While Harwell leads in name recognition, Ogles’ strong conservative record makes him a dark horse candidate, and Winstead’s fundraising numbers suggest he could be a strong contender as well. Friday’s fundraising disclosures show that Winstead received $381,980 in donations and loaned his campaign $660,000 in the second quarter. However, he also paid back $460,000 of an earlier loan, totaling a net $581,980 in collections for this quarter. Adding that amount to the $519,625 from first quarter contributions and the $20,000 remaining from his initial $480,000 loan, Winstead’s total is roughly $1.1 million since joining the race. Harwell raised $421,360 in the second quarter, an improvement over her first-quarter collections of $353,927. Harwell’s total receipts to date are $775,287. Surprisingly, Ogles reported no fundraising numbers by the July 15 Federal Election Commission deadline. The missed deadline will likely subject Ogles to a fine from the FEC.
On the Democrat side, State Senator Heidi Campbell (D-Nashville) is replacing Cooper as the party nominee and is running unopposed in the primary. However, Campbell will face a stiff test in November’s general election, as the GOP has long coveted a “Nashville” seat in Congress, not to mention the ability to shift the balance of power in Washington as well.
The election intrigue is not limited to Congress. The General Assembly will also see a number of interesting races, with a handful of hotly contested primaries taking place to determine who will replace retiring incumbents such as Sen. Mike Bell (R-Riceville), Sen. Brenda Gilmore (D-Nashville), Rep. Kent Calfee (R-Harriman), Rep. Mike Stewart (D-Nashville), Rep. Brandon Ogles (R-Franklin), Rep. Glen Casada (R-Franklin), and Rep. Michael Curcio (R-Dickson). As noted previously, the plethora of safely Democratic or Republican districts frequently means that all of the action is in the primary, with the general election often standing as a mere formality.
We will update you following the outcome of the August primary elections. In the meantime, we hope you are having a safe and enjoyable summer, and please don’t hesitate to reach out if you have any questions.
With the legislature adjourning several days ago, we thought now would be a good opportunity to bring you up to date on the revision of the towing statute that is PC 826. This was primarily sponsored by Senator Bailey and co-sponsored by Senators Powers and Stevens in the Senate and primarily sponsored by Representative Marsh and co-sponsored by Representative Hazelwood in the House.
CURTAIN CLOSES ON 2022 TENNESSEE LEGISLATIVE SESSION
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.
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.
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.
Education Funding Formula Unveiled, Harwell Enters 5th District Race, and Redistricting Lawsuit Filed
With lawmakers expressing a desire to adjourn the 2022 regular session by mid-April and some committees beginning to announce final calendar dates, it’s starting to feel like the General Assembly is rounding into form, although it appears that the overall volume of legislation traveling through committees is somewhat less than in recent sessions. The legislature has reached the halfway point for budget hearings in committees, and more bills are finding their way to committee agendas. The Cordell Hull building took on a “pre-pandemic” feel this week, with crowded hallways and gathering areas due to a number of groups having “Days on the Hill,” as well as an increasing volume of legislation moving through committees.
Lee Administration Releases Performance Based Education Funding Formula
Governor Bill Lee’s long-awaited, student-based education funding formula — known as the Tennessee Investment in Student Achievement (TISA) Act — was unveiled last week, reflecting the Governor’s cornerstone legislative initiative for the 2022 session. At a press conference at the Capitol, the Governor described the plan as “student centered and student focused,” and one that works for families, teachers and the state. In the process, the Governor described the current BEP formula as cumbersome, bulky and outdated, while arguing that the new plan would support students in a transparent way. “The Tennessee Investment in Student Achievement formula will be a powerful tool the state can use to ensure we are putting all students on a path to success,” stated Governor Lee. “By serving our students well and giving the public greater insight into how their tax dollars are supporting students, the TISA represents an exciting opportunity to improve educational outcomes, strengthen our workforce and propel Tennessee forward.” The Governor also argued that “we need to invest more in our public schools in our state, but we don’t need to invest in a bulky, out of date formula. The BEP formula doesn’t deserve a billion dollars to be put in it, but our students do deserve a billion-dollar increase for public education.”
The plan is the culmination of a process that began in October, with numerous 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 proposed formula, local education districts would receive more funding under TISA than they would under the current BEP funding formula, and the total local contribution would not increase for four more years. According to a Tennessean report, under the plan Memphis-Shelby County schools would see a 12% funding increase, Nashville-Davidson County would see a 7% increase, and Knoxville-Knox County would see a 12% increase.
The plan also features a base funding of $6,860 per pupil, weighted for economically disadvantaged students, and anywhere from $1,000 to $10,000 in additional funding for students with unique needs. There are also various allowances made for students in grades K-3, and also for fourth grade literacy programs.
As for specific price tags, the TISA formula proposes $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 proposal, $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. In addition, this TISA formula allocates additional education funding for fast-growing school districts with at least 2% growth from the prior school year. The TISA Act 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.
The bill must now face the crucible of the legislative process, where seven different committees will vet the proposal before it reaches the respective floors. Some lawmakers have expressed reluctance to pass such significant legislation in a fairly compressed time frame, especially with the widespread desire to adjourn in mid-April and return home to hit the campaign trail and familiarize themselves with what in many cases are decidedly different districts due to redistricting.
Harwell Enters the Race for Tennessee’s 5th Congressional District.
Last week, former state House Speaker Beth Harwell (R-Nashville) officially announced she will be running for the Republican nomination in Tennessee’s new look 5th Congressional District, joining an increasingly crowded field of candidates. Harwell, who became the first female Speaker in General Assembly history in 2011, stepped down from the post in 2018, when she decided to leave the House and pursue the GOP nomination for Governor. Harwell is a longtime Nashville resident and currently serves on the board of the Tennessee Valley Authority. In entering the race, she joins the likes of Trump-endorsed former State Department aide Morgan Ortagus, former National Guard Brigadier General and Nashville attorney Kurt Winstead – who also joined the race last week — and businessman Baxter Lee.
Tennessee Sued Over New State Redistricting Maps
Last Wednesday, three private citizens filed suit against Gov. Bill Lee, Secretary of State Tre Hargett, and Tennessee Coordinator of Elections Mark Goins, alleging the General Assembly unconstitutionally drew and passed the new state House and Senate district maps to further entrench the Republican supermajority. The lawsuit is backed by the Tennessee Democratic Party and was filed in Davidson County Chancery Court. While the suit does not address the General Assembly’s new congressional district lines, which divide Nashville three ways, that map is expected to be the subject of additional litigation in the future.
With lawmakers targeting a mid-April adjournment, the next several weeks will be fast and furious in terms of legislative activity, with many bills seeing their fate determined over the next 3-4 weeks.
Headlines Aplenty in Tennessee as State of the State Approaches: Cooper Makes Decision on Reelection; Trump Weighs in On Congressional Race; Supreme Court Confirmation and Legislative Expulsion Trial Set for This Week
The 2022 session is beginning to grind into gear as a momentous week looms ahead, featuring the State of the State address, a Supreme Court confirmation, a potentially historic expulsion hearing, and bill filing deadlines. Combine that with last week’s finalization of the redistricting maps and a longtime Congressman’s announcement that he will not seek reelection, and the Tennessee political landscape is not lacking for headlines or intrigue.
Redistricting Effects: Cooper Announces Retirement; Trump Endorses Ortagus
The 112th General Assembly has completed its once-a-decade legislative task of redistricting, with the House passing the Republican backed proposals last Monday and the Senate finishing up the job on Wednesday morning. The entire process and the new district maps will either be bemoaned or celebrated depending on which side of the aisle one identifies with, as Davidson County is now splintered into three Congressional Districts through the heart of Nashville.
The hot button redistricting issue was always what would become of Rep. Jim Cooper’s current 5th District. 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 Republican redistricting plans will now head to Gov. Bill Lee’s desk and await his signature as Democrats prepare potential legal action.
In the midst of the changes being formalized, Congressman Jim Cooper (D-Nashville) made the unsurprising announcement last week that he would not be seeking reelection for another term. Within hours of that announcement, former President Donald Trump was already offering his endorsement for a potential GOP replacement. Trump announced his support for Morgan Ortagus, a Fox News Commentator and former spokeswoman for Secretary of State Mike Pompeo, who just moved to Nashville a few months ago to work for a Nashville-based healthcare investment firm. Trump’s press release described Ortagus as “an absolute warrior for America First and MAGA,” and said that she would have his “complete and total endorsement” if she decided to run. Despite being a virtual unknown in the Nashville area before Trump’s announcement, Ortagus quickly became a household name in Republican circles around Nashville. It also remains to be seen what impact President Trump’s endorsement will have on the field of potential Republican contenders, which seemed to have been growing by the day.
Governor Lee Announces Over $3 Million in Campaign Contributions in Second Half of 2021
Heading into the final year of his first term, Governor Bill Lee gave an update on the size of his reelection war chest, including the fact that he had raised more than $3 million in campaign contributions during the second half of 2021. Governor Lee, who partially self-funded his 2018 gubernatorial bid, is not expected to report any loans to his reelection campaign. Last summer, Lee reported raising $3.6 million since winning the gubernatorial election in 2018 and spending $1.85 million during the same period. The Governor begins his reelection year with almost $5 million on hand, a strong deterrent for any would-be challenger on either side of the aisle. While the generally popular Governor is not likely to attract an opponent for August’s Republican primary, his would-be Democratic challengers will have an even tougher hill to climb given the fundraising disadvantage they will face. So far several Democrats have announced plans to challenge Lee, including Nashville physician Jason Martin and Memphis City Council member JB Smiley, Jr. The latest campaign finance disclosure reports are due by January 31, which is the same day the governor is scheduled to deliver his final State of the State address for his first term in office.
Lee to Deliver Final State of the State of First Term
In what is often considered the true beginning of any legislative session, Governor Bill Lee will deliver his annual State of the State address to lawmakers and fellow Tennesseans on Monday evening, January 31. The Governor will reflect on recent accomplishments, give an update on the state’s fiscal condition, and outline his top legislative priorities and spending requests for the year. The state budget is always the top issue and will be extremely important this year due to strong tax collections, excess revenues, and an extraordinary amount of federal funds disbursed to Tennessee. There is also the possibility that the proposed budget will not be released until a week after the State of the State is delivered, a relatively unusual move.
The Governor is also expected to devote significant time to discussing education funding, a significant priority in 2022, and the attempt to overhaul the state’s K-12 education funding formula. Infrastructure is also expected to be a top priority this year, based upon recent comments by the Governor as well as Tennessee’s receipt of $3.9 billion from the American Rescue Plan and another $8 billion as part of the Infrastructure Investment and Jobs Act passed by Congress last year. Lee has stressed the need to invest in broadband, and water and wastewater improvements.
Sarah Campbell Set to Fill Vacant Tennessee Supreme Court Seat
Last month, Gov. Bill Lee announced that he would be naming associate solicitor general Sarah Campbell to the Supreme Court, filling Justice Cornelia A. Clark’s vacant seat. This week the Legislature will hold confirmation hearings in the Senate Judiciary Committee and House Civil Justice Committee. Campbell, 39, grew up in Rogersville, TN and attended Duke law school. Before joining the Tennessee Attorney General’s office in 2015, Campbell clerked for U.S. Supreme Court Justice Samuel Alito and worked at Williams & Connolly in Washington, DC.
Robinson Trial Set; Could Be First Sitting Member Ousted in Modern History
Last Monday, Lt. Gov. Randy McNally (R-Oak Ridge) announced that Sen. Katrina Robinson’s (D-Memphis) expulsion trial will be held before the full Senate on Wednesday, February 2, potentially resulting in the first Senate expulsion in modern history. Robinson had been the defendant in a recent federal trial in Memphis, where a jury originally convicted her of four federal wire fraud charges, two of which were later dismissed by a federal judge. The remaining two convictions related to the misspending of federal grant money that was actually meant for her nursing school, and putting those funds to personal use, including her wedding. The federal judge denied Robinson’s motion for acquittal on those two charges, thus upholding the jury verdict.
Lt. Gov. McNally’s announcement came just days after the Senate Ethics Committee recommended expulsion after weighing Robinson’s convictions. While Robinson supporters argue that the alleged acts predated her election in 2018 and that expulsion would be premature due to her sentencing hearing in federal court not being scheduled until March of this year, the Ethics Committee determined last week that the convictions amount to a violation of the Senate Code of Ethics, thus triggering the full Senate vote to determine whether she should be expelled.
Sen. John Stevens (R-Huntingdon), an attorney in his own right, will present the argument for Robinson’s expulsion. Robinson and her attorneys will then be given an opportunity to present a defense. Following the presentations, Lt.Gov. Randy McNally (R-Oak Ridge) will allow debate.
It will take a two thirds vote to expel Robinson, amounting to 22 of the 33 seats in the Senate. Currently Republicans hold 27 seats in the chamber.
Lawmakers Make Another Attempt at Marijuana Legalization with Bipartisan Bill
For years, marijuana bills have come before the General Assembly — and in some cases, actually pass a few committees — only to meet their eventual demise. SB1973/HB1634 is the newest endeavor with Rep. Bruce Griffey (R-Paris) and Sen. Sara Kyle (D-Memphis) teaming up to sponsor legislation that would enable voters to weigh in on marijuana legalization in a state sponsored public opinion poll. As introduced, the bipartisan bill requires county election commissions to include three non-binding questions related to the legalization of marijuana on the November 2022 ballot.
Last March, the Senate passed a hemp bill sponsored by Sen. Frank Nicely (R-Strawberry Plains) and Rep. Chris Hurt (R-Halls). The bill, SB694/HB715, creates an exemption in the prohibition of possessing THC at a concentration of greater than three-tenths of a percent if the person is transporting it within the state to a location where it will be reconstituted to a concentration of not more than three-tenths of a percent. The House Agriculture & Natural Resources Subcommittee deferred the bill to final calendar.
House Transportation Committee Advances “Transportainment” Regulation Bill
Last October, the Metro Nashville City Council passed a new ordinance barring party vehicle passengers from possessing open containers of beer and other alcohol on open-air party vehicles — including unenclosed party busses, trailers, and pedal taverns — much to the chagrin of Nashville partygoers, bachelorettes, and business owners in the industry. The Tennessee House of Representatives is now taking a stab at passing regulatory legislation, and last week the House Transportation Committee discussed HB1329, a bill that allows government entities outside of Shelby and Davidson counties to also regulate entry into the business of providing passenger transportation service, including entertainment transportation. The governmental entity’s jurisdiction must comply with the safety rules and regulations and the liability insurance requirements. Legislators were torn when contemplating the heartburn of putting transportainment companies out of business, but in the end, the Committee voted to pass. The bill is set to appear before the House Finance, Ways, and Means Committee on February 2.
The Tennessee General Assembly went into a Special Session in October with a very broad call to consider COVID-19 issues and some other issues that were related to the pandemic. The legislature has had several Special Sessions over the past two years. Historically, a Special Session is called by the Governor to address very limited issues such as the Special Session that was called to approve the Ford incentives for the West Tennessee Mega Site Development. However, the “COVID-19 Special Session” was not called by the Governor, who withstood pressure for several months to call a Special Session to address COVID-19-related issues. Instead, the COVID-19 Special Session was called by two-thirds of the voting members of both the Senate and the House, which is allowed under the Constitution. As a result, the call was not restricted and was very broad in that it addressed numerous COVID-19 issues and other issues that were indirectly related to the pandemic. Instead of having three or four major bills considered, there were over 100 bills introduced. Many of these bills were very anti-business and encroached on the rights of private property owners.
The Special Session was spearheaded by several legislators who were opposed to the actions of some private businesses enacting policies related to requiring masks be worn and vaccine requirements. As one may imagine, there was not one set of rules for companies throughout the state. Different companies had different policies based on the nature of the industry, the level of COVID-19 in the community, etc. Basically, out of the 100 bills, only 8-10 bills were given serious consideration. Those bills were primarily sponsored by Lt. Governor McNally and House Speaker Sexton. The original draft of these bills would have been a huge imposition on private businesses and private property owners. As drafted, a business could not require an employee to show proof of receiving a COVID-19 vaccine or require an employee to wear a mask. In addition, the original legislation would have even prevented private homeowners from directing someone entering their home (e.g., service delivery or home health care) to wear a mask. The legislation was obviously drafted quickly without the input of the business community. The final legislation that passed was put together within 24 hours of the legislature going into session and was basically amended in total secrecy and passed at 1:00 am on a Saturday. As a result, the legislation that passed and was signed by Governor Lee will be the subject of many court challenges that are currently taking place. Furthermore, as the local media has been reporting, it has been disclosed that the Governor’s own legal counsel had advised the Governor and the legislature that much of the legislation that was passed was not legally enforceable.
The following are some quick points on some of the issues that are now faced by the business community:
- Vaccines. Employers are subject to broad language. The law states that employers cannot have “adverse action” against employees based on vaccination status. Employers cannot compel proof of vaccination status from employees, which, as a practical matter, essentially outlaws the vaccine mandates. One of the key issues with the law is the definition of “adverse action.” On its face, it could mean any sort of discrimination based on vaccination status. This now has to be reconciled with the federal directives, which requires employers with 100 or more employees to get employee vaccination status. This is in direct conflict with the law recently enacted in Tennessee. The OSHA ETS directive has been suspended due to the fact that several states have filed lawsuits in different U.S. federal courts and those cases are now being consolidated in the U. S. Sixth Circuit Court of Appeals.
- Masks. Private employers who require masks be worn and require unvaccinated employees to wear masks while not requiring the same for vaccinated employees, would be considered an adverse action. Some companies have basically established an honor system when it comes to declaring whether or not someone was vaccinated. If someone was vaccinated, a mask was not required. If someone was unvaccinated, they were asked to wear a mask, especially in an area where there are a lot of people working. Based on the law that was passed, it seems if an employer requires unvaccinated employees to wear a mask, the employer must require all employees to wear a mask, even though some have been vaccinated.
- Testing. The state law says nothing about testing; however, OSHA ETS provides for testing. Again, there is the issue of what an “adverse action” is and what constitutes discrimination. If a Tennessee business chooses to only test unvaccinated employees, this would likely be interpreted as taking an adverse action against unvaccinated employees. There is also the issue regarding the cost of testing and it is likely the business will be obligated to provide the test.
- Private Right of Action. Under the new state law there is now a private right of action for employees who have been subject to an adverse action. This is retroactive and very dangerous. Employees who file these lawsuits can recover attorney’s fees, which incentivizes attorneys to take these cases. To allow for a direct cause of action by employees against employers was a harsh penalty to be placed on private businesses by the legislature. There are certainly other options, one of which is using a minor civil penalty, which would have been more practical. Also, please note there has already been legislation introduced by Representative Brandon Ogles from Williamson County, Tennessee, that would not only allow for a direct cause of action against an employer but also make it a “Class D Felony” if an employer takes any type of adverse action against an employee for being unvaccinated.This legislation will be considered during the next legislative session.
- Comptroller’s Office. Exemptions from the Comptroller’s office will only last one year. These exemptions are for any entity that receives federal funding and the state law would jeopardize that federal law by failing to comply with federal mandated masking or vaccine policies. Most major universities and hospitals fall under this exemption and there are hundreds of millions of dollars that go directly to these entities. Requests for exemptions have already been filed. This probably applies to private companies who have federal contracts and are receiving funds from the federal government pursuant to a federal contract. Furthermore, it will probably end up applying to any type of public organization such as police departments, fire departments, etc., who receive any type of federal funding. This creates another level of bureaucratic red tape in regard to a private company protecting itself and making sure it is not in violation of a federal vaccine/masking policy. This will require filing for an exemption with the Comptroller’s office.
There are other issues considered by the legislature that are not addressed in this update such as restricting the discretion of District Attorney Generals in regard to prosecuting certain cases, making the election of the local school boards now partisan elections, and removing masking authority by local public schools, etc. There were many issues addressed by the legislature within 24-48 hours of going into Special Session which was done without any input from most organizations, including the business community in Tennessee. The Tennessee Trucking Association followed the Tennessee Chamber of Commerce, the National Federal of Independent Businesses and other pro-business organizations in strongly objecting to the final legislation that passed and expressed concern that the business community was not given an opportunity to offer any input as the legislation was being drafted and adopted. If the legislature had recessed on Friday night and then returned on Monday to take up the legislation, it probably would not have passed since the business community was so opposed to many parts of the legislation.
I am sure we will have to defend against similar efforts that will be directed against the business community during the 2022 regular legislative session. We will keep you updated on any new developments.
What Can Employers Do Now While OSHA’s COVID-19 Vaccination and Testing Rules Are Temporarily Suspended?
Employers now have OSHA’s long-awaited Emergency Temporary Standard (ETS) mandating COVID-19 vaccinations or testing for some workers, but much uncertainty remains about how and whether employers should take action at this point. Hours after OSHA issued the ETS, numerous states and private organizations asserted legal challenges to it — in the U.S. Courts of Appeals for the Fifth, Sixth, Seventh, Eighth, Eleventh, and D.C. Circuits — and the Fifth Circuit subsequently issued a nationwide temporary suspension of the ETS.
The Policy Basics
The ETS requires certain employers to implement a written mandatory policy requiring employees to be “fully vaccinated” (as defined by the ETS). The mandatory vaccine policy may only exempt those employees: (i) “for whom a vaccine is medically contraindicated”; (ii) for whom “medical necessity requires a delay in vaccination”; or (iii) “who are legally entitled to a reasonable accommodation under federal civil rights law because they have a disability or sincerely held religious beliefs, practices, or observances that conflict with the vaccination requirement.”
As an alternative to the absolute vaccine mandate, the employer may implement a written policy providing that employees must either be fully vaccinated or be subject to rules requiring regular testing for COVID-19 and wearing a face covering at work (subject to some limited exceptions). This alternative is generally consistent with EEOC guidance that, if an employee does not want to comply with an employer-initiated vaccine mandate, “as a reasonable accommodation, an unvaccinated employee entering the workplace might wear a face mask … [or] get periodic tests for COVID-19 ….”
The ETS imposes two compliance deadlines: 1) December 6, 2021, for compliance with all sections of the ETS except for provisions requiring COVID-19 testing of unvaccinated or partially vaccinated workers; and 2) January 4, 2022 for compliance with the COVID-19 testing provisions for those workers. In other words, the covered employer must adopt a policy and confirm the vaccination status of all employees by December 6, and then, if the employer’s policy allows, begin mandatory testing for COVID-19 for unvaccinated or partially vaccinated workers by January 4, 2022.
These deadlines, however, are now in flux as a result of the Fifth Circuit suspension. The DOJ has asked the Fifth Circuit to lift this suspension order and informed the Fifth Circuit that, because there are challenges pending in other circuit courts, the consolidated cases must be heard by a single circuit court randomly selected by the Judicial Panel on Multidistrict Litigation. The DOJ expects the panel to select the circuit court for the consolidated cases by November 16. It is highly unlikely the selected court will issue a decision before December 6, the effective date for the majority of ETS’ provisions.
So what are employers supposed to do now?
The first order of business should be to determine whether the employer is even covered by the ETS if the courts lift the stay or uphold the standard.
The ETS applies to: all employers with a total of 100 or more workers, company-wide, at any time the ETS is in effect. Temporary and seasonal workers are counted as “employees” for purposes of coverage, but independent contractors are not.
The ETS does not apply to: federal contractors and subcontractors subject to President Biden’s Executive Order 14042 or workplaces where employees provide healthcare services or healthcare support services. OSHA also does not have jurisdiction over public employers such as state and local governments.
Many employers might be subject to state versions of OSHA instead. OSHA’s jurisdiction extends directly in 29 states, while other states, including California and Michigan, have their own federally approved workplace safety agencies. Those states have until February 2022 to adopt their own version of the vaccine mandate that is at least equal to the ETS requirements. These states could adopt a tougher version of the ETS and lower the coverage threshold to require compliance by smaller size employers.
Given the federal court stay, businesses covered by the ETS are not legally obligated to adopt an ETS-compliant policy by December 6. But as a best practice, an employer certainly could make a business decision to do so based on the reasonable chance the courts will uphold the ETS mandate. Some legal scholars and commentators are speculating that whistleblowers could play a large part in the enforcement of workplace vaccine rules. If a covered employer has not announced an ETS-compliant policy by the time the court process plays out, its own workers (or union representatives of those workers) could very likely file complaints with OSHA. Rather than scrambling at the last minute, and possibly facing inspections or fines, the prudent company would be prepared with a policy in place if the stay is lifted or if the court upholds the ETS on the merits.
The ETS is complex and has multiple requirements for employers. As always, it is best practice to consult with experienced employment counsel when implementing new policies and procedures.
The Tennessee General Assembly just recently concluded a Special Session limited to the legislature approving financial incentives for the major Ford Motor Company project in West Tennessee. That Special Session wrapped up business in 3 days approving nearly $900,000,000 in incentives that will assist with bringing the largest single manufacturing investment ever to Tennessee. This will create thousands of new jobs in West Tennessee, fulfilling a long-term commitment to the Memphis Regional Mega Site.
As announced on October 20, 2021, enough signatures have been obtained in the Senate and the House of the legislature (two-thirds of each body) to go into a COVID-19 Special Session on October 27, 2021, to address COVID-19 mandate issues. This Special Session appears to be very broad and could result in several issues being addressed by the legislature. The Tennessee Business Roundtable has already issued a policy position letter opposing legislative interference and instead has asked that the legislature not impose mandates or prevent businesses from adopting their own workplace health guidelines. The Tennessee Chamber of Commerce also followed up on October 22, 2021 pleading with the Legislature to not adopt legislation interfering with the ability of Tennessee companies to manage their own operations. TTA is considering issuing its own position statement, as well, which will closely follow the lead of the Tennessee Business Roundtable and the Tennessee Chamber of Commerce. I expect more trade associations and major companies to do the same.
The business community as a whole is opposed to the Special Session for COVID-19. There appear to be several members that are pushing to pass legislation that will attempt to interfere with the decisions of private businesses to address COVID-19 issues. This legislation includes penalizing companies for mandating vaccines and requiring testing, penalizing schools for mandating the wearing of masks, and other COVID-19 protection policies. You will find that some members will be introducing legislation that will remove the immunity from liability that has protected businesses and been in place since 2020 in regard to potential COVID-19 litigation. At this time it is difficult to predict the number of bills that will be filed and the COVID‑19 issues the legislature will cover; however, it is expected that any legislation will be very far-reaching in regard to what is required of employers. Companies have adopted different policies across the board to address the challenge of COVID-19 for the past 18 months. Not all policies are the same and some are stricter than others.
Even during the recent Special Session to approve financial incentives for Ford, members filed anti-business legislation. House Bill 1643, sponsored by Representative Susan Lynn, provides that employers would be liable for COVID‑19 vaccine-related complications should employers require vaccines. House Bill 8003, sponsored by Representative Rusty Grills, would allow individuals who choose to leave their employment because an employer requires a COVID-19 vaccine to continue to receive unemployment benefits based on that choice. These two bills are just examples of what will be filed within the next few days. Please note that these two bills were not heard during the Special Session on the Ford expansion but I expect them to be refiled for the COVID-19 Special Session.
Remember that just because legislation passes, that does not mean it will be upheld in a court of law should the legislation be challenged. As we all know, at this time the federal mandate on employers requiring vaccinations or weekly testing for companies with 100 or more employees is still being developed as an OSHA regulation. No one knows for certain the final rules and regulations issued by OSHA will encompass that will be enforced through TOSHA in Tennessee. Hopefully, as ATA has pointed out, the federal policy will take into consideration that trucking companies operate differently than many other companies in that thousands of truck drivers are on the road delivering goods all across the country, and mandating weekly testing will be a huge challenge for those who don’t want to get vaccinated. In addition, unlike what the Legislative Committee proposed recently, Tennessee just cannot ignore federal OSHA rules and regulations. Trucking is an interstate commerce business and having different policies adopted by several states could be very challenging.
I am confident that there may be little that the legislature can do that would interfere with federal regulations or change the rules on how unemployment benefits are paid. However, I am very concerned about the employers’ exemption from immunity that is now in place in Tennessee in regard to COVID-19 issues. I will continue to keep you updated as we work through this next Special Session which could last for weeks. If you have any questions, please contact me.