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April 21, 2017


The most anticipated vote of the entire legislative session happened this week – and it did not disappoint. After over five hours of debate in the House and less than an hour of debate in the Senate, the first Tennessee gas tax increase since 1989 prevailed in both chambers. All members of the Hamilton County delegation voted in favor of the act. To recap: the IMPROVE Act, or Tax Cut Act of 2017, increases the gas tax by 6 cents and diesel tax by 10 cents and will be phased in over the next three years. It increases car registration fees by $5 and imposes a $100 fee on electric car users. It reduces the state sales tax on grocery store food purchases by 20 percent and changes the F&E tax structure for manufacturers to a single sales tax formula.

The liveliest debate took place in the House where 81 amendments were filed to be discussed on the floor. As promised, Rep. Hawk brought back his amendment that removed the gas tax increase and instead proposed to use sales tax revenue from vehicle sales to fund transportation projects, but it failed again.  

The versions of the act passed by the House and Senate vary slightly with the biggest distinction being the Senate version of the bill includes property tax breaks for disabled veterans and qualifying elderly citizens. The Senate version of the act will go back to the House next week for a vote. If the House chooses not to conform to the Senate version of the bill, and not adopt the property tax relief, then the bill will be sent to a conference committee to iron out the differences. There's light at the end of the tunnel! 

With the IMPROVE Act so close to the finish line, the budget can now be completed. The governor's budget amendment package, which is set to be introduced in the Senate Finance, Ways and Means Committee next week, will include the tax cuts proposed by the act and subsequently rewrite the funding for the transportation funding plan. House and Senate budget amendments, or the "asks" for money from various organizations, local governments, state agencies, etc., will also be considered in the next week or so. After all amendments have been considered and either rejected or accepted, the budget will be presented to the General Assembly for final approval. Remember, the state is sitting on over a billion dollars in surplus money. It should be interesting to see who gets allotted what and how much. Mo' money, mo' problems.

According to a 2008 USA Today article, 250 million pounds of prescription medication are discarded by health facilities each year. On Monday, the Senate approved a bill to help eliminate this waste. SB429 / HB137 creates a prescription drug donation repository program. Organizations that choose to participate in the program may collect an unused prescription drug and redistribute it. The prescription must be in its original packaging and not expire within six months after the donation. The collected medication will be provided free of charge to indigent and uninsured persons. The bill exempts the Tennessee Department of Health, board of pharmacy, medical facility, and drug manufacturers from being held criminally liable for injuries related to the drug repository program, except in the case of gross negligence, willful misconduct, or bad faith.

Sen. Ferrell Haile told his colleagues, "There is a huge amount of medication that is unused (and then) destroyed that with this program could be used. Unless you’ve worked in these facilities, you really do not realize the amount of medication that we are talking about." The bill is set to be heard in the House Finance Subcommittee next week. Reuse, don’t abuse.


Both the House and the Senate are set to vote next week on legislation establishing "Celebrate Freedom Week" to take place the week of September 17 in Tennessee public schools. SB1152 / HB286 states that the purpose is "to educate students in grades K-12 about the sacrifices made for freedom in the founding of this country and the values upon which it was founded." The bill proposes subjects to be studied during the week, such as the Bill of Rights, Emancipation Proclamation, the Abolitionist Movement, the Women’s Suffrage Movement, and the American Revolution. The bill also calls for parts of the Declaration of Independence to be memorized and recited. U-S-A! U-S-A! U-S-A!

However, it exempts a student from the reciting requirements if: 
  • the student's parent or legal guardian submits a written request to the school district for the student to be excused from recitation;
  • the student has a conscientious objection to the recitation; or
  • the student is a child of a foreign government representative who has diplomatic immunity with the U.S.

The General Assembly is still considering legislation to determine if mi casa es su casa (for a fee) applies in Tennessee. Two pieces of conflicting legislation regarding local control of short-term rentals are circulating within the General Assembly. One of the bills, SB1086 / HB1020, prohibits a local governing body from restricting the use or regulating a short-term rental unit based on the short-term rental unit's classification, use, or occupancy. It is set to be heard in the House Finance subcommittee next week. 

The other bill, SB372 / HB47, permits a local government to regulate and tax a short-term rental unit that is located within the local government's jurisdiction and has been taken off notice. BUT, it could be revived at any time before the end of session. This bill also requires short-term rental providers to comply with all applicable federal and state laws and to acquire business licenses. Under this bill, an HOA may prohibit or restrict an owner of a property from using the owner's property as a short-term rental unit. 

The Chattanooga City Council is still deciding how to handle short-term rentals. Just this week, the council discussed the creation of a special district in which short-term vacation rentals could operate. To regulate, or not to regulate, that is the question. Where's Shakespeare when you need him? 
About the author
Nicole Osborne 
Government Affairs Counsel
Updates from the Capitol is a legislative newsletter brought to you by Nicole Osborne
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