Gov. Bill Haslam’s proposal to cut Tennessee’s sales tax on food by a half percentage point over three years has been joined by several other proposals from Republican and Democratic legislators alike.

The volume of bills related to the tax has prompted lawmakers to move all of the proposals to a special meeting of the House General Subcommittee of Finance, Ways and Means, toward the end of the session, after the committee approves the budget, said Rep. Curtis Johnson, R-Clarksville, vice chair of the sub-committee.

“I think that’s wise, what the chairman of the finance subcommittee did,” said Rep. Glen Casada, R-Franklin, “because what it says is ‘Gentlemen, you’ve got until late April to figure out where to come up with those things you want to do,’ and, in other words, don’t just come to us and say, ‘I want to cut the sales tax on food,’ and then complain, when that’s all you bring, is an idea, and you don’t propose a way to do it.”

One such bill, HB2239, sponsored by Casada, proposes to cut the sales tax on food from 5.5 percent to 5 percent and would take effect July 1 of this year. A family of four spending $884 on groceries per month would save about $53 a year under Casada’s plan. Tennesseans would pay about $46 million less in grocery taxes annually, and Capitol researchers estimate they would spend some of that money on other items subject to sales tax.

The net effect would be a $42 million loss to state coffers.

Casada has requested the bill be moved to the special tax committee in order to find a way to offset the decrease in revenue to the state.

“That’s why I put the bill on notice and put it behind the budget,” Casada said. “That way it becomes public. Everyone knows what’s going on and knows exactly what I’m trying to do, and I’m looking for other legislators to help me find areas they may know about, where we could find this $42 million.”

Haslam’s proposal to cut the sales tax follows eight months of tax revenues increasing by 5 percent or higher. Republican lawmakers, who recommended against cutting the sales tax several months ago, have said the uptick in revenues has given them a reason to support the proposal.

While Democratic lawmakers have put forward bills that would make steeper cuts to the tax, they have said they view the proposal positively. Lt. Gov. Ron Ramsey, R-Blountville, has said that although he doesn’t view a reduction to the sales tax as a priority, the gradual reduction proposed in the governor’s plan is prudent.

Lawmakers spent much of last year riding a political roller coaster to define Amazon.com’s role in collecting sales taxes from online shoppers. This week they made their first move to approve a deal reached between the state and the online retail titan.

Just a day before Gov. Bill Haslam toured the new Amazon warehouse in Chattanooga Thursday, a House Finance subcommittee easily approved legislation to seal a deal with Amazon to collect sales taxes from its online shoppers beginning in 2014. It will amount to about $23 million a year, according to legislative analysis.

“These sales taxes are already due,” House Majority Leader Gerald McCormick, R-Chattanooga, told the committee as he pitched the bill. “This simply is a collection issue, and they have agreed to collect the sales tax.”

The deal means Tennessee taxpayers who shop online will get to hold on to about $40 million in revenue that could be collected between now and 2014, according to legislative staff.

Haslam and Amazon.com executives announced a deal in October where the Internet retailer would make a $350 million investment by opening distribution centers in Hamilton and Bradley counties. The Internet retailer is opening additional centers in Lebanon and Murfreesboro.

The arrangement, which was called “Project Tango” by officials, grew out of a deal struck between outgoing Gov. Phil Bredesen and Amazon executives just weeks before Haslam took office.

Lawmakers quickly split on the issue. Although they liked the prospect of Amazon creating thousands of jobs in the state, some argue the company ought to be forced to collect money from Tennesseans for the government just like any other business located here.

One of those critics, who says he is satisfied with the current deal, says he doesn’t see the bill hitting any snags making its way through the Legislature, even though Amazon has brokered deals in other states that require the company to collect sales taxes as soon as September.

“There are a number of states that are not collecting a penny, and this is something we were able to work out, plus the benefit that we are going to have four distribution centers in the state of Tennessee. I think that’s a good thing,” said House Finance Committee Chairman Charles Sargent, R-Franklin.

The issue is one of national significance. Amazon has argued there is no uniform law that requires it to collect sales taxes and that the company doesn’t meet a legal threshold called “nexus” for collecting the taxes because it doesn’t have brick-and-mortar sales facilities in many states seeking the tax.

Giving the Internet retailer a pass on collecting sales taxes is unfair to Tennessee business with a physical state presence because they have to charge customers the tax, says critics with the Tennessee Alliance for Main Street Fairness, a fierce opponent to the Amazon deal in Tennessee and across the country.

Only a federal law requiring the retailer collect sales taxes in all states would trigger Amazon to collect sales taxes any earlier than 2014.

House Speaker Beth Harwell, who met with Amazon executives Wednesday, said she too sees no trouble writing the deal into state law, but wants a national solution from Washington.

“Our federal government has got to take action on this issue, and until they do, all of our hands are tied,” she said.

The state legislation is up again for discussion in both the House Finance committee and the Senate tax subcommittee Tuesday.

Judges and lawmakers agree the state’s system for policing judges is flawed, but there’s so far little agreement as to how much sway judges themselves should have over that watchdog role.

Lawmakers are considering two major bills this year to recreate a panel responsible for disciplining judges who cross ethical lines. The major difference between the two proposals is just how many judges can sit on the new panel — and both sides are so far unwilling to budge.

“The appearance of judges appointing judges to hear complaints on judges doesn’t give them much credibility,” said Senate Judiciary Chairwoman Mae Beavers, R-Mt. Juliet, a top critic of the current panel, the Court of the Judiciary.

Judges pitched their own reforms to a legislative committee in SB2671 Wednesday, suggesting the lawmakers replace the current ethics panel with a “Board of Judicial Conduct” that would shift responsibility for discarding complaints to board members rather than staff. The new board would also produce quarterly public reports instead of the current yearly statistics, establish a legislative liaison, and operate with a lower threshold for pursuing an investigation.

“Certainly there have been issues, and I think we’re trying to address those issues,” said Criminal Appeals Judge Jeff Bivins, who is leading the charge for the Tennessee Judicial Conference’s ad hoc committee on Court of the Judiciary legislation. “We have some new membership. I think some of us are looking harder at cases and taking a little tougher line.”

The biggest problem Beavers has with the judicial branch’s proposal is the new board would retain too many judges, 10, plus six laypeople.

Beavers would prefer her own bill, which would dump the current board and build it anew, shrinking the board down to 12 people, with four as sitting judges. Her measure is on the Senate floor and is up for debate Feb. 9.

“I think you’d actually find that every single judge in the state of Tennessee, from the part-time municipal judge all the way up through every member of the Supreme Court, are actually united totally against that particular bill,” said Bivins, who also sits on the COJ.

The Senate Government Operations Committee advanced the judges’ measure with a “positive” recommendation on a 5-1-3 vote with little discussion. It now goes to the Senate Judiciary Committee where it will likely face opposition from Beavers.

Beavers said she would also like the ethics panel to inform the House and Senate Judiciary Committee chairpeople when the board has received multiple complaints about the same judge.

Tents and other “living quarters” would not be allowed on public spaces, under a bill advancing at the Capitol aimed at the Occupy Nashville protest – whose members have been camped on War Memorial Plaza for four months.

Members of that group say the bill would limit free speech and criminalize homelessness. On Wednesday it moved out of a subcommittee to the House Judiciary Committee.

The bill, HB2638, aims to prevent “people from living on publicly-owned property not designated for residential use and prohibits people using publicly-owned property from posing a health hazard or threat to the safety and welfare of others.”

“It is not a bill that will make the protest on the plaza end. It is not a bill that denies First Amendment rights to any individual,” said Rep. Eric Watson, R-Cleveland, the sponsor of the bill. “What this bill does, though, it restores the entire public’s right to utilize all the public property around the state, not just a single group.”

Occupy Nashville released an open letter to Gov. Bill Haslam, the General Assembly and the Highway Patrol in response to this bill’s filing.

The bill was amended Wednesday morning to provide the state with the right to prevent people from camping on public grounds where camping is not permitted.

The new amendment, which is named the “Equal Access to Public Property Act of 2012,” is based on a 1984 federal law, supported by a U.S. Supreme Court decision, that gives the states the right to do this, Watson said.

Additionally, the amendment would change a violation of the no-camping law from a Class C to a Class B misdemeanor, raising the fine from $50 to $500. However, the amendment doesn’t allow for incarceration as a form of punishment.

“This seems to me to be sweeping legislation that could be used to silence dissent and punish our unhoused brothers and sisters for their poverty,” said Bill Howell, a member of Occupy Nashville and the progressive group Tennesseans for Fair Taxation at the subcommittee meeting. “What we see on the plaza every day is the direct result of bad public policy, both state and federal, that has served to further enrich the rich and impoverish the poor.”

Howell said people participating in the round-the-clock protest could catch cold if tents were banned.

The Occupy movement claims the bill is unconstitutional.

“The $500 fine is an infringement of free speech because it would have a negative effect on 24-hour vigils,” said Jane Steinfels Hussain, a group spokeswoman.

Last fall, when the Occupy movement was evicted from Legislative Plaza, Gov. Bill Haslam said that the reasoning behind the new policy was public safety, not to prevent free speech.

A few weeks later Lt. Gov. Ron Ramsey said that although he believes in freedom of speech, the Occupy movement had overstepped its bounds.

Excerpted from the Home Builders Association of Tennessee‘s “Legislative Briefing,” Jan. 26, 2012:

2012 Legislative Agenda

The Home Builders Association of Tennessee Board of Directors approved the 2012 Legislative Agenda during the membership’s recent Fall Annual Meeting. We have worked diligently to craft the proper language of the proposed legislation and to secure outstanding sponsors who will carry the bills in both the Senate and the House…

Tennessee Home Construction Jobs Development Act

The legislation (SB1296-Johnson /HB0730 Casada) is more commonly referred to as the Building Homes – Building Jobs Act.

This legislation is a carry-over from 2011. Construction, especially homebuilding, is one of the state’s weakest sectors. From the employment peak in 2007 to the fall 2010, construction employment estimates indicate a loss of 36,300 jobs. The loss of 36,300 jobs resulted in a loss of $9.08 billion in output, $2.69 billion in earnings, 72,600 total jobs, and $168 million in state taxes. A substantial share of the shortfall of state taxes was associated with the decline in this industry. The positive effect of this proposal on the creation of approximately 4,900 new jobs across the state is borne out in a recent study by the Sparks Bureau of Business and Economic Research at the University of Memphis. This economic development legislation, which would grant $6,000 to approximately 1,666 new home buyers, would have a positive impact on every county and every community in Tennessee.

Legislation to Prevent Single Family Residential Fire Sprinkler Mandates

Simply put, proposed legislation (SB2492 Tracy/HB2639 Watson) would mimic several other states’ legislation that prevents any county, municipality, city or town from requiring the installation of fire sprinklers in single-family residential construction. Legislation would NOT prevent nor dissuade any home buyer or homebuilder from installing fire sprinklers. It just would prevent any mandates to require them. It is our belief that current building codes offer significant fire safety features, including the installation of hard-wired smoke detectors, in new construction. A recent University of Tennessee study underscores the fact that the majority of fire safety issues are in those homes built using pre-1998 building code construction.

Tennessee Public Improvement District Act

This legislation (SB1865 -Overbey / HB1643-Dennis) is also a carry-over from 2011. The legislation, based on similar current laws in Alabama, Mississippi, Arkansas, Florida, Georgia, Texas and Louisiana, would provide an alternative financing mechanism for municipalities and developers to pay for infrastructure needs. With the current state of the financial markets, which limit borrowing for these type projects, we see this as an option that will serve as an economic development tool for cities, counties and developers that will help stimulate new housing construction opportunities.

Property Tax Relief Legislation

As proposed, this would be enabling legislation that would allow counties to delay the reassessment of improved land until a time at which the property is sold to the first owner. Currently, the land is reassessed once a plat has been recorded to subdivide the land into lots and again when the builder improves the lot with constructing a new home. This legislation would defer the reassessment until the lot is sold to a builder and the lot would not be reassessed until a new home is sold to a homeowner. This deferral would significantly help our members during recessions to carry their real estate for longer periods of time by significantly reducing their annual carry costs.

Tax Assessor Legislation

Proposed legislation would require that the Tax Assessor’s office establish new parcel ID numbers immediately upon recording a subdivision plat after January 1 in a given year. As it stands now, the Assessor establishes a parcel ID number for each parcel of real estate on January 1 of each year. No matter what happens to that property throughout the year, even if it is subdivided and homes are constructed on it, when the tax bill comes out, it is billed under one number.

If a closing occurs prior to January 1 of the following year, then taxes must be paid on the entire property. But if it is still under the original parcel number, then the seller has to pay the entire tax bill, even on land that the seller doesn’t own. A closing cannot take place without the entire tax bill being paid.

The proposed legislation requires the Assessor to establish parcel identification numbers for subdivided lots effective at the time subdivision plat is recorded rather than waiting for the following January. The Assessor shall prorate the assessment on such real property for the year for the parent parcel from January 1 to the date of subdivision. And for resulting parcels, the assessment would cover the period from the date of the subdivision to the year-end. Any supplemental tax resulting from added value, shall be assigned exclusively to such resulting parcel to which the value was added.

As always, your assistance in helping educate your legislators on the importance of these issues will be most important in securing successful passage of these matters. As you look at the emphasis of our proposed legislation this year, you will see the one overriding powerful belief, and that is:

HOUSING = JOBS!

After Tennessee’s top three elected officials put the issue front-and-center last week, opinions about the state’s judicial selection process are still shaking out on Capitol Hill.

And while the issue has divided state legislators, it has not necessarily done so along partisan lines. Opposition to a constitutional amendment has cropped up, in one form or another, from Democrats and Republicans alike, casting some doubt on the likelihood that such a resolution could get the two-thirds vote it would need to make it on the ballot in 2014.

In a joint press conference last Wednesday, Gov. Bill Haslam, Lt. Gov. Ron Ramsey and House Speaker Beth Harwell announced they will be pushing for a resolution that would give voters the chance to weigh in on a constitutional amendment that would enshrine the state’s current process.

A selection commission provides the governor with a list of candidates from which to appoint judges. Once appointed, those judges, who serve eight-year terms, face a yes-or-no “retention” election after their first term.

Ramsey has flatly said he believes the current method works well but that it is not constitutional. While Haslam and Harwell have stopped short of labelling the current process “unconstitutional,” their proposal aims to clear up any public uncertainty.

The issue has forced some Republican supporters of direct judicial elections between a rock and a political hard place. Several Republicans told TNReport last week that they won’t oppose the governor’s efforts to put an amendment to the people. But they also expressed doubts that the current method is the right one or that a majority of Tennesseans will vote to validate it constitutionally.

Last session, Rep. Bill Dunn co-sponsored a bill - HB0958 - that would have required popular elections for judges. That bill’s lead sponsor, Government Operations Committee Chairman Mike Bell, R-Riceville, has said he has doubts that a majority of Tennesseans would vote yes on the governor’s amendment, but that he won’t stand in Haslam’s way.

Dunn, R-Knoxville, said he thinks the Constitution clearly calls for direct elections and that it’s “wrong for us to ignore the Constitution.” If voters were to agree with him, he said, then supporters of the amendment should be open to changing the process.

“The big question is, if the voters reject what they ask to do, then they’re really saying, ‘No, we want to keep the Constitution the way it is,’” he said. “I think to a certain degree we need to go into this whole process saying that if it is rejected then we will start following the Constitution. I think we should start following it right now, but those who have been dragging their feet need to put that on the table.”

Dunn also pushed back against the idea that elections would politicize the judiciary in a way the current system does not, asserting that it would be far easier to corrupt two or three people on a committee than to influence a judge accountable to more than 6 million people in a statewide election. Because of those concerns, and his feeling that the governor’s proposal is the most likely to separate itself from the crowd, he said he’ll be focusing his time and energy on the language of the possible amendment as opposed to alternative legislation.

Other Republicans, though, are fully on board with Haslam, Harwell and Ramsey.

“I am very glad to see the gov and the speakers take the position that they have to amend the constitution, really to conform the current process to the Constitution,” said Sen. Ken Yager, R-Harriman. “I’m going to support that, and I think that’s a good solution to the problem.”

On the other side of the aisle, opinions are no more aligned. Memphis Sen. Ophelia Ford has filed a bill that would require state Supreme Court justices to be popularly elected by voters in various supreme court districts across the state. The bill, SB3714, would require the same of appellate court judges. The accompanying districts for both would be created by the General Assembly.

Ford told TNReport that breaking the state up into supreme court districts for popular elections would allow voters to elect judges they’re better acquainted with and keep candidates from being forced to campaign across the state. She also said she would be pushing for a constitutional amendment, which would mirror the bill.

Leading Democrats said they’re fine with the current process - which has been held up in court - but aren’t so fond of their counterparts’ amendment streak.

“It’s a change of position from some in the majority party to all of a sudden get on this constitutional amendment track,” House Democratic Leader Craig Fitzhugh told TNReport. “So I don’t really understand why all of a sudden we decide to change the Constitution when it’s been something that worked OK. So, I’m sort of scratching my head on that. But we certainly are for the Tennessee Plan as it is now to continue.”

House Democratic Caucus Chairman Mike Turner said costly statewide elections would be the “worst thing we could do” and that the current process is the best one. As a result, he said Democrats could support the proposed amendment, but that he believes the larger trend is a problem.

“It appears to me that it could be something we could support,” he said. “I just have a problem with having all these constitutional amendments on the ballot. I think it’s confusing to the people.”

Gov. Bill Haslam, who wants to expand taxpayer-funded grants to business, is also suggesting that extra information collected to pick the winners be kept hidden from public view.

“Due diligence” documents such as corporate financial statements, budgets, cash flow reports and ownership information would be reviewed by politicians and agency staff but would not be open under a measure, Senate Bill 2207, that advanced out of a Senate committee Tuesday on an 8-0 vote with little debate.

Haslam, a Republican, wants to pump $70 million into the Fast Track grant program which is used to entice companies like Amazon to locate in Tennessee in addition to tax incentives and tax credits. Under SB2207, the state would collect more information from applying businesses but share none of it with taxpayers.

“You have to recognize that as a private company, that they have a need to keep information private,” Sen. Bo Watson, a Hixson Republican and the bill’s co-prime sponsor, told TNReport.

Both Haslam and his predecessor, Democratic Gov. Phil Bredesen, have faced criticism for keeping lucrative state deals with corporations shrouded in secrecy. In some cases, it’s hard for the public to even know the final tally of incentives provided because of the privacy of tax information, though in the case of Volkswagen, the bill reached hundreds of millions of dollars for expenses like buying land and training employees to work for the car manufacturer.

The measure comes from a long list of bills Haslam wants to see passed this year, including one that would give the Department of Economic and Community Development more flexibility to offer Fast Track grants for high-impact relocations and expansions.

“Using hard dollars from the FastTrack program is more transparent than the tax incentive process, which is completely confidential under law,” Clint Brewer, an ECD spokesman, said via email. “The due diligence bill does not hide anything ECD is doing, it only protects private company finances.”

The “due diligence” business details, which lawmakers want to add as an exemption from open records laws, are additional bits of information Watson says will help the agency do its “homework.”

Under that legislation, the State Funding Board would be able to review insider details for Fast Track grants but the group — made up of the top five officers in the executive branch — will also be required to keep that information confidential.

ECD now decides which companies to invest in without that “due diligence” level of insider information. It now reviews and keeps proprietary information and any trade secrets close to the vest.

One government transparency advocate contends the documents Haslam is looking to keep out of the public eye are already protected under state law. But push comes to shove, the most important information that needs to be public are the final details of the arrangement: Who is getting how much money?

“Our concern was that language dealing with ownership could be construed to say that they didn’t have to say who they were giving grants to,” said Frank Gibson, director of the Tennessee Coalition for Open Government, who is not fighting the bill because the company name would still be public information on the final ECD contract, even if the owner’s name isn’t.

“Eventually people are able to find out who they are. Volkswagen LLC is still Volkswagen.”

The governor’s proposed reduction to the food tax is laudable, but Democratic lawmakers believe it doesn’t go far enough.

During the Democratic response to Gov. Bill Haslam’s State of the State address, Sen. Lowe Finney, D-Jackson, said that they applaud Haslam’s proposed reduction from 5.5 percent to 5 percent over a few years, but said that they would like to see a gradual elimination of the food tax.

“This would indeed help all Tennesseans,” Finney said. “This would help everybody around the state. And I think especially if you go in and you look at low-income areas, you look at rural areas around the state, you would see that this legislation could have a really positive impact.”

The gradual elimination of the grocery tax has support from Democratic leaders in both chambers of the General Assembly.

“We’re actually glad that the governor’s doing this,” said Rep. Mike Turner, D-Old Hickory. “But we’ve already had bills filed. We’ve got several different bills filed from last year that we’re carrying forward.”

One sponsored by Turner aims to cut the sales tax from 5.5 percent to 5 percent in the first year and to 4.5 percent in the second year.

“We’re a very sales tax-dependent state, so it’s hard for us to cut sales tax, but it’s a step in the right direction,” Turner said. Sales taxes make up about 54 percent of Tennessee’s state tax revenue.

Turner also suggested that instead of making the cuts the governor has proposed to the inheritance tax and the Hall income tax on investments, which he says will only benefit the wealthy, that the Legislature take that money and apply it to steeper cuts to the grocery tax to benefit everyone.

Turner’s bill, HB1529, originally scheduled to be debated in the House Finance Subcommittee Wednesday, was deferred to be debated alongside other sales tax legislation, including Haslam’s bill. Turner said that he expects it to be taken back up within the next few weeks.

In addition to the governor’s bill and his own bill, Turner said that Rep. Jimmy Naifeh, D-Covington, had several amendments to attach to Turner’s bill that would make steeper cuts to the grocery tax.

Turner and Naifeh would need political support from their colleagues in the GOP — who control both chambers of the Legislature and the executive branch — for their proposals to have any chance of passage.

Tennesseans for Fair Taxation, one of the state’s most vocal opponents of taxing food purchases, in fact does not support Haslam’s grocery tax reduction, or any other tax cut that isn’t offset by an increase in revenues somewhere else.

“We’re all about removing the tax on groceries, but we also want to make sure there is still adequate funding for public services,” TFT executive director Elizabeth Wright told TNReport. “We feel that Tennessee has a budget crisis, and we can’t really afford to lose any more income coming in because people are losing jobs, services are being cut and the quality of our public services is declining even further than it has been.”

Craig Fitzhugh, the House Democratic leader, says that in fact because revenue estimates were lower than what the state has actually collected, the proposed grocery tax cut is essentially revenue neutral.

“We have the revenue to do this, because the revenue has increased since revenue estimates were made,” Fitzhugh said. “I think the governor recognized that, and we’re glad that he did — and I’m glad see him support our measure that we came forth with.”

Bill Howell, TFT’s Middle Tennessee director, doesn’t buy Fitzhugh’s reasoning. Cutting any of the state’s taxes without finding ways to bump tax collections up in other places will “result in a steady ratcheting down of the state’s revenues,” Howell said.

In the packed chambers of the Tennessee House of Representatives, Gov. Bill Haslam delivered his second State of the State address Monday night before a joint session of the state General Assembly.

Many in there were armed with laptops, cell phones, and for most of the time, an internet connection.

Haslam’s speech focused on his budget proposals for the coming fiscal year, as well as legislative initiatives including cuts to the estate and grocery sales taxes, efforts to curtail violent crime and drug use and changes to the way the state’s hiring and employment practices. Throughout the 40 minute address, he aimed to outline an effective, efficient state government that he said should stand in contrast to gridlock in Washington.

Below is the story of the day in tweets, Facebook statuses and YouTube videos from people watching the speech in the Capitol and around Tennessee.

Gov. Bill Haslam is proposing a budget he says will make the state more efficient, but it is actually bigger than the one he proposed last year.

But his budget plan — complete with a 2.5 percent pay boost for teachers and state employees and more than a quarter billion dollars for higher education and capital improvements — is still 2.7 percent less than the current year’s spending plan.

“(Taxpayers) want a state government that is accountable and spends their tax dollars as carefully as they spend their own dollars. But that’s the problem, isn’t it?” Haslam asked a crowded joint assembly of state House and Senate members Monday night at his annual State of the State address.

“It is very hard for folks to spend other people’s money as carefully as they spend their own. Even worse, it is easy for those of us in government to begin to think that the tax dollars are ours. It is here that it is best for all of us to remember what Mark Twain said about the taxpayers’ dollars: “It’s tainted. ‘Taint yours and ‘taint mine.”

Haslam unveiled a $31.08 billion spending plan for the next state budget year. His proposal assumes a 4.03 percent growth in revenues in the budget year that runs from July 1, 2012 to June 30, 2013.

“So, what is the state of our state? Well, in many ways we are doing great,” Haslam said, lauding the state’s low taxes and debt, balanced budget and slowly falling unemployment rate.

“But yet, all of us realize that we have serious issues to deal with. Unemployment is still too high, and we are consistently only in the mid-40s when states are ranked for educational achievement. I don’t think any of us should be satisfied. So I stand here tonight and ask you: Is the current state of our state good enough? I think the answer is no. I think we can believe in better.”

The governor’s budget includes eliminating 1,166 state government jobs, through layoffs of 617 workers and nixing 549 vacant positions. The state employs about 45,000 people.

“We have been cut to the bone here in as far as state services,” said union leader Bob O’Connell, with the Tennessee State Employees Association, which opposes the governor’s call to reduce staff and change how the state hires government workers. ”There’s no more fat to offer and from here on out it’s all muscle so it’s going to hurt to cut those folks out. We hope that money can be found to restore all of those positions.”

Meanwhile, the administration wants to dole out 2.5 percent pay raises for state employees, teachers and higher education workers at a cost of $123.8 million. That would mean an extra $95 pre-taxes a month for the average Tennessee teacher, who makes $45,891 a year.

Haslam also wants to readjust salaries for some state employees to bring them up to comparable market rates, costing taxpayers about $30 million a year.

His proposal includes cutting the tax on food and raising the threshold for exemptions to the inheritance tax, which combined will mean a collective reduction of $33 million — or less than 1 percent of the state’s total revenues.

“I’m well satisfied with what he’s laying out here,” Lt. Gov. Ron Ramsey, R-Blountville, told TNReport after the 40-minute speech. “Not only are we going to be able to cut taxes in the state of Tennessee, with the death tax and the tax on food, but also we’re going to increase services, and I think the governor’s set the priority in the right place to make Tennessee an efficient and effective government that serves the people well.”

Democrats say they like some of what they heard from the governor, but are concerned with some of the issues he didn’t talk about, like his plan to give school districts the authority to adjust class sizes.

“Our teachers just went through a year with a different kind of ABCs,” said Sen. Lowe Finney, D-Jackson. “They were attacked, they were belittled and they were criticized. This year it seems to be new math: fewer teachers with bigger classrooms is supposed to equal better results. But that really does not add up.”

The budget comes after months of the governor speculating the state would be in tough shape come the next budget year amid growing yet unreliable tax revenues. He has asked state agencies to plan for cuts up to 5 percent, although departments average about 2 percent cuts in the governor’s plan.

Haslam’s budget for the current fiscal year was proposed at $30.2 billion and relied heavily on former Gov. Phil Bredesen’s spending strategy.

The Legislature ultimately endorsed his plan after making a handful of edits. But between increases in revenues and a stack of federal funds officials say couldn’t be spent right away, the budget ballooned to $31.93 billion, or 5.7 percent greater than proposed, according to the governor’s administration.

State funds make up 45 percent of the governor’s proposed budget while federal funds account for 39.5 percent of the state’s spending plan. The rest is made up of other funds including higher education tuition and bonds. The federal portion is down from making up 41.1 percent of last year’s state budget.

Steven Hale contributed to this report.