Governor & Lawmakers Allocate Funds Dedicated for Recovery and Workforce During Legislative Session

The Tennessee General Assembly adjourned in May after passing a state budget and bills that include increased spending on efforts aimed at helping businesses recover from the pandemic, improving the state’s economic environment and creating a more skilled workforce.

Of the roughly 30 bills filed related to the COVID-19 pandemic, and the resulting state of emergency that saw governments institute restrictions on business operations, less than a handful were passed and enacted into law. Those that were, for the most part, were favored by the business community’s lobbying corps.

For example:

• Lawmakers exempted from state franchise and excise taxes any relief payments businesses may have received from federal and state governments. In addition, the fall deadline for filing those taxes is pushed back to Nov. 15.
• Legislation was approved that forbid governments from deciding what businesses should be allowed to remain open – if they were following health guidelines – during a state of emergency, like a pandemic. Small businesses complained that closures of so-called non-essential stores allowed their big-box competitors to continue to operate.
• Likewise, local government agencies are prohibited from classifying workers as essential vs. non-essential unless the local fire marshal or a judge declares the business a danger to public safety.

After passing a bare-bones budget last spring in the height of the pandemic, lawmakers found state coffers relatively flush this year, with tax revenues ahead of budget and an influx of federal recovery dollars.

Two budget allocations are especially welcome to the Knoxville area as the region seeks to accelerate the commercialization of research and technology developed at Oak Ridge National Laboratory and the University of Tennessee.

Funds to provide state matching grants to entrepreneurs receiving federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants were included in the final budget approved by lawmakers. While its annual allocation was historically for $3 million, the grant program increased to $7 million this year. Those funds will be used by entrepreneurial small businesses for marketing and other uses not allowed by the federal grants.

The budget amendment was a priority for the Knoxville Chamber, which worked with Life Science Tennessee, Innov865 and Chambers in Chattanooga, Nashville and Memphis, to advocate for the funding to keep the state competitive in retaining and attracting these entrepreneurs.

In addition, UT and ORNL received $8 million for the nascent UT-Oak Ridge Innovation Institute. The U.S. Department of Energy has already awarded the institute $20 million over five years to support workforce development and innovation. The Institute aims to recruit faculty, scientists, and students to the region to focus on some of the world’s greatest challenges.

The state this summer is to receive $8.6 billion in federal funds from the American Rescue Plan. Of that, $4 billion will be kept by the state, with the lion’s share – $3.82 billion – targeted for the fiscal recovery fund and $216 million for coronavirus capital projects, according to reports. City and county governments will reap $2.27 billion, and school districts will receive $2.3 billion. School districts also have about $2.7 billion more coming from previous allotments.

Legislators slashed in half the governor’s request for $200 million to help deploy broadband service in underserved areas – at $100 million still at five times that of the previous year – but lawmakers and the administration hope that federal funds can be used to boost the total grant pool. Regional broadband service is a priority for the Knoxville Chamber and allies.

The state has prioritized one-time expenditures for much of its federal largesse – nearly $1 billion is budgeted for capital improvements, a boon to the architectural, engineering and building industries.

Sen. Becky Massey of Knoxville championed legislation to ensure federal dollars aimed at increasing the supply of quality, affordable and accessible childcare – a barrier to employment for many families – are put to good use. Funds were dedicated under the legislation to retain a consultant to work with a task force to create a strategic plan to support existing providers, as well as increase their numbers.

Sen. Richard Briggs and the University of Tennessee were successful in obtaining $5.5 million in state funds to add 100 medical residency opportunities focused on family practice, general pediatrics, internal medicine, and psychiatry in Tennessee’s underserved and distressed rural counties.

Overcoming the learning loss experienced by Tennessee students as schools closed and went virtual this year was a high priority. Gov. Bill Lee called a special session in early January and received lawmakers’ approval for $160 million legislative package that included requiring the teaching of phonic-based reading; a new assessment to track students’ reading progress; and interventions, including summer reading camps and tutoring, targeting first- through third-grade pupils who are not proficient.

Legislation in the regular session also focused on education, particularly increasing the odds that middle and high school students will earn a post-secondary credential, and that post-secondary students will complete their credential. These issues have also been top-of-mind for the business community, including the Knoxville Chamber, as 55 percent of jobs by 2025 will require a post-secondary credential.

Bills were approved, with attached funding, that:

• Created a four-year pilot program funded at $250,000 to provide small emergency grants to technical or community college students with financial hardships, such as an automobile repair.
• Extended eligibility for tuition reimbursement provided to members of the Tennessee national guard under the “Strong Act of 2017” to include technical certificates and diplomas and certain graduate programs.
• Fully funded the first four dual enrollment courses for Tennessee high school students, increasing access to postsecondary opportunities.
• Requires, instead of encourages, the department of education to prepare middle school students for a career and technical education pathway by introducing students to career exploration opportunities.