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Water Rates coverTACIR Releases Interim Report on Public Chapter 441, Acts of 2013

Annexation disputes among counties, cities, and affected residents have been a recurring theme in Tennessee’s history. Tennessee’s Growth Policy Act (Public Chapter 1101, Acts of 1998) was an effort to resolve these disputes by requiring local governments in each of the state’s 92 non-metropolitan counties to adopt 20-year growth plans limiting where future incorporations and annexations could occur. Fifteen years have passed since the Growth Policy Act was adopted, and there is agreement that a thorough review is needed to consider whether it has served its intended purpose and whether the annexation and growth planning processes can be further improved.

A large number of bills that would have changed Tennessee’s laws on annexation and growth planning were considered by the 108th General Assembly in its 2013 legislative session. The one that drew the most attention would have required all annexations in Tennessee, not just those outside cities’ urban growth boundaries, to be by consent in the form of referendums. That bill became Public Chapter 441, Acts of 2013, which placed a moratorium through May 15, 2014, on annexation without consent of land used primarily for residential or agricultural purposes and required the Tennessee Advisory Commission on Intergovernmental Relations to review and evaluate the efficacy of state laws on comprehensive growth plans and on changing municipal boundaries.

In response to Public Chapter 441, the Commission has delivered an interim report to the General Assembly, providing a comprehensive review of the Act and related bills sent to the Commission for study and comparing and contrasting how similar issues are handled in other states with current and proposed laws in Tennessee. The Commission recommends extending the moratorium imposed by Public Chapter 441 for another year or until the issues raised by the Act and related bills are addressed, identifies a number of options for further consideration, and plans to continue its study of these issues and options.
(Full Report)

TACIR Headlines

Water Rates coverEnsuring Fair and Equitable Water and Wastewater Rates for Non-resident Customers of City Utilities

A new Commission report, Ensuring Fair and Equitable Water and Wastewater Rates for Non-resident Customers of City Utilities, recommends ways to ensure fair water and sewer rates for non-city customers of city utilities. The report is the result of complaints by residents of Piney Flats in Sullivan County who receive water and sewer service from Johnson City that they, like all non-resident customers of the city, are charged rates double those charged city residents without justification. A bill by their state representative, Timothy Hill, that would have capped their rates at 150% of rates charged city residents was sent to the Commission for study.

The report points out the unintended consequence of rate caps, which have a tendency to become standard rates, and recommends instead giving outside customers representation on city utility boards or an appeal process or both. Echoing a 2008 report by the state’s Water and Wastewater Finance Board (WWFB), the report says that rates should be both reasonable and justified and that whether a customer lives inside or outside the city is not enough on its own to justify a rate difference. (Full Report)

Surety Bonds coverLocal Government Official Accountability

The Commission has released its report on Senate Bill 624, which was referred to it by the 108th General Assembly. The bill would authorize insurance in lieu of individual surety bonds for local officials. The Commission recommends instead authorizing blanket surety bonds in order to maintain the individual, personal accountability on the part of public officials provided under current law. Based on the experience in other states, blanket bonds should be less expensive and easier to administer while providing the same coverage and safeguards as individual bonds; it is not clear that insurance could do the same. (Full Report)

TVA PILOTs coverTVA Payments Down Again. Changing Conditions and Policies Could Affect the Balance of Payments Across the Region.

The Commission has released a new report showing that estimated payments from the Tennessee Valley Authority (TVA) for Tennessee and other states in the region served by the authority are $25 million less for the federal fiscal year 2013-14 than the $547 million in actual payments for the previous fiscal year. This will be the second consecutive year in which TVA revenues and payments declined. The estimated decline in payments results from the continued slow pace of economic recovery, the loss of a major direct industrial customer, greater energy efficiency, and mild weather. Even with the severe winter weather this year, TVA is expecting another decline in electricity sales. They reported in early February that electricity sales in the final three months of 2013 were down $245 million from last year.

The TVA payments, which are known as payments in lieu of taxes, or PILOTs, are divided among the states based both on revenues from power sold and on the value of power-generating property owned by TVA in each state. Tennessee, by far the single largest recipient of these payments, received $337.7 million in fiscal year 2012-13 and more than 60% of total payments made since 2011. Since the state distributes close to half of that money to cities and counties, declines in the PILOT negatively affect not only state funds, but also county and city funds. The estimated decline for the current year amounts to $2.7 million in the distribution to Tennessee’s county governments, slightly more than $1 million in the distribution to cities, and approximately $3 million to the state and its agencies. Innovative financing methods used by TVA, as well as changes in the supply system called for by the Authority’s management strategy, could further affect PILOTs. (Full Report)

Governor Haslam appoints TACIR’s executive director to task force on education funding

TACIR’s executive director, Lynnisse Roehrich-Patrick, has been appointed by Governor Haslam to a task force charged with studying how the state funds its public school systems. Ms. Roehrich-Patrick is one of a dozen state and local officials and staff who will study the Basic Education Program (BEP) funding formula for K-12 schools. Ms. Roehrich-Patrick was part of the team that developed the Basic Education Program formula in the early 1990s. The formula was last studied and modified in 2007. The task force will meet over the course of this year and will make recommendations to the governor by the end of the year. (Press Release)

Tracking Tennessee’s Economic Recovery

TACIR has partnered with the Middle Tennessee State University Business and Economic Research Center to provide an Internet site to track the state economy during the recovery from the recession that began in December 2007. The site will permit the reader to follow labor force status including employment and unemployment numbers; housing data including a housing price index and construction activity; and sales tax collections. These data are available for the state and for 10 Metropolitan Statistical Areas across the state. Presented graphically, the data may also be downloaded for use at the reader’s convenience. (More)

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TACIR's Mission

Serve as a forum for the discussion and resolution of intergovernmental problems; provide high quality research support to state and local government officials in order to improve the overall quality of government in Tennessee; and to improve the effectiveness of the intergovernmental system in order to better serve the citizens of Tennessee.