Finance, Ways and Means Committee [Source] Translate

The Senate Finance Ways and Means Committee meeting began with a roll call confirming 11 members present. Chairman Hensley reminded members of the upcoming Senate Revenue Subcommittee meeting on February 24 and the deadlines for placing bills on notice and amendments. Senator LaBarbe acknowledged Senator Yarbrough's recent birthday. Dr. Larry Kessler from the Boyd Center for Business and Economic Research presented the 2026 economic report to the governor, discussing the economic environment in Tennessee. He highlighted U.S. real GDP growth trends from 2000 to 2019, noting volatility in 2025 due to trade policy changes and consumer spending patterns. While Tennessee's GDP showed strong gains, job growth was muted, raising concerns about "jobless growth." Non-farm employment growth had slowed significantly, particularly in construction and health services, with most counties experiencing job losses. Dr. Kessler indicated a current labor supply shortage of 20,000 workers, despite low unemployment rates trending upward. The committee discussed unemployment and labor force participation, particularly among younger workers, who faced challenges in the job market. Labor force participation rates had declined since the pandemic, with older workers also retiring at accelerated rates. The impact of government stimulus on economic growth was noted, along with concerns about distortions in economic data. Questions arose regarding employment trends in rural areas, where job losses were attributed to population outmigration and technological advancements in agriculture. Structural issues like inadequate infrastructure and healthcare were identified as hindrances to rural economic growth. Education's impact on labor force participation was discussed, with Tennessee improving in high school attainment but lagging in bachelor's degrees. Senator Hensley questioned how employment is counted for individuals living in rural counties but working elsewhere, clarifying that they are counted in the county where they work. The conversation then shifted to consumer spending and wealth distribution's impact on sales tax revenue, emphasizing the importance of maintaining low tax policies. International trade implications were discussed, noting a significant increase in effective tariff rates and its effects on inflation and business costs. A business leader survey indicated that 75% felt tariffs impacted their operations. The meeting highlighted a decline in imports from China and a rise from Vietnam and Taiwan, along with drops in Tennessee exports to Canada and China. Population growth in Tennessee was noted, with nearly 97,000 new residents in 2022, primarily from domestic migration. Employment and GDP growth forecasts indicated a slowdown, with projections of 24,000 new jobs in 2025 and 31,000 in 2026, influenced by an aging workforce. Senator Wiley raised concerns about job growth relative to the influx of working-age adults and the impact of AI on job retention. The discussion included migration trends related to tax policy, particularly Tennessee's lack of an income tax. A study on the Tax Cut and Jobs Act's impact on migration found that while the SALT cap affected housing prices, it did not significantly influence migration patterns. The demographics of new residents, particularly those aged 25 to 39, were examined, noting a significant portion in higher education sectors. The meeting transitioned to agricultural trade policy, discussing challenges faced by farmers due to weather and trade issues, particularly with exports to China. Collaboration with the University of Tennessee's Agricultural Economics Department was ongoing. Mary Beth Thomas, Executive Director of the Sports Wagering Council, presented the council's budget and regulatory responsibilities in the sports betting industry. She reported on privilege tax collections totaling $412 million since legalization and discussed efforts to combat illegal sports betting. The council requested four additional positions to manage increased compliance and investigation workloads. The council's budget relied on licensure fees and fantasy sports vendor fees, estimating total revenue for the next year at $8.16 million. A conservative estimate of a 5% revenue increase was provided, despite an 18% growth in the past year. Concerns about fair competition and problem gambling were raised, with the council confirming that sportsbooks must disclose their rules. Senator Hensley inquired about payment methods for wagers, confirming approved methods for deposits. The committee decided to postpone further discussion on the budget proposal for a week to allow for additional consideration and conversations with the council, recognizing the importance of ongoing litigation related to sports gaming.