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Archived TACIR Publication Overviews

TACIR produces several types of publications each year. Overviews of publications are listed below. Each overview has a link to the full report.

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2014 |2013


Ensuring 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)

Local 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 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)


TACIR 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)

Government Transparency: Can One Size Fit All?

Access to government information has been important since America’s founding, but 21st century advances in technology have raised citizens’ expectations. TACIR’s report, Government Transparency: Can One Size Fit All? explores the kinds of data governments should make readily available, as well as challenges that stand in the way. Because of the differences in size, complexity, and resources of Tennessee’s state and local governments, the report suggests a varied approach to improve government transparency and provides a range of options that could help most governments improve information accessibility.

The Commission produced the report in response to two government transparency bills referred for study by the Senate Finance, Ways and Means Committee and the House State and Local Government Subcommittee of the 107th General Assembly, one bill addressing state government and the other addressing local governments. The report examines the guidelines of several national organizations that focus on government transparency and compares efforts by Tennessee’s state and local governments to peers in other states.
(Full Report)

Human Capital

One of TACIR’s goals is to provide useful information to everyone interested in understanding the challenges public policy makers face. As part of that continuing effort, staff developed a set of indicators that anyone can use to assess what’s going on in their own county, including reports on local economic activity and personal & family economic well-being and now our first report measuring human capital. Read it here.

Building Tennessee’s Tomorrow

Tennessee has $37.1 billion worth of public infrastructure improvements that should be in some stage of development from July 1, 2011, through June 30, 2016. TACIR’s latest infrastructure inventory report provides information on these improvements, grouping them into six general categories: transportation and utilities ($20.2 billion in infrastructure improvements), education ($7.2 billion), health, safety, and welfare ($6.2 billion), recreation and culture ($1.7 billion), economic development ($1.2 billion), and general government ($488 million). Transportation infrastructure, which dwarfs all other types, increased by $1.3 billion (6.8%). Even with that increase, overall infrastructure needs are flat compared with the year before.

The inventory also provides the only statewide source of information about the condition of public school buildings and what it would take to get them all in good or better condition. The news here continues to be good with local school officials reporting that 93% of local public schools are in good or excellent condition. The cost to bring the remaining 7% up to good or better condition is estimated at $574 million.

Further, this year’s report examines why infrastructure is built. Senator Mark Norris, TACIR’s chairman, notes that public infrastructure is one of the most important things government can provide to encourage economic development, saying, “This inventory is not just a catalog of infrastructure needs; it’s a guide for improving quality of life in Tennessee.” In addition to fostering economic development and improving the quality of communities, infrastructure is also built in response to population growth, public health and safety concerns, and government mandates. Examining these reasons and how they are related to funding, the report shows that two-thirds (67%) of the cost of improvements are needed for public health and safety, 29% is needed for population growth, and 22% is needed for community enhancement. (Full Report)

Land Use in Tennessee—Striking a Balance

Land Use in Tennessee—Striking a Balance is a new Commission report released by the Tennessee Advisory Commission on Intergovernmental Relations (TACIR) that presents the findings of the Commission on seven land use bills referred to it for study during the 107th General Assembly. These bills focused on what constitutes a subdivision, who gets to regulate land use outside city limits in areas set aside for them to annex, roads built by developers, and grandfathering of land uses that don’t conform to new zoning requirements. (Full Report)

  • House Bill 2818 (Faison) [Senate Bill 2878 (Southerland)] would have prevented regional planning commissions in the 47 counties without countywide zoning from regulating all lots one acre or smaller. House Bill 3042 (Elam) [Senate Bill 3167 (Haynes)] would have enabled local governments to regulate the subdivision of lots between 5 and 25 acres in size. Exempting lots one acre or smaller from regulation could jeopardize property values by denying property owners such benefits as adequate roads and water as well as assurances that development of adjacent property will comply with similar standards. Amending it to apply to lots larger than five acres could extend these benefits to more property owners.
  • House Bill 125 (Sargent) [Senate Bill 347 (Haynes)] would have enabled municipalities in counties without countywide zoning to both zone and regulate land use outside their corporate limits without prior approval from the county legislative body. House Bill 3041 (Elam) [Senate Bill 3119 (Yager)] would have enabled municipalities in those counties to regulate subdivisions, but not zone, outside their corporate limits without approval from the county legislative body. Support for these bills is based on the city officials’ concerns about becoming responsible through annexation for development that does not meet city standards. Opposition to the bills stems largely from the concerns of residents living outside the cities about land-use regulations being imposed on them by government officials for whom they cannot vote. Tennessee law provides two routes for resolving these conflicts, first through creation of joint city-county planning commissions and through joint economic and community development boards.
  • House Bill 3040 (Elam) [Senate Bill 3171 (Haynes)], which applied only to roads in cities’ planning regions outside their corporate limits, would have required those municipalities to accept full responsibility for new subdivision roads, relieving the county of any responsibility for those roads. In effect, this legislation would consolidate responsibility for these roads in the municipalities, but there is no consensus among city officials in support of it.
  • House Bill 3105 (Faison) [Senate Bill 2876 (Southerland)] would have permitted a developer and lot purchasers to agree through restrictive covenants to develop and maintain the roads in a subdivision themselves. These restrictive covenants would run with the land and be recorded with the deed or plat of the development. It is unclear whether a planning commission would be able to require such roads to meet the construction standards adopted for subdivision roads. The concern leading to introduction of this bill is the cost to build roads to municipal standards, but that concern is outweighed by the benefits of both increased safety and lower long-term maintenance costs.
  • House Bill 3043 (Elam) [Senate Bill 3118 (Yager)] would have removed language from the law that requires local governments to prove intentional abandonment or discontinuance of land use that does not comply with current zoning in order to prevent the landowner from re-establishing that use. Local governments would have been required instead to prove abandonment based on criteria such as utility connection information and dated pictures indicating abandonment. Substituting specific criteria for the requirement to prove intent benefits local governments, but also clarifies for landowners exactly what constitutes abandonment.
  • A related bill was not sent to the Commission for study but was reviewed as a part of this study. House Bill 3694 (Gotto) [Senate Bill 3646 (Ketron)] would have completely rewritten the nonconforming use statute. There is widespread agreement that the statute should be rewritten but no consensus on what the content should be.

Fire Service in Tennessee

Despite some improvement, Tennessee remains among the ten jurisdictions with the highest fire death rates nationwide, underscoring the importance of better understanding fire service in the state. Which is why the General Assembly asked TACIR to study how fire service is funded, in rural and suburban areas, whether provided by paid or volunteer fire departments, and to determine the effect on local governments of not having a fully funded fire department and what it would mean for firefighting to be made an essential service.

Different types of fire departments have access to different types of funding based mainly on whether they are city, county, or private corporations. Most fire service is funded through taxes or through fees. While tax revenue is typically general fund revenue, counties may also establish fire tax districts in which some portion of the property tax is earmarked for fire service. The Commission found no obvious reason not to extend the option of allowing fire tax districts to cities.

While there is no definition for “fully funded” or “essential service” in state law, conversations with the bill’s sponsor and fire officials support interpretation of a fully funded, essential service as a publicly funded, mandatory service. There are very few mandated services in Tennessee or any other state. In fact, the only mandatory service in Tennessee with a definition of fully funded is public education. And while many sources assert that there is a relationship between funding levels and fire losses, the data available for Tennessee’s fire departments does not indicate a strong relationship. The data, which is self-reported, is inconsistent and has many gaps for individual fire departments. The quality of data for fire departments and for fire incidents is a concern in itself, one that has already been identified by the State Fire Marshal’s Office (SFMO).

The report discusses a 2011 University of Tennessee (UT) study of fire deaths by Census tract that found that 90% of the Census tracts in Tennessee at highest risk for fire deaths are rural tracts characterized by high poverty; low education levels, incomes, and housing values; and a large number of mobile homes. The SFMO has already begun to target those high-risk areas in an attempt to reduce fire deaths, focusing largely on methods other than fire suppression—like distributing smoke detectors and supporting public fire-safety education—and on better data collection to help identify future strategies. (Full Report)

The Recession and Employment in the US and Tennessee: A Long Road Back to Normal?

The Great Recession, which began in December 2007, has been the worst general economic decline that most Americans have experienced. It began in the construction sector, spread to the financial sector, and eventually rippled throughout the economy, causing significant collateral damage in most other areas. Overall employment fell by 8.7 million nationally, and by 220,000 in Tennessee. Almost six years since the recession began, employment has not fully recovered. A few job sectors were insulated from the decline—primarily education and health services. Others, like state and local government sectors, were able to postpone some of the recession’s effects. Job growth during the recovery has varied by sector, as well as between Tennessee and the US and by region within Tennessee. Looking at data for the most recent 12 months, it’s apparent that the sector hit hardest by the recession—mining, logging, and construction—has been recovering, but not in three of the four big regions: Nashville, Knoxville, and Chattanooga. Memphis is the only one of the four with growth in that sector. The sector has also declined in Clarksville and Kingsport. A similar story emerges for the financial sector, which is not looking good in the Memphis, Nashville, Chattanooga, Kingsport-Bristol, and Johnson City areas.

Recent estimates by the University of Tennessee’s Center for Business and Economic Research show total employment in both the US and Tennessee regaining or exceeding their previous peaks by 2015. The expectation for recovery in some sectors in Tennessee, however, remains dismal. The retail trade, wholesale trade, financial activities, and information sectors are not expected to return to their peak employment levels until after 2022. Manufacturing may never return to its peak, which occurred in 1979 for the US and 1978 for Tennessee. (Full Report)

Tennessee Valley Authority’s Payments in Lieu of Taxes Annual Report to the Tennessee General Assembly

Managing within the $30 billion debt limit set for it by Congress in 1979 has led the Tennessee Valley Authority to adopt a number of innovative but, by its own account, costly financing techniques. Some of these techniques could affect payments in lieu of taxes to states in the region. Most TVA states, like Tennessee, use the funds as general revenue and share much of it with local governments. Tennessee is by far the single largest recipient of TVA’s payments in lieu of taxes, drawing more than 60% of the total since 2011, and distributes close to half of that money to cities and counties.

TVA’s new financing arrangements, in particular, sale-and-lease-back agreements, could change the amount of revenue available for state government to fund its own budget and to share with Tennessee’s cities and counties. This information comes to light in an annual report by the Tennessee Advisory Commission on Intergovernmental Relations. TACIR has been asked by the state legislature to monitor possible effects on TVA’s payments to the states.

The report also notes that TVA’s estimated payments in lieu of taxes for the region for federal fiscal year 2012-13 are expected to be around $537 million, $43 million less than the $579 million in actual payments for federal fiscal year 2011-12. This is only the second time since 2000 that a decrease from one year to the next has occurred. The projected decline comes as a result of the slowing economy, mild weather, and the potential loss of its largest customer, the US Enrichment Corporation, because of the impending closure of the Paducah Gaseous Diffusion Plant in Kentucky. The decline in estimated payments to Tennessee amounts to slightly more than $1 million in the distribution to county governments, $462 thousand to cities, and approximately $2.0 million to the state and its agencies. In most cases, the loss to counties and cities amounts to only a few thousand dollars. (Full Report)

Charting A Course to Tennessee’s Future

Charting a Course to Tennessee’s Future, a new staff report released by the Tennessee Advisory Commission on Intergovernmental Relations (TACIR), presents an overview of the Volunteer State’s strengths and challenges based on the experience and views of more than 40 Tennesseans representing state and local government, business, the not-for-profit sector, and academia. The report builds on the foundation laid by the Forum on Tennessee’s Future, a group of leaders convened by TACIR staff in 2008 to discuss our state’s greatest challenges. Like the members of the Forum, most of the people interviewed for this report believe Tennessee needs to improve its ability to prepare for the future. The challenges they identified are discussed in four broad categories: people, infrastructure, natural resources, and governance. The report encourages Tennessee leaders to draw on the expertise of various groups to develop a statewide vision and long-term goals in order to shape public policy around effective solutions and wise use of resources. (Full Report)

Eminent Domain in Tennessee

TACIR has released a Commission report on eminent domain legislation referred for study during the 107th General Assembly. The report makes several recommendations including that property owners should not have the power to force local governments into binding arbitration to resolve disputes over the price to be paid for condemned property, and that mediation should always be considered before arbitration. It also recommends removing language from the law that allows local governing bodies to delegate the authority to approve redevelopment plans to housing authorities, ensuring that such agencies could not approve the plans themselves and use them as a basis for condemnation without the oversight of the local governing body. The report notes that many stakeholders interviewed supported the idea of giving property owners a right of first refusal in all condemnation cases. It recommends adoption of the Tennessee Department of Transportation’s right of first refusal model, including limiting the right of first refusal to ten years from the date of condemnation, limiting it to the former property owner only, and setting the price based on appraisals of fair market value. The report also suggests that efforts should be made to better inform property owners about their eminent domain rights. (Full Report)