Previewing the Tennessee and Virginia legislative sessions

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By A.J. Kaufman, Managing Editor

TENNESSEE

The 2025 Tennessee General Assembly convened Jan. 14 and is scheduled to run for 100 days.

Republicans hold a 27-6 Senate majority and 75 of the 99 House seats. With Gov. Bill Lee in the executive chair, Tennessee is one of 20 state legislatures where Republicans have the trifecta, a veto-proof supermajority in both chambers.

New bills to curb illegal immigration were filed nearly three months ago by Republican lawmakers ahead of the 114th general assembly.

One would distinguish legal immigrants from U.S. citizens by issuing them Tennessee identification cards with a different color, while another — deemed the Tennessee Illegal Immigration Act — would require law enforcement officers to take unauthorized immigrants to sanctuary cities if the person is not taken into federal custody.


Coming off a 2024 debate, there is also a growing divide in Nashville over the issue of school vouchers.
Lee’s school voucher failed passage in last year’s legislative session, and his second voucher bill — the Education Freedom Act — was introduced shortly after the November elections.

The original plan offered statewide access for all to taxpayer-funded school vouchers for private schools. The state already makes vouchers available for families below a certain income cap in Davidson, Hamilton and Shelby counties. Lee’s bill pushed to expand the program statewide and remove the income limitations after the second year of expansion.

The Republican governor’s new plan gives public school teachers a one-time $2,000 bonus and provides 20,000 students with over $7,200 in taxpayer-funded scholarships to spend on their choice of education.

Lee says he has made record investments in public schools during his tenure and noted in an editorial to close out 2024 that, “When it comes to education, parents know best, and there’s a reason why school choice is sweeping the nation. Now more than ever, parents are advocating for their right to decide what, where and how their child learns.”

The plan’s supporters claim that school vouchers are a way to empower families seeking quality education options for children. Detractors contend, without evidence, that school vouchers divert additional funds that could be used in public schools. To date, 33 states have adopted school choice measures and enjoyed success.

“I think that vouchers will receive the lion’s share of attention, and while as an individual, I certainly have my own views, it really isn’t something on which we at NETWORKS are taking a stance at this point,” NETWORKS Sullivan Partnership CEO Clay Walker told the Business Journal. “I am always concerned about potential funding levels of programs on which we rely, such as the TNECD Fast Track grants and incentives. But overall, our state remains viewed as business friendly and welcoming to investment and growth, so I really think that there is great value if our legislature continues to stay the course.”

Most recently, Lee called for a special legislative session to address Hurricane Helene relief, with a proposal of $20 million in state funding to rebuild Hampton High School and $240 million in disaster relief grants for local governments.

All three measured passed at the conclusion of January.

“The education scholarship bill gives the freedom of parents to choose which education system best fits their children,” Lt. Gov. Randy McNally said, adding that “At the same time, holds harmless local systems and indeed helps teachers with a bonus.”


VIRGINIA

As Virginia enters Gov. Glenn Youngkin’s final year in office, the commonwealth’s General Assembly convened in mid-January and will hold a shorter session than past years. Democrats hold slim majorities in the Senate (21-19) and House (51-49).

The governor is seeking tax changes that include rebates for the car tax, eliminating taxes on tips, changes to how businesses pay taxes and more. He also proposed additional spending on law enforcement, as well as continued investments in healthcare, the Commonwealth’s technology infrastructure and economic development, and disaster relief — with $127 million included to help residents rebuild in Southwest Virginia.

The proposals are buoyed by tax collections that came in above estimates.

“My friends, there is no reason to raise taxes on Virginians. We are running surplus after surplus after surplus,” Youngkin told legislators while unveiling his “Keeping Virginia Winning” budget in December. “My main point today is simple. Let’s keep going. There is reason to be optimistic about our economic outlook.”

Revenues through the close of 2024 were over 7% higher than the previous year, with a new economic forecast adding nearly $5 billion for Youngkin to propose incorporating into the two-year budget, which runs from July 2025 through June 2026.

New tax policies include forming a $1.1 billion fund to finance three years of tax rebates for Virginia’s contentious car tax. Individual filers must earn less than $50,000 — joint filers earning less than $100,000 — per year to qualify. While the car tax is a source of consternation for lower- and middle-class Virginians, it is a major source of revenue for local governments. The city of Richmond alone levies roughly $50 million annually in personal property taxes.

The governor said that helping Virginians “keep more of their hard-earned money in their pockets is not a Republican idea, it’s not a Democrat idea, it’s just common sense.”

Rising housing costs could be one area of compromise this session.

“In my estimation, housing is of paramount importance to Southwest Virginia,” Leton Harding, president and CEO of Powell Valley National Bank told the Business Journal. “Extension of the State of Virginia Housing Opportunity Tax Credit Program — set to expire at the end of 2025 — and recapitalization of the Community Development Financial Institution Fund could significantly benefit this housing and economic needs for Southwest.”

Lieutenant Governor Winsome Earle-Sears, who is poised to be the Republican nominee hoping to replace Youngkin in Richmond next year, said in part before the session began that “Our mission has always been guided by how we can meaningfully improve life in the Commonwealth, and that’s exactly what we hope to achieve during this legislative session. We certainly hope that spirit is shared by everyone. We will not be deterred nor distracted.”

She is leading efforts to enshrine “right-to-work” laws in the state constitution.

Locally, Delegate Israel O’Quinn is working on that issue, claiming that, “Because of Right to Work, Virginia has been home to a pro-business environment that has attracted record level investment and fostered innovation and growth in every corner of the Commonwealth, all while ensuring that Virginia workers are not coerced into joining a labor organization simply to obtain employment.”

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