(The Center Square) – Tennessee ranks second for its economic outlook in an annual analysis of the fiscal health of the 50 states.

The 18th annual Rich States, Poor States from the American Legislative Exchange Council shows Tennessee moved to the second spot after ranking 6th in 2024 and 13th in 2023.

The Volunteer State received its highest marks for its tax policies. The state has no income tax or estate/inheritance tax. Tennessee also received the top mark for its minimum wage, which is at the federal level of $7.25 an hour.

Tennessee’s high sales tax rate placed it at 44th, its worst rating. The sales tax rate is 7%.

The state’s economic performance ranking was 12th among the 50 states, according to the report.

An analysis of Tennessee’s gross domestic product for 2013 to 2023 showed it was 76.25%, 10th in the country.

The state welcomed 405,833 new residents between 2021 and 2023, ranking it seventh among the states, according to the report.

“As Washington attempts to tackle debt and dysfunction, the states remain America’s last line of defense for fiscal responsibility and economic growth,” said ALEC President and Chief Economist Jonathan Williams. “Rich States, Poor States once again illustrates that Americans vote with their feet – leaving high-tax, high-regulation states in favor of those embracing low taxes, balanced budgets, and worker freedom. The states leading our rankings thrive because they put the people first.”

Utah took the top spot in the report, with Indiana, North Carolina and North Dakota rounding out the top five. The bottom five states are Illinois, California, New Jersey, Vermont and New York.

The report was co-authored by Reagan economist Dr. Arthur B. Laffer, policy expert Stephen Moore, and ALEC president and chief economist Jonathan Williams.

(The Center Square) – A bill that would allow Tennessee’s school districts and charter schools to ban students who are not in the country legally was delayed due to the possible loss of federal funds if it passes.

House Bill 703’s fiscal note says federal Title VI protections extend to undocumented individuals in the United States. Title VI is part of the Civil Rights Act of 1964 that bans programs from discrimination.

“Violations of federal civil rights laws may place this funding at risk, however, the specific amount at risk is undetermined,” analysts wrote in the bill’s fiscal note.

The state receives $1.1 billion in federal funding each year. Local school systems and charter schools could also face a loss of federal funds, analysts said.

The bill, sponsored by Rep. William Lamberth, R-Portland, was put “behind the budget” and could be considered again once lawmakers pass the state budget.

The Senate passed its version of the bill last Thursday, with supporters calling the bill a “financial” decision and opponents questioning the moral cost. Senate Bill 836, sponsored by Sen. Bo Watson, R-Hixson, received “no” votes from some Republicans.

“But I think this is a bill that we do not need in the state of Tennessee and it will not pay dividends in the future for the children,” said Sen. Todd Gardenhire, R-Chattanooga.

The Small Tennessee Business Alliance said the bill’s sponsors have not shown the bill could save money.

“This is an admission that Sen. Watson and Rep. Lamberth’s attack on children isn’t just morally indefensible – it’s fiscally reckless,” the organization said in a news release. “So we want to know: Will they finally drop their crusade against these children?”

The Hamilton County Principals Association is asking the local school board to pass a resolution that says all children in that county will have access to school.

“As educators, our mission is clear: we are dedicated to creating safe, welcoming, and inclusive environments where all students can thrive,” the association said in a statement. “Efforts to exclude children from school due to their immigration status undermine this mission, threaten the well-being of vulnerable communities, and harm the future of our nation.”