Tennessee's Secret Cookie Jars

Tennessee's alleged revenue problems are misleading. Deliberately so.

Try this analogy: Your employee comes to you and says she's having a cash crunch. Can she get a raise? You ask her about her situation. Yes, she says, she does make $60,000, but she has car notes, insurance, house notes, school, children's needs, groceries, etc. It takes all her income and more to keep up. This is what Naifeh, Sundquist, Kisber, et al. try to tell you.

But then you ask her the obvious question. How much do you have in the bank? She tries to tell you that's a separate issue, that it's about money coming in, not money unspent. You press and she finally admits that she has tens of thousands in the bank. Why, you ask, does she need a raise? Just use some of her savings.

This is where the pro-IT forces use sleight of hand. According to Tennessee's Comprehensive Annual Financial Review (CAFR), a Federally mandated accounting document, Tennessee has over $4 billion in the bank, in various accounts scattered throughout various departments! [Note: the page is large, over 600Kb, and requires Adobe Acrobat to read.] There is a private version, easier to read, here.

Senator Curtis Person is trying to pursue this. He has twice asked State Finance Director Walter Neel to provide him with an accounting. Below is an email he is circulating, explaining his travails:

Dear Friends:

Recently, I began searching for answers to accounting practices that affect the use of surplus funds.

Apparently, many state departments and agencies are taking surpluses at the end of a budget cycle and transferring them on paper into asset accounts. This appears to be a standard practice and once the funds are placed in asset accounts they become investments and do not appear as taxpayer dollars in the budget for the next fiscal year. This is a legal accounting practice; however, I believe any and all surplus funds belong to you, the taxpayers of Tennessee. Surpluses should be returned to the General Fund so they can be used as revenue or rebated to you. They should, at the very least, be applied to budget shortfalls before we ask the citizens of Tennessee to pay more taxes to fund state government.

I have written two letters to our Finance Commissioner, Warren Neel, asking for specific information regarding surplus funds in accounts labeled "Designated Reserves" and "Undesignated Reserves." To date, I have not received satisfactory answers from him. I addressed this matter in a caucus meeting and twice on the floor of the Senate. Each time I asked the members to research the use of these funds. So far, my colleagues have not responded.

I inquired and received a response from John Morgan, our State Comptroller. However, it is vague and claims it will take additional time for his staff to provide answers to my inquiry.

If there is truth to the information I have received regarding the departments and agencies hoarding taxpayer funds to cushion their own excessive spending, I want a thorough, independent audit of our accounting practices with the complete report published for every citizen to read. The lack of responses and specific answers regarding reserve funds causes me a great deal of concern and emphasizes the immediate need to question accounting practices being used by the State of Tennessee.

Now, I am asking you for your help in this matter. Please contact your Senators and State Representatives and ask them to demand answers to the use of surplus and reserve funds that are in reality your money!

I have no idea how much money should be available from these account overages to apply toward funding our State. However, I do know that this money belongs to the taxpayers of Tennessee. If there is any amount at all in any reserve funds anywhere, the right thing to do is to use it wisely as you have entrusted us to do.

Sincerely,
Curtis Person, Jr.
State Senator

Bill Hobbs had the Person email first. Tax Free Tennessee also has it. Please spread the word.

Until next time, that is all.