Tennessee Budget News

The Commercial Appeal is reporting today on Governor Phil Bredesen's new budget for next fiscal year (2004 - 2005). The paper spins the good news for Memphis, in that we get roughly $200 million sent out way on various projects, but if we step back, it's bad news overall.

You have to read down into the article to learn that the $10 million for Memphis "biotech initiative" is really for "site renovation," a neutral term for tearing down the old Baptist Memorial Hospital.

There's $56 million for a new mental health facility in Bolivar. But readers with long and sticky memories may recall that a battle was fought a few years back over just this thing. Memphis Mental Health had to fight to get this project stopped back in the late Nineties, because its purpose was to divert folks from MMHI, threatening it with shutdown. It was, as I recall, a pork thing by the Bolivar representative. The argument against the Bolivar facility was that having such a mental health hospital in a major metro area like Memphis made more sense than releasing patients into a town like Bolivar. I'd like to learn more here.

But if you read into the story, you find this:

The 2004-2005 budget, which goes into effect July 1, calls for no new taxes or tax increases. Instead, it is funded by nearly half a billion dollars in increased money from the federal government, $313 million in revenue growth from existing state taxes, $163 million in savings carried forward from the current year and $200 million in cuts in most areas of government.

This is what disturbs me. You may recall (cough, cough) that we had a major tax battle in this State just a year or so ago. Stopping the income tax was the goal, but the Sunquist-era Legislature -- still in the thrall of old ways -- failed to rein in spending. It was assumed that just letting budgets run amok like always would scare citizens into accepting the IT. That failed, but we ended up with an increase in the sales tax that netted a new billion dollars for the State.

If you read Bill Hobbs' blog, and you should if you're interested in Tennessee budget politics, you'll know that Tennessee is running revenue surpluses this year. We're on track to run maybe $130 million this year and maybe as much as $350 million next year. Compare those numbers with the paragraph quoted above. Notice anything?

I can understand the attraction of using the expected surpluses to fund all these projects. It's got to be hard to fight. But Governor Bredesen did just that with his first budget, accomplishing the seemingly impossible task of getting State government to cut growth. He did it without huge battles or nasty rhetoric. He made a promise to the people of Tennessee and to the surprise of nearly everyone managed to keep it.

So now, when we see that taxes are producing higher than "needed" revenue, why is the Governor not considering reducing the sales tax? Take a bit of the burden back off the good people of Tennessee. Even a mere quarter-point reduction would still bring revenues to just above parity with budget needs. A quarter-point sounds like nothing but imagine the symbolic power of doing it.

It would be a message to the people of Tennessee and a message for the special interests across the State. Bredesen would suddenly have a huge public pool of good will. He'd be a hero, at least to the people.

But this budget seems to prove what many conservatives, Libertarians and Republicans have feared -- that when times got flush the governor would revert to his Democratic principles and succumb to the pressures of government-fed interests in spending all the "extra" monies. Most of the spending is for physical projects, but some is for new and expanded programs that can only mean more spending commitments for the future.

I am disappointed. Reduce the sales tax!