November 28, 2004

No Surprise

Surprising absolutely nobody, the Tennessee Tax Structure Study Commission - all of the members of which were appointed by elected officials who favor a state income tax, and none of the members of which is on record opposing an income tax - is going going to recommend a state income tax.

The commission is a shining example of political malpractice. Even though a state income tax is plainly not permitted by the state constitution, and the state Supreme Court has affirmed that to be true in three different unanimous rulings, the state's previous governor, Don Sundquist, and Democratic legislative leaders including House Speaker Jimmy Naifeh and then-state Sen. Robert Rochelle tried to pass one a few years ago. Having failed, they then cooked up this commission to "study" the state's tax structure and make a recommendation.

The commission was then stacked with income tax supporters and its chairman, Nelson Andrews, is a vocal advocate of the income tax.

It's forthcoming recommendation was pre-ordained.

But the commission has only looked at half of the state's budgetary picture. Taxes are only half of the equation that determines fiscal health. Spending is the other, and there is not nor has there ever been a Tennessee Spending Structure Study Commission.

But there are facts about spending that can not be denied. In 12 of the last 20 years, the legislature and a series of governors have conspired to break the state constitution's cap on annual government spending growth. That cap is designed to limit the growth of spending to the growth rate of the state's economy, so as to keep government affordable to the people of Tennessee. Under governors Lamar Alexander, Ned McWherter, Don Sundquist and Phil Bredesen the spending limit has been exceeded a dozen times by a total of $3.2 billion in first-year excess.

That has cost Tennessee taxpayers far more than $3.2 billion over the years as each year's budget becomes the baseline for the successive years' growth. Thus, exceeding the cap by $100 million last year, as Gov. Bredesen and the legislature conspired to do, will cost Tennessee taxpayers ten times that amount - $1 billion - over the next decade.

During his administration, Sundquist exceeded the spending cap by a total of $1.096 billion, the sole reason the legislature by the end of his second term was forced to pass a $1 billion tax tax increase.

There is a proposal pending in the legislature that would fix the loophole that allows the legislature and governor to easily break the constitutional spending cap. It is called the Taxpayers Bill of Rights. It's chief sponsor is state Sen. Jim Bryson. The measure, if passed, would allow voters to vote on whether to amend the state constitution by adding the Taxpayers Bill of Rights. If they approved the amendment, it would not only limit the growth of state spending, it would force the legislature to build a healthy "rainy day" reserve fund, and then require future excess tax revenue to be returned to voters. It would also require the legislature to allow voters to vote on future tax increases. It is a reform that would force the legislature to address the state's out-of-control spending structure and restore fiscal sanity to the halls of Legislative Plaza and the governor's office, where it is sorely lacking and has been for the last 20 years.

[Note: I have been writing about the Taxpayers Bill of Rights and Tennessee's tax and budget numbers and politics for several years now, here at HobbsOnline and, before that, for the Nashville City Paper and the now-defunct weekly In Review. You can find a wealth of information in my Tennessee Budget & Tax Policy archive, my Taxpayers Bill of Rights archive, and a fairly brief summary in this 17-page white paper. My City Paper columns are all online and listed here. My InReview columns are not available online.]