October 26, 2006

Sen. Henry's Dismal Record on Keeping Taxes Low

State Sen. Douglas Henry's campaign has released a new television ad and, true to form for his Weekend at Bernies campaign, the senator doesn't speak in the ad. The ad, with production values and a voice-over befitting a movie trailer for a big-budget Hollywood drama, features various pictures of Sen. Henry as the voice says "you can count on" Sen. Henry to "hold the line against higher taxes."

One thing the ad confirms, however, is that after 36 years in the state Senate, you can no longer count on Sen. Henry to talk directly to the people he's supposed to serve. Sen. Henry doesn't appear or speak in the ad, just has he has made few campaign appearances, refuses to debate his opponent , and when he does make an appearance it is usually brief and doesn't involve answering questions from the audience. (He did have time earlier this year to do a video greeting to the people of China celebrating the Chinese New Year.)

Sen. Henry's new ad is rather disengenous regarding Sen. Henry's 36-year-record on taxes.

Twice in the past year, Sen. Henry has supported stripping Tennesseans of their right to use referendums to defeat tax increases - both the wheel tax (car tag fee) and the local-option sales tax. More on that in a bit. On the all-important issue of the state sales tax, the senior senator from wealthy Belle Meade has a 36-year track record of voting for tax hikes that have increased the sales tax burden on the average Tennessean by 55 percent.

The state sales tax rate was 2 percent when Henry was first elected to the state House in 1955. He served a single term in the House. In 1971, when Henry was first elected to the state Senate, the Vietnam War was winding down and the disco era was dawning - and the state's sales tax rate had just been increased to 3.5 percent.

In 1976, under Gov. Ray Blanton, the legislature raised the sales tax rate to 4.5 percent.

In 1977, Sen. Henry became chairman of the Senate Finance, Ways & Means Committee, the committee through which all tax legislation, including tax increases, must pass.

In 1984, Sen. Henry and the Senate Finance Committee helped Gov. Lamar Alexander raise the sales tax rate another penny to 5.5 percent.

In 1992, Sen. Henry and the Senate Finance Committee helped Gov. Ned McWherter raise the sales tax rate half a cent to 6 percent

In 2002, Sen. Henry proposed creating a statewide property tax to raise an additional $1 billion in revenue.

Also in 2002 Sen. Henry and the Senate Finance Committee helped Gov. Don Sundquist raise the sales tax rate another penny, to 7 percent, raising taxes on Tennesseans by approximately $1 billion per year.

In all, under Sen. Henry's leadership of the Senate Finance Committee, Tennessee's sales tax rate has gone up more than 55 percent.

And that's just the state sales tax. Sen. Henry has also played a role in increases in the state's business taxes, gasoline tax and other taxes and fees.

Even after helping pass a billion-dollar sales tax increase in 2002, Sen. Henry wasn't done with trying to raising taxes during his ninth four-year term in the state Senate.

Sen. Henry Supports Higher Wheel Taxes
In February 2005, Sen. Henry sponsored and pushed legislation designed to make it easier for county commissions to increase wheel taxes (car tag fees), and to strip from state law the current right that Tennessee residents have of using a petition drive and referendum to overturn wheel-tax increases. And in December 2005 Sen. Henry backed a recommendation by the Tennessee Advisory Commission on Intergovernmental Relations that would put an end to the requirement that increases in the local-option sales tax be approved by voters in a referendum. The respected Tennessee Journal reported in its Dec. 19, 2005, edition that Henry made a motion and the commission then voted to recommend that the legislature remove the referendum requirement.

In short, twice in less than a year Sen. Henry actively supported proposal to take away your existing right under Tennessee law to vote on increases in your taxes. If Sen. Henry had his way, it would be easier now than ever for your local or county government to raise your wheel tax and your local sales tax.

Excess Spending Requires Higher Taxes
Far from "holding the line against higher taxes," Sen. Henry has actively helped raise them at the state level. Perhaps he felt he had to because spending was rising fast too - but, then, Sen. Henry bears a lot of the blame for that, too.

The growth of the state budget accelerated starting in 1985, when the legislature began to exploit a loophole in the state constitution's spending-growth limit.

As detailed in the research paper Spending Spree: The Bipartisan Assault That is Killing The Constitutional Cap on the Growth of Tennessee's State Budget, published in August 2005, Tennessee's last four governors, two Democrats and two Republicans, have routinely exceeded the state constitution's cap on the annual growth of state spending, a limit designed to prevent tax increases by limiting the growth of the state budget to the growth of the average Tennessean's income.

But because of a loophole, every governor since 1985 has exceeded the spending limit - aided and abetted by Sen. Henry and his Senate Finance Committee, which has rubber-stamped the excess spending and the higher tax rates needed to pay for it.

Gov. Lamar Alexander, a Republican who was governor from 1979-1987, exceeded the spending cap twice in eight years by a total of $740.6 million, including $582.6 million in fiscal year 1985, $58 million in fiscal year 1986, and
$100 million in fiscal year 1987.

All of Alexander's excessive spending came after Sen. Henry and the Senate Finance Committee helped Alexander raise the sales tax rate another penny to 5.5 percent in 1984.

Following Alexander's lead Gov. Ned Ray McWherter, a Democrat who was governor from 1987-1995, exceeded the spending cap four times in eight years by a total of $1.328 billion. His budgets over-spent the constitutional limit by $101 million in fiscal year 1989, $74 million in fiscal year 1990, $703 million in fiscal year 1992, and $450 million in fiscal year 1993.

In 1992, Sen. Henry and the Senate Finance Committee helped Gov. Ned McWherter pass a "temporary" half-cent increase in the sales tax rate to 6 percent. The tax increase was needed to keep up with McWherter's overspending in fiscal years 1989 and 1990 and to fund his overspending in 1992 and 1993. The "temporay" tax hike was made permanent, helped by Sen. Henry and his Senate Finance Committee..

Nearly matching the pace of Gov. McWherter's overspending, Gov Don Sundquist, a Republican who was governor from 1995-2003, exceeded the spending cap three times in eight years by a total of $1.096 billion, including $55 million in fiscal year 1997 and - incredibly, given his claim of a revenue shortfall - by $270 million in fiscal year 2000.

In 2002, after first proposing to create a statewide property tax to raise an additional $1 billion in revenue, Sen. Henry and his Senate Finance Committee instead helped Sundquist raise the sales tax rate another penny, to 7 percent, raising taxes on Tennesseans by approximately $1 billion per year.

The additional revenue from the tax increase was needed to sustain Sundquist's over-the-limit spending in fiscal years 1997 and 2000, and to fund the $771 million in excess spending over the constitutional growth limit in fiscal year 2003.

Gov. Phil Bredesen, a Democrat who took office in 2003, has exceeded the spending cap once in his first four years, by $275 million, in fiscal year 2004.

While a surging economy has, so far, provided large revenue surpluses to sustain the latest spending in excess of the constitutional growth limit, it will take merely a slowing of the economy to once again pitch Tennessee state government into a fiscal crises, as revenue growth falls short of spending growth.

When it does, you can be sure, based on his history, that Sen. Henry will be there to help raise taxes again.

The history of Tennessee's state budget and tax rates over the last 21 years shows a direct correlation - when the legislature repeatedly grows the state budget faster than the average personal income of the people of Tennessee, tax-rate increases always follow - and when taxes are raised, over-spending also follows.

Growing the budget faster than average personal income statewide makes tax hikes inevitable - and Sen.Henry has been serially complicit in the state routinely exceeding the constitutional spending growth limit.

Henry's fiscal leadership was so bad that, in 2002, The Tennessean endorsed Henry's opponent in the Democratic primary in 2002, in a stinging endorsement criticizing Sen. Henry's "lack of leadership" during the 1999-2002 state budget crisis that said Henry's lack of leadership "has contributed to the stalemate Tennessee has suffered," and called for "a fresh approach to government" for a Tennessee legislature that "desperately needs new ideas."

Instead, Sen. Henry offers old, discarded and discredited ideas:

"Henry is chairman of the Senate Finance Committee, which has become increasingly irrelevant in the ongoing tax debate. He has championed a state property tax, a bad idea state government abandoned in 1947." - Tennessean columnist Larry Daughtrey, April 14, 2002.

Henry's arrogant refusal to debate his Republican challenger regarding his own record on taxes and other issues, or to take questions from audiences is troubling.

Or maybe such a debate is no longer possible. Maybe after 36 years in the state Senate, Sen. Henry has simply forgotten that he has a record on the issues, and a record on taxes - a record of providing every major tax increase requested by every governor since 1977 - that belies his slick campaign ad. Perhaps he has forgotten all those votes he's cast in favor of higher taxes.

Perhaps Sen Henry simply has forgotten that his actions speak louder than his campaign ads.

Maybe 36 years in the state senate is enough.

Update: A reader pointed me to this radio ad on Henry's campaign site. Well, at least the site calls it a radio ad. I haven't actually heard it on the radio. It sounds like Sen. Henry recorded it without leaving his house by calling his answering machine. It even starts with a hearty "Hello!" as if you have just answered his call. Odd.

The ad continues Sen. Henry's disingenuousness on taxes by claiming "we have balanced the budget without a tax increase." That's not actually true. First, the $1 billion sales tax increase just three years ago costs taxpayers $1 billion or more every year. And, second, Henry and the Senate Finance Committee helped the Bredesen administration pass a $75 million tax increase on the business community just two years ago. Details here and here.

Update: Sen. Henry's election challenger, Bob Krumm, is up on TV with a new ad that you can view here.