March 16, 2007

Sales Job

State Sen. Mae Beavers' op-ed in today's Tennessean makes perfect sense in arguing that the state budget can absorb a reduction in the sales tax on food simply by slowing the growth of state spending a tiny bit.

This year the state is projecting a budget surplus of $318 million. The Funding Board will meet in May, and there is a possibility that the surplus could be even larger. A portion of the surplus comes from over collection of taxes. In other words, the state has actually been collecting more money than it budgeted.

Logic would tell us that when you receive more than you need, you return the excess; however, that is not happening. When additional revenue comes into the state, it is spent. Not only is it spent, but it is added to the base, which means the state expects that money the next time around.

All we would have to do to rip out the food tax root and branch would be for our government to spend the same thing last year as it did this year. Would that be horrible?

Can the state live without that $39 million? Consider some facts and historical perspective. First, the state's revenue surplus in February was $30 million. Second: Just seven years ago, the state legislature passed a budget totaling $18.4 billion, including federal dollars. Seven years later, Gov. Bredesen is proposing a $27.5 billion budget, including federal dollars.

Given that state spending has been growing by about $1 billion a year for almost a decade now, it's not unreasonable to think the state could tap the breaks a bit on the spending surge, just to slow it down a bit - like slowing your car from 100 miles per hour down to just 99.986 miles per hour.

Nobody would notice the difference. Well, nobody except the people of Tennessee who would have a little more money left in their pockets after they buy their groceries.