August 29, 2007

TN Attorney General: State Budget Violates Constitution

(Editor's note: This post updated Wednesday afternoon with response from governor's office at end.)

NASHVILLE - Tennessee Attorney General Robert E. Cooper Jr. has issued his legal opinion and, although he doesn't come right out and say it, the implication of the legalese is clear: the fiscal 2007-08 budget adopted by the legislature and signed into law by Gov. Phil Bredesen violates a key provision of the state Constitution.

Specifically, the Bredesen administration has failed to follow the law known as the Copeland Cap, which is designed to limit the growth of the state budget to a rate taxpayers can afford. This year's budget illegally overspends the cap by nearly $670 million.

Writes Cooper in the opinion, published Monday:

By their terms, both the Tennessee Constitution and Tenn. Code Ann. 9-4-5203 require officials to determine the percentage increase in "appropriations from state tax revenues" from the previous fiscal year in preparing the budget for each fiscal year.

The Copeland Cap is a provision in the state constitution which limits the year-over-year growth in state spending to the rate of growth of the state's economy. The legislature can exceed the cap but must specify in the budget the dollar amount and percentage by which it is breaking the cap. According to both the state constitution and relevant state law the Copeland Cap number is based on state appropriations. But Sims admitted that the Bredesen administration has always based its Copeland Cap calculation on revenues.

The difference is not insignificant. The current state budget claims to be only $53.7 million over the Copeland Cap, but if one calculates the cap number this year based on the fiscal 2006-07 budget's appropriations, this year's budget actually is $723 million over the cap.

That means that the current state budget contains nearly $670 million in spending that violates the state constitution.

Update: The Governor's office has not responded to a request for a statement regarding the AG's opinion.

Update: Bredesen press secretary Lydia Lenker responds:

"The Governor has not seen the legal opinion, but he will certainly review it. We feel comfortable with what we've done. The state of Tennessee has followed the most prudent and conservative budgeting practices, most recently noted in the upgraded bond rating from Moody's."

Moody's is a credit-rating agency. It doesn't care about how the state gets its money, only that it has enough money - the same way Mastercard doesn't care if you earn your money legally or illegally, it only cares that you pay your bills on time.

"We feel comfortable with what we've done." - I'm guessing that tune will change once Bredesen reviews the AG's opinion and the law.

I find it hard to believe that the Bredesen administration actually would defend its unconstitutional budgeting practices by saying, "Well, it got us a good bond rating."

That's not going to fly in court against the legal challenge that's now virtually assured...