March 11, 2003

Ugh: "Unbudgeted Dollars"

The Bredesen administration has made a good start at restoring the credibility of the governor's office and the honesty of the budget process that were left shredded by his predecessor. Changing how it handles surplus dollars would be a good next step. And if the administration won't fix it, the legislature should.

In recent years I have written critically several times, in newspaper columns and online, of the Sundquist administration's use of the term "unbudgeted dollars" to artfully describe surplus revenue without using the word surplus. As longtime readers know, the Sundquist administration one year spent nearly $300 million in "unbudgeted dollars" while claiming the state faced a "shortfall" in the coming fiscal year. It could have saved that surplus for the next year, but instead chose to spend it, preferring the next year's "shortfall" be large enough to increase pressure to pass an income tax.

Even more than fiscally stupid, the Sundquist approach was constitutionally suspect. The administration spent the money without getting the legislature to appropriate it, although the state constitution requires every single dime the state spends be appropriated by the legislature, and spells out that the appropriations process involves passing a law. Instead, the Sundquist administration used a legislature-created loophole to simply advise a few key lawmakers that it was spending the money. Under the loophole, legislative consent was not required. Spending "unbudgeted dollars" became so ingrained in the Sundquist administration's way of doing business that, in response to several columns of mine criticizing the process on both fiscal and honesty grounds, Sundquist's finance commissioner Warren Neel inserted a highly defensive explanation of the process in its budget summary. It's on page A-65 of the FY 2002-03 budget and says this:

When notice of unexpected revenue is received by an agency, the Commissioner of Finance and Administration may submit an expansion report to the chairmen of the finance committees for acknowledgement. Upon the chairmen's acknowledgement of the expansion report, the Commissioner of Finance and Administration may allot the additional departmental revenue to implement the proposed or expanded program. This expansion procedure is not used to increase allotments funded from state tax revenue sources. No appropriations from state tax sources may be increased except pursuant to appropriations specifically made by law.

Article 2, Sec. 24 of the state constitution says verbatim: "No public money shall be expended except pursuant to appropriations made by law." Laws are made in Tennessee by majority vote in both houses of the Legislature, subject to normal signature or veto/override.

All that is background to some very bad bad news buried deep within the Bredesen budget. Bredesen's finance commissioner, Dave Goetz, did not delete Neel's defensive explanation of the constitutionally dubious spending practice. It's still in there, on page A-56 of the Bredesen budget document.

Perhaps in the rush to complete the budget, Goetz merely copied that section from last year's budget. Let's hope so, because the Bredesen administration needs to stop the practice of spending "unbudgeted dollars" and "unexpected revenue" without a legislative appropriation. The Bredesen administration needs to start calling "unbudgeted dollars" what they are - surpluses - and reserve them until the legislature passes a law appropriating them. In fact, lawmakers should demand reform. After all, right now they're left out of the loop. The finance commissioner and the governor get to spend millions of "unbudgeted" dollars by merely notifying the finance committee chairman in the House and Senate - not even getting their approval. Lawmakers have no say and no control. They ceded that power to the governor's office and it's time they take it back.