April 21, 2004

Solid Revenue Growth Forecast for Tennessee Government

The Jackson Sun editorial page today urges the Bredesen administration to Save, Don't Spend, State's Meager Surplus:

Tennessee lawmakers should follow Gov. Phil Bredesen's advice and stop spending money they don't even have yet. Instead, any money they have left over this year and next should be put toward replenishing the state's battered reserves which have been depleted the past several years just to make ends meet.

The State Funding Board adopted its revenue estimates Monday, and for the first time in several years, things are looking up for state finances. Projected growth over the next couple of years is moderate - between 3.85 and 4.6 percent. That translates to between $15 million and $67 million in non-recurring funds this year, and $64 million and $112 million next year. Already, lawmakers are fighting over what to do with that money.

While the editorial is right about the need to save rather than spend surpluses, it confuses the issue by calling the Funding Board's projection of next fiscal year's revenue growth a "surplus." The real surplus is being piled up this current fiscal year. Sadly, the Bredesen administration has already made plans to spend that money rather than rebate it to taxpayers via a reduction in the sales tax rate, or save it in the state's reserves for a future "rainy day."

By the way, regarding the State Funding Board, I recommend you read, if you haven't already, my post from yesterday on how the Funding Board's work is often politicized.