May 14, 2004

Tennessee GOP Has Right Approach on State's Big Surplus

NASHVILLE - Republicans in the Tennessee legislature are moving to restore to city and county governments in the state's next budget the more than $36 million in state-shared funds that the Bredesen administration took from cities and counties in order to balance this year's budget. The Nashville City Paper reports:

With the legislative session in its waning days, state Sen. Ron Ramsey (R-Blountville), the Senate Republican Caucus chairman, plans to present a budget amendment next week that would return the funds to local governments.

In light of recent news of a state budget surplus of $93 million this fiscal year and roughly $120 next year, Gov. Phil Bredesen recently laid out a laundry list on how to spend the money and lawmakers are lining up with alternative ideas.

"I want to take these over collections and give it back to local governments,” said Ramsey. “Local governments are struggling. We’re sending a terrible message that ‘we’ll make cuts but not return the money when things get better.'"

The City Paper, however, needs to pay attention to HobbsOnline and get its facts straight about this year's state budget surplus. It isn't $93 million. This year, the surplus is expected to reach $256 million.

As I noted here the other day, state tax collectors now expect to collect about $256 million more in tax revenue this fiscal year than was budgeted by the legislature for this fiscal year last May. Bredesen has already proposed plans to spend $163 million of it. Meanwhile, state finance officials have raised their estimate of revenue for the next fiscal year by $120 million since Bredesen released his proposed budget.

By using the $93 million figure, the City Paper and other news organizations are falling for a rhetorical trick. The administration knows the actual revenue surplus is approaching $256 million, but it has already decided how it wants to spend $163 million of that money, so it pretends that revenue is not surplus, and uses the lower figure of $93 million.

You can guess why they are doing it: If the average Tennessee taxpayer knew the real size of the surplus, they'd be clamoring for the legislature to give back part of that billion-dollar tax increase the legislature hit them with two years ago.

UPDATE: East Tennessee's best political commentator, Frank Cagle, emails:

My column tomorrow in the News-Sentinel asks why, with $256 million more in revenue, no one is talking about repealing the last sales tax increase. That crushing regressive monumental mistake editorial writers attacked in 2002. Also, I suggest people ask their legislator why Knoxville and Knox County are raising taxes while Bredesen keeps the state shared sales tax and the state has a surplus. It sounds like Ramsey is about to do something about that.