August 17, 2005

A Surplus of Confusion

NASHVILLE - Tennessee Gov. Phil Bredesen's administration on Wednesday issued two confusing announcements regarding the state's tax revenue surplus. Just hours after the Tennessee Department of Finance & Administration announced a $260 million surplus for the entire fiscal year, Gov. Phil Bredesen's office announced the state had recieved $120 million in surplus revenue in May.

The Nashville City Paper posted the breaking news late Wednesday afternoon."I think it’s a testament to the healthy state of the economy here and the fact that we've been conservative in our projections about things, so we're trying to always give good news on the finances instead of trying to explain some bad news," Bredesen said.Bredesen said the $120 million surplus would be used to strengthen the TennCare "safety net."

But the governor's announcement of $120 million in surplus revenue in May is confusing.

As I reported here on June 10, Tennessee collected about $10 million - not $120 million - in surplus revenue in May, and ended May with $102 million in surplus revenue after the first ten months of revenue collection for the fiscal 2004-05 state budget.

This isn't the first time the administration has issued a misleading statement about the size of the revenue surplus.

Three weeks ago, Revenue Commissioner Loren Chumley told a group of Knoxville Rotarians that the state would end the fiscal year with a surplus of "above $100 million" even though the state's surplus stood at $194.5 million through June. As I explained here, Chumley's claim of a surplus of around $100 million appeared to be a bit of deceptive spin as she, apparently, was comaring the revenue totals to the total actual spending, rather than the budgeted spending. That makes the revenue surplus appear smaller because the Bredesen administration had already made plans to spend more than the legislature budgeted, eating into the revenue surplus.

I have sent Bredesen's office an email seeking a clarification.