I don’t support sacrificing state’s future
I have received phone calls and e-mails both before and after the recent income tax vote. Typically, I am asked one of two questions.
Some people have asked me if I was for an income tax. The answer to this question is no. Other people asked me if I was going to vote for an income tax. My answer to this is I am not planning to. However, if the only options left on the table were to implement an income tax or make drastic cuts to the budget, I would vote for the income tax.
I am not opposed to cutting $200 to $300 million dollars out of the budget, but I am only one person. I have my own ideas of where to make this type of cut. The problem is there are 98 other legislators and each one of them has their own idea of where to make cuts. Therefore, a consensus is never reached. As a result, most budgets are cut by not fully funding budget requests.
The tax reform bill that was recently voted on contained several tax measures. It raised the tobacco tax, alcohol, beer and wine; had a 4.5 percent flat income tax beginning Jan. 1, 2003; repealed the Hall Income Tax beginning Jan. 1, 2003; and raised the sales tax 1 cent from July 1 until Dec. 31, 2002.
The net result of this bill would raise $970 million in the first full year and $1.25 billion the second full year. This bill would, in effect, have cut $430 million from the governor’s proposed budget of $1.4 billion.
I have been advocating and supporting repealing some of the sales tax exemptions and taxing some services at a reduced rate. The sponsors of the bill accomplishing this were unable to obtain the necessary votes to pass the bill.
This bill, as presented, would have raised $966 million the first full year. The second year, it would only raise $758 million. This would cut the governor’s proposed budget by $434 million. It removed many sales tax exemptions and taxed several services, such as accounting and real estate commission, some of which I disagree with. However, I would rather vote for this bill because I have never supported an income tax.
I also want to address the issue of TennCare. TennCare has two major problems: The state is not the best manager and we can’t make any changes without permission from the federal government because they provide two-thirds of the funding.
When we find problems with management, we can and should take measures to correct these problems. However, when it comes to making major changes to TennCare, we cannot make them without permission from the federal government.
For example, we were under a federal restraining order for several months that would not allow us to purge anyone from TennCare, even if they had failed to pay their premiums or obtained TennCare fraudulently. However, we purged over 60,000 people from the TennCare rolls in December 2001, after the federal restraining order was lifted.
Overall, the current situation is that there are 13 legislators who will not vote for any type of revenue proposal. Then there are 44 legislators who will only vote for an income tax. I am one of the 42 in favor of removing exemptions and taxing some services, but my option was taken away.
My fear is that because of this split among legislators, we will not be able to pass anything and it will be a tragedy. If we cut 10 percent of state dollars from every department, we would cut just over $800 million. However, there are some departments that receive federal matching funds and these will also be withdrawn. The major department cuts would be as follows:
• K-12 education – Over $220 million in state cuts
• Higher education – Over $120 million in state cuts
• Highway – Over $60 million in state cuts; over $20 million in federal matching money
• TennCare – Over $180 million in state cuts; over $360 million in federal matching money
There could be additional TennCare cuts if K-12 cannot be cut due to court order. This would result in an extra $270 million cut from TennCare at the state level, matched by $360 million in federal matching funds.
The additional $170 million would come from other departments. We are currently under court order with K-12 education and may be unable to make cuts to this area. In effect, the amounts cut from this area will probably be taken from TennCare.
As you can see, the state of Tennessee is in a terrible dilemma. We are in this dilemma for several reasons: poor budgeting, loss of revenue due to Internet sales, loss of franchise and excise tax due to federal economic incentive program, and loss of revenues due to the recession after the Sept. 11 tragedy.
Thanks,
Charles Curtiss
5538 Smithville Highway
Sparta