Friday, June 08, 2007

Final State Budget Details Emerge

Joe White at WPLN is reporting the final budget details. This is absolutely sickening. (see item 6) After raising taxes by $250 million in a year of huge budget surpluses, OUR elected representatives are going to reduce the food tax by a measly 1/2 percent and add another sales tax "holiday" for Easter Weekend...this results in a net tax hike of approx $200 million in a year when State Government was awash in taxpayer dollars. This is a disgrace.


1) The budget will be based on revenue estimates that are on the high end of the state Funding Board's earlier estimates, both for this year and next year.

2) To offset that, the budget adds $150 million to the Rainy Day Fund. That contribution drives the safety-cushion fund towards the 11% of an annual budget that the Funding Board is seeking. And the money would be available for two foreseeable expenses:
i) If revenue estimates are correct, the money being banked this year would fully fund the state's Basic Education Program (BEP) for three years; or
ii) If revenues fall off, the amount would cushion the entire budget – the correct named for the Rainy Day Fund is "revenue fluctuation account."

3) The bill recognizes $75 million in unspent state funds carried forward from the current year – not new revenue, but money which can be spent.

4) The appropriations bill recognizes $68 million in "treasurer's earnings," money traditionally allocated by the legislature for its own priorities.

5) The spending bill is based on a 42-cent increase in per-pack cigarette taxes.

6) Tax relief under the appropriations bill takes two forms:
i) A permanent, one-half percentage point decrease in sales tax on groceries.
ii) A spring tax holiday, probably Easter Weekend 2008, on the same items that were tax-exempt this past April.
iii) State-paid property tax relief for disabled veterans would be extended to persons with "service-connected" disabilities, rather than as currently, "combat-related" disabilities.
iv) State-paid property tax relief for senior citizens would be extended to those making up to $24,000 a year, versus the current $20,000. THIS IS NOT THE SENIOR CITIZEN TAX FREEZE PROPOSAL, which has not so far been passed by the legislature.

7) The bill funds a 2% pay increase for state employees and higher education employees, and funds "compression" corrections so that employees with two or three years experience will make more than persons hired yesterday to do the same job.

8) BUT the legislature is expected to use part of its "adjustment" money to drive the overall pay increase to 3%. Also, the state share of the 401K program would go to $50 a month from $40, at a cost of $3 million.

9) The bill funds 32 new district attorneys general and 19 new public defenders. And it serves up $22 million-$23 million for increased costs of incarceration of persons convicted of serious crimes who use a gun – the outcome of the "crooks with guns" bill.

10) The bill pays $110 million in capital improvement funds in cash, avoiding the interest expense of projects which would otherwise be built on bond-funds.

11) A $10 million smoking prevention program will be funded with non-recurring money, which means on paper it is a one-year program.

12) An assisted living facility in Erwin, TN, will lost $3 million of the money it had expected.

13) Land acquisition funds – for parklands and natural areas – were to be reinstated, permanently, from a real estate transfer tax. Instead, the money to those funds will be treated as "non-recurring," which frees up $12 million in recurring funds for other uses. And it means the parklands fund will try against next year to get the income flow made permanent.

14) Education:
a) $10 million of lottery interest money would go to finance need-based grants in the Tennessee State Assistance Corp. (TSAC) program.
b) $21 million sought by the Board of Regents for new equipment for Tennessee Technology Centers would be implemented this year. The administration had thought to phase in the expense over three years.