Legislature struggles with shortfall

By John Commins Nashville Bureau

NASHVILLE -- The 102nd General Assembly opened Tuesday with many lawmakers conceding that they'll have to address the state financial crisis they dodged last year.

"Many of us learned a great deal from the last legislative session,'' House Speaker Jimmy Naifeh, D-Covington, told lawmakers after his re-election to a sixth term as speaker. "We have a responsibility to learn from last year and to do better.''

Lawmakers foresee a budget shortfall of at least $130 million for the current fiscal year.

Plus, legislators also must replace an additional $100 million in one-time money they used this year to pay for recurring expenses. Also, TennCare, the state's $5.2 billion health insurance plan for uninsured, uninsurable and poor Tennesseans, may require up to $150 million in new state dollars to account for medical inflation. And the state faces a pay-equity lawsuit that could cost $400 million to get rural teacher salaries up to the level paid to urban teachers.

Speaker Naifeh said lawmakers who signed anti-income tax pledges or who believe the state can cut the budget to eliminate the shortfall need to be specific.

"We need to know what their plans are,'' he said. "The majority (of legislators) recognize we have a problem, but there is a vocal minority who cause problems for the responsible members.''

Speaker Naifeh reaffirmed that the General Assembly must once again step up to fund TennCare.

"All you got to do is look at what TennCare is doing for us. It's saving us money, and it's insuring more lives,'' he said. "Those who use TennCare as a whipping boy, they're not being responsible. That's an easy way out.''

On June 27, three days before the start of this fiscal year, the 101st General Assembly patched together a quick fix that used about $100 million in one-time money for ongoing expenses. However, that still wasn't enough to balance the budget. Rather than implement an income tax, lawmakers inflated revenue growth projections until they created another $30 million to cover the shortfall.

Gov. Don Sundquist called it a "fudge-it budget it,'' vetoed it, and warned that the state would be in dire fiscal straits if the revenue projections fell short. The legislature overrode his veto.

Since then, revenues have grown by 2.32 percent, which is less than half of the 5.15 percent rate of growth that lawmakers predicted.

Some lawmakers still maintain that the budget fix last year was the best remedy at the time.

"We can't go on what we know now," said Sen. Jeff Miller, R-Cleveland. "We had to go on what we knew at the time. Nothing would have indicated that we would not have been growing at such a rate to have covered the growth. Right now we see that we are not performing that well.''

Sen. Steve Cohen, D-Memphis, a vocal opponent of the budget scheme, said lawmakers are now reaping what they've sown.

"It wasn't the right thing to do," he said. "It wasn't wise, but it got people out of the session and it got some people re-elected without having to make a difficult decision. It served the purposes of those who voted for it."

Despite a growing consensus among lawmakers that some type of tax hike will be needed this year, others in the General Assembly remain unconvinced.

"I m not ready to say that,'' said freshman Rep. Jim Vincent, R-Chattanooga, a former Hamilton County commissioner. "I've resisted that all along. My hope is we can hold our spending in line with our revenue."