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Sunday, May 11, 2008 , 12:00 a.m.

Griscom: Budget battle politics

Gov. Phil Bredesen must have felt like the Bill Murray character in “Goundhog Day.”

In the movie, Mr. Murray wakes up each morning only to discover that he is locked in place. The clock radio signals the same day and time until his character eventually solves his dilemma.

Tennessee’s governor awoke several weeks ago to find the state mired in an economic slowdown.

On today’s front page, Dave Flessner writes that unlike the last recession six years ago when Tennessee’s sales tax-dependent state budget fared better than most other states, this time the state is being hit harder.

Tennessee sales tax collections, already falling 0.7 percent below year-ago levels in the first three months of 2008, plunged by an estimated 5 percent below year-ago levels in April — the biggest drop in nearly a half-century, according to statistics examined by Mr. Flessner.

“This is a housing and durable-goods slowdown which has cut our sales tax collections,” said William Fox, director of the Center for Business and Economic Research at the University of Tennessee. “In the ‘tech bust’ in 2001 and 2002, stock investments and capital gains were hit much harder and that hurt income tax collections much more.”

Dr. Fox projects sales tax collections will grow a meager 2 percent in the fiscal year that begins July 1.

In 2003 as Gov. Bredesen prepared to take office, he faced a budget deficit driven by the expanded burden of providing health care for the uninsured and the uninsurable. The weight of the state’s TennCare commitment, somewhat enhanced through a series of court-mandated reviews and program expansions, pushed the state to a fiscal precipice.

His options were limited due to an intense battle over a state income tax, advocated by his GOP predecessor, Don Sundquist, that fenced off new broad-based tax sources as even a topic for discussion.

Unlike 2008 as the state again faces a fiscal challenge, there were few if any reserve funds for the Democratic governor to tap in 2003. As he outlines his approach to balance the state budget for the new fiscal year, Bredesen chose not to invade the reserves for one-time solutions. He also decided to cut his way out of the problem and not propose new revenue sources as the answer.

Unlike 2003 the state will not be embroiled in a prolonged political mud wrestling match over an income tax — a debate that would generate an upturn in the partisan paper and copying business but little in terms of addressing the budget shortfall. If words or, more appropriately, rhetoric with a healthy slice of hot air could be monetized, an income tax debate certainly would solve a portion of the budget problem.

Those who are anxiously waiting for Bredesen to say “Read my lips,” a la Bush 41 as he broke a tax pledge, will be left unfulfilled.

For those who decided earlier in the legislative session to propose almost $1 billion in new projects and programs at a time when the governor is looking

for ways to slash $585 million and eliminate 2,011 state jobs — and when steeper increases in college tuition may be coming — the most appropriate step would be, in unison, to withdraw all those measures.

That extraordinary political step will not happen, but it would be a noticed nonpartisan gesture.

As the partisan wordmeisters whip out the latest attack line, it would be interesting if even once it were acknowledged that responsibility for taxing and spending does not end at the governor’s door.

There may be some national lessons unlearned — which cast a pall over Congress regardless of party — that might assist Tennessee lawmakers in making better, more balanced budget decisions.

Tennessee does not have a printing press to make more money or a Social Security trust fund to move around at will to camouflage deficits. State decisions have to be made without so many smoking mirrors.

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