published Tuesday, April 2nd, 2013

Tennessee spending limit needs repair

What would you say about a constitutional amendment to cap the amount government spends so that lawmakers can't increase spending at a rate faster than taxpayers' ability to pay for it? If you're like most working Americans, it probably sounds like a marvelous idea.

Did you know that such an amendment already exists in the Tennessee State Constitution? Unfortunately, big-spending state lawmakers have stripped the spending limit of much of its value.

In 1978, Tennessee voters approved a constitutional amendment intended to limit the amount state government could spend every year. The amendment, known as the "Copeland Cap" in recognition of its author, former state Rep. David Copeland, of Ooltewah, prevents state spending from growing faster than the annual growth in personal income. The Copeland Cap, lawmakers expected, would all but eliminate the need for future tax increases.

Early Copeland Cap enthusiasts underestimated state lawmakers' ravenous appetite for tax dollars and overlooked the Cap's fatal flaw: Members of the Tennessee General Assembly can override the Copeland Cap with a simple majority vote.

As a result, the cap has failed at preventing wild surges in spending, leading to a largely unrestrained explosion in state outlays over the past 35 years.

The Copeland Cap was intentionally constructed with a "break in case of emergency" clause to allow state spending to exceed the limit in case of emergency or disaster — if an earthquake destroyed infrastructure in West Tennessee or the federal government suddenly pulled hundreds of millions of dollars in highway funding or TennCare reimbursements and the state was left holding the bill, for example.

That emergency clause wasn't intended to be overridden every time there was a budget surplus and state lawmakers had a list of pork projects they wanted to fund. But that is exactly what has happened.

Since lawmakers first voted to override the Copeland Cap in 1984, the cap has been bypassed 16 times. All told, lawmakers have voted to approve more than $3.6 billion in extra spending by busting the cap.

For taxpayers, that cost is just the beginning.

The Copeland Cap limit is based on the previous year's state government spending, plus an inflation increase based on the personal income growth in the state, usually 4-6 percent. If, hypothetically, the 2012 state budget was $100 and there was 5 percent personal income growth, the maximum amount state lawmakers could spend under the Copeland Cap in 2013 would be $105.

When lawmakers bust the Copeland Cap, however, the next year's cap limit includes the amount the budget went over the cap before the personal income growth increase is applied. In our hypothetical scenario, if lawmakers voted to bust the Cap by $10 in 2012, the 2013 budget would be $115.50 — $110, plus a 5 percent hike to reflect personal income growth.

The compounding effect that occurs year to year as a result of lawmakers busting the Copeland Cap means the state spending is more than $4 billion more this year than it would be if lawmakers had never voted to override the cap, according to state budget director Bill Bradley. As a result, every household in the state will pay an average of $1,600 in additional state taxes this year because the Copeland Cap has been busted so frequently — and so excessively.

Fortunately, a number of current state lawmakers are taking the lead in an effort to strengthen the Copeland Cap.

A bill is breezing through the Tennessee General Assembly to create a task force to develop ideas to improve the Copeland Cap. If the task force is established, a plan to require a two-thirds vote by lawmakers to bust the Copeland Cap is expected to be one of the first options considered.

State Sen. Mike Bell, R-Riceville, told TNReport.com that he believes adding a two-thirds House and Senate floor-vote requirement to override the cap would be a good place to start.

A lot of Tennesseans probably share Bell's sentiment.

A two-thirds rule would ensure that the state could spend as much as needed in cases of actual disasters or emergencies, but would make it much more difficult to bust the Copeland Cap just because there's money available to spend.

Because of the complexity of amending the Tennessee Constitution, it may be 2018 before voters can approve improvements to the Copeland Cap. If, however, the improvements mean Tennessee finally controls its spending, the results will be well worth the wait for state taxpayers.

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