Bad time for heavy spending

Bad time for heavy spending

April 1st, 2012 in Opinion Free Press

With Tennessee showing faint signs of economic recovery, it is perhaps predictable that there would be voices calling on Gov. Bill Haslam to back down from proposed budget cuts to various social service and other programs.

But that would be the wrong thing to do, for a number of reasons.

It is true -- and obviously encouraging -- that in the first seven months of Tennessee's current general fund budget, tax revenue outpaced projections by about $238 million.

But it is also true, as pointed out by state Finance Commissioner Mark Emkes, that all but $30 million of that already has been accounted for by the governor's proposed budget for the 2012-13 fiscal year, which begins July 1.

In other words, the governor cannot just use that $238 million as if it were "free money" to fund a range of programs, however desirable some of the programs may be. Most of that money already is spoken for in his upcoming budget.

In addition to that, it should be pointed out that state tax revenue which is rising today could just as easily be falling again tomorrow.

The recovery is proceeding at a snail's pace, and skyrocketing gasoline prices or any number of other factors could reverse even the limited economic progress that Tennessee and the United States as a whole are seeing.

Meanwhile, Commissioner Emkes pointed out that pharmacy costs for the TennCare program are running a troubling $60 million over projections.

Taken together, those factors certainly do not suggest that fiscal conservatism and careful stewardship of tax dollars should be allowed to fall by the wayside, as if everything were suddenly rosy.

That is not to say, of course, that the programs for which more money is sought aren't worthwhile. Some, for instance, would coordinate food and tutoring for students from low-income families. We doubt many people would oppose those things in principle.

But we simply do not know what will happen to the state's finances during the remaining months of this fiscal year, and that makes it vital that the governor and lawmakers budget conservatively.

"I'm a little concerned about running out and spending money, even though we're ahead of the game right now," Commissioner Emkes said.

"That's one thing we have to be watchful about."

It is indeed.

The last thing Tennessee should be doing in these unstable economic times is spending liberally on a range of programs when future revenues very well could contract and force painful cuts.

This is a time to be encouraging free-market expansion -- as the governor is doing with his proposed tax relief -- rather than to be expanding the size of government. A growing economy, which is something that comes from private investment rather than government spending, ultimately will bring in more tax revenue to support essential government functions.

That should be the focus of lawmakers and the governor.