The annual $31.5 billion budget the Tennessee Legislature finally passed on Monday, after a weekend of squabbling with the Senate over earmarks, did reduce the sales tax on groceries, from 5.5 cents to 5.25. And it helped quench the pay-raise drought for state employees' and teachers with a 2.5 percent increase. Unfortunately, that may be the extent of the good news.
The bad news has gotten less attention. The budget imposes new cuts for higher education and sustains the squeeze on health and social programs and state employment levels. That damage came as the governor and the Republican-controlled Legislature stashed away an estimated $400 million expected in revived sales tax revenue.
In fact, Gov. Bill Haslam's administration and legislative leaders refused to recognize the expected rise in revenue in the budget, or to allocate the rising sales tax income, though it's expected to be a recurring increase. A portion of that rising revenue, the result of an improving economy, could have been well used to avoid the 2 percent cut in higher education, and the 7 percent cut in the University of Tennessee's budget.
As a result of not using the increased revenue, the state budget, which includes roughly $10 billion in federal revenue and some $50 million in state tax cuts, will be about $400 million lower than the overall budget for the ending fiscal year. At least $15 million in tax cuts will come from an initial cut in the state inheritance tax -- the first of the governor's misguided multi-year plan to favor affluent Tennesseans by terminating the inheritance tax on estates of more than $1 million in value.
One of the budget cuts that Gov. Bill Haslam and his legislative supporters insisted on was the hurtful closure of the Taft Youth Development Center in Bledsoe County, a main-stay facility in southeast Tennessee for 94 years. Closing the doors of this vital facility will save $8.5 million, but it will require sending the region's juvenile offenders to centers much further from home support.
The new budget also fails to address the continued refusal, begun by former Gov. Bredesen after the 2007 financial implosion, to finally implement the second phase of the state's proposed revision in the BEP funding formula for K-12 schools. That continues to leave Hamilton County schools more than $12 million short of its fair state funding. Gov. Bill Haslam should know how that shortfall hurts a county school district: He was formerly the mayor of Knoxville, a victim of the state's other underfunded school district.
Perhaps the biggest battle came on the minority Democrats' ultimately unsuccessful effort to inject at least $200 million of the rise in tax revenue into higher education, primarily to cut tuition hikes in half to foster increased college attendance. That would be a fair use of the revenue. Tennessee continues to lag behind most other states in the percentage of workers with college degrees. Closing that gap remains critical to elevating job growth, higher wages and an improved quality of life in Tennessee. Boosting higher education simply is critical to the state's future prosperity. Republicans' refusal to recognize that broadly harms the state as well as individual families.
If the GOP-controlled Legislature had paid half as much attention to education as it did to its effort to sneak in $25 million in local pork-barrel spending, the state budget might have turned out far better.