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.