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Getting the State's Ox Out of the Ditch

by Joe Sullivan

Last week's abject abandonment by the Legislature of the state's need for increased revenues is a sad testament to Tennesseans' denial that such a need exists.

There's no doubt that a legislative majority recognizes that the state is descending into fiscal dereliction. But faced with a public outcry against the state income tax recommended by the Senate Finance Committee to rectify it, the Legislature chose to fold its special session rather than stay on any kind of corrective course.

Blame for lack of recognition of the need is being laid by many commentators on Gov. Don Sundquist. And when Sundquist first sprung his plan for taxing Tennesseans' earnings last February, such criticism was fair enough. The governor had laid no foundation for his conveyance that the state faced a fiscal crisis and that new taxes were needed to resolve it. But now it's nine months later, and Sundquist has spent much of that time criss-crossing the state trying to dramatize that need.

Concurrently, a select committee of the Legislature conducted extensive hearings and unanimously issued a set of findings including: (1) that the fiscal affairs of Tennessee have been well-managed; (2) that Tennessee has one of the lowest combined state and local tax burdens in the nation; (3) that the current revenue system is inadequate to provide the government services that ensure the continued economic vitality of the state; and (4) that the current projected state revenue shortfall for next year is another example of the structural flaw in the state revenue system.

Yet large segments of the public have a way of not hearing what they don't want to hear and of listening to voices that play to their fears and biases instead. A spokesman for the Tennessee Family Institute, invoking the worst of them, warned that, "Higher taxes will compound financial stress on families which causes more alcoholism, spousal abuse, divorce and even suicide than anything else." With smug self-righteousness, hordes of letter-writers to newspapers echoed the refrain that governments, like families, must learn to live within their means and that the state should tighten its own belt rather than try to latch on to more of their hard-earned incomes. Getting rid of governmental excesses and abuses, especially in the beleaguered TennCare program, would surely solve the problem, many claimed.

So when the Senate Finance Committee narrowly approved an income tax (IT) after two weeks of wrangling, shock waves resonated throughout the state. How could the politicians stick IT to us without any justification, seemed to be the prevailing swell of rage among a populace that clearly had been paying little heed to the many months of painstaking exposition of the state's financial plight. Rather than vote on IT or consider any other revenue-raising alternative, the Legislature hastily adjourned its special session, leaving an embattled Sundquist equally enraged.

It's become apparent that no amount of entreating by the governor is going to sway to public opinion to his side. Never mind that scarcely any legislator has any idea how to cut the $382 million budget deficit that's projected for the fiscal year ahead. Never mind that this shortfall doesn't begin to cover the full amount of the funding that's going to be required to keep TennCare from collapsing or to fortify a higher education system that's mired in mediocrity.

No, too few Tennesseans care enough about the well-being of their state for reason to prevail over their greed. The only proven antidotes to greed are fear and force, and ever so unfortunately these are needed now. Reflecting back, it took a court order to improve conditions in the state's prisons to force a sales tax increase in the 1980s. Again, it took a court order to equalize the state's poorer school systems to force the sales tax increase that partially funded the Better Education Program (BEP) launched in 1992.

The crisis that could force drastic action now is the collapse of TennCare. Blue Cross/Blue Shield, which manages the care of close to one-half of TennCare's 1.3 million enrollees, can pull the plug at year end by serving notice of its intent to drop them to get out from under what it now sees as unacceptable loss exposure. Since none of the other managed care organizations involved in the program begin to have the wherewithal to pick them up, this could force the state to resort to a far costlier fee-for-services basis of paying health care providers.

Force is the word because TennCare is controlled by the federal Health Care Financing Administration which mandates state coverage of the indigent. Perversely, many of the tax resisters who are now making shrill calls to clamp down or get rid of TennCare are the same Christian rightists who insist the state should deny women the right to decide whether to give birth. Yet these same rightists would deny the offspring the right to prenatal, neonatal, and pediatric care, let alone coverage for the working poor who can't afford health insurance or persons with serious conditions who can't obtain it at any price. Fortunately, Washington has and will enforce a social conscience that too many Tennesseans seem to lack.

At the same time, perhaps Louis Donelson can devise a lawsuit to force Tennessee to start bringing its higher education system up to snuff. It was his suit that beget the BEP. Under funding formulas established by the Tennessee Higher Education Commission, the state's universities should be getting an additional $160 million a year. Even that is only a start toward the $440 million recommended last year by a blue-ribbon governor's council to get Tennessee up to the national average. Yet the tax resisters seem to be saying that students in this state aren't entitled to anything better until UT stops granting pay raises to administrators.

These resisters are so mired in the underbrush that they can't even see the trees, let alone the forest. Yes, there's mismanagement and waste in state government, but it's peanuts compared to the amounts required to, as Sundquist has stated it, "prevent Tennessee from becoming among the last and least of the 50 states." Here, again, if the state just had enough money to pay its employees well enough to attract and keep good managers, the administration of botched programs like TennCare would no doubt be improved. But state employees went without any pay raise for the current fiscal year, and the meager 2 percent raise proposed for next year is in budgetary jeopardy.

Don Sundquist is an ordinary man who finds himself challenged by circumstances far more difficult than foreseen when he came into office. So was Harry Truman. Some say Sundquist should tone down his harsh attacks on tax reform opponents. We say:

"Give 'em hell, Don."