by Joe Sullivan
If Sen. Ben Atchley weren't such a prince of a human being, a conversation with him about the state's fiscal plight would be maddening.
"The time has some when we've got to have a more balanced state revenue system," Atchley avers. He agrees with yours truly that a state income tax coupled with sales tax abatement is the most equitable and efficacious way to go. "You can demonstrate that it is," he says. And he believes that public opposition is giving way to recognition of the need. "I see the trend changing. I'm getting a lot more contacts now saying, 'I've been against an income tax, but you guys need to go ahead with it,'" he volunteers.
Yet the Senate Republican leader, who has become the most pivotal person in the Legislature in getting an income tax enacted, can't bring himself to support it. "My concern is going back on my word [not to vote for one], and I haven't been able to resolve that."
The result has been an impasse that left the Legislature unable to come up with any new source of revenue to cover an $800 million shortfall in Gov. Don Sundquist's budget. Use of $560 million in mostly non-recurring tobacco settlement money temporarily plugged much of the gap like a finger in the dike. But nearly all of the $104 million funding increase Sundquist had recommended for higher education got chopped, along with a commendable reading initiative for pre-schoolers.
That, too, troubles Atchley mightily. "We've got to come up with another $100 million for higher ed or we're going to do a lot of damage," he avows. But how? "I don't know...I thought we could come up with an alternative [source of revenue] to get us through, but that didn't happen...We were all frustrated."
In the final hours prior to the Legislature's abject adjournment two weeks ago, liberal Democrat Sen. Bob Rochelle and conservative Republican Sen. David Fowler came close to reaching agreement on a tax reform plan that Atchley might have been able to support. Their strange-bedfellows courtship would have struck a compromise between Rochelle's graduated rate (up to 6 percent), high exemption income tax bill and Fowler's much lower flat-rate-on-everything approach. The two had settled on a 3.5 percent flat rate with a $10,000 exemption. The income tax would be coupled with removal of sales taxes on clothing, groceries, and non-prescription drugs along with the 6 percent Hall tax on dividend and interest income. Rochelle and Fowler also agreed that the income tax should be the subject of a referendum, but their negotiations broke down over its timing in relation to the effective date of the tax.
"The Fowler plan called for a referendum prior to effectiveness, and that could get all of us off the hook," says Atchley, referencing fellow Republicans who had previously pledged to oppose an income tax. "My commitment has been not to vote for one unless the people authorize the Legislature [to do so], and I realize that takes time." But he reckons that a majority of the Senate's 15 Republicans would have supported this approach, which would have carried the day in that 33-member body if the Rochelle bill's 10 Democrat backers had followed suit. (House Speaker Jimmy Naifeh had previously vowed he could produce the 50 votes needed for a majority in the House.)
Rochelle, however, remained bent on implementing tax reform first and holding a referendum on it later. His belief, which cannot be gainsaid, is that voters are more likely to approve it after they've had some experience with its workings. And since Fowler insists he remains opposed to an income tax, its rejection—once and for all—may be exactly the outcome he has in mind for a pre-effective referendum.
Still, no one can fairly accuse Atchley of being disingenuous or obstructionist. Nor can he be faulted for not trying to raise enough new revenue by any other means to make ends meet until true tax reform could take effect for following a 2002 referendum. Indeed, he was the leading proponent of the only tax bill to pass either chamber of the Legislature: namely, a 1 percent ad valorem tax on automobiles that would have raised about $500 million. But this Senate-passed measure faced sure defeat in the House where, as Atchley puts it, "the income tax proponents were saying an income tax or nothing."
The stalemate is doing grave damage to this state as reflected in the erosion of its credit rating, its state university and its standing in the nation's eye as a result of near riots at the capitol by anti-income tax zealots. Moreover, the damage promises to get worse next year when the state's nest egg of tobacco money will have been exhausted.
Surely, there must be some way to bridge the gap between Rochelle and Fowler, between the House and Senate, between majorities on both sides of the aisle who are deeply disappointed in their collective performance. But the Senate's estimable Republican leader doesn't have it.
"Sometimes things have to get worse before they get better," he muses at the end of the conversation.
July 26, 2001 * Vol. 11, No. 30
© 2001 Metro Pulse
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