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TENNESSEE SPENDING: A 5-YEAR STUDY SHOWS HOW BUDGET GREW Date: August 5, 2001
Section: News Page: A1 By Paula Wade; wade@gomemphis.com In a sweltering Hawkins
County tobacco warehouse, a leather-skinned farmer told Gov. Don Sundquist
last month that he wants no new taxes and wants the state's national tobacco
settlement money reserved for farmers. "But how would we
balance the budget?" asked Sundquist. "Cut. Cut
everything. Everything that's going on - just cut it out," the farmer
replied. Sundquist, a longtime
fiscal conservative who had campaigned on a theme of cutting government,
sighed. "We have cut government. There are fewer state employees now
than when I took office. We've made efficiencies... ." But there was no time
for a seminar on the state budget for the governor to make his point: that
further cutting would be difficult without harming services. If it weren't, the
Tennessee legislature would not be reconvening Tuesday for an unprecedented
August session to deal with Sundquist's veto of a no-new-taxes budget,
adopted July 12 amid a loud and angry tax protest. That anger was absent
Saturday at a festive "Tax Freedom Rally" in Nashville, where about
2,000 people turned out on Bicentennial Mall at the foot of Capitol Hill at
the invitation of talk radio host Steve Gill, a leader of the protest last
month. But the message was the same as last month: No new taxes, especially a
state income tax. Sen. Marsha
Blackburn (R-Nashville)
and six other no-tax legislators told the crowd that Tennessee government's
problems are related to its spending habits, not its tax system. "You
know we don't need an income tax because our budget has been growing by a
billion dollars a year. We have record revenue coming into this state, and
you know what we have in this state is a spending problem," Blackburn
said. The state budget has
grown $5.5 billion over the past five years, based on a comparison of the
first budget Sundquist proposed as governor with the 2000-01 budget year that
ended June 30. But an analysis of the
state's spending also shows that the way state government accounts for nearly
every dollar passing through the state's coffers overstates the budget's
bottom line in terms of its direct impact on state taxpayers. The bottom line - $13.4
billion in 1995-96; $18.9 billion for last year - is cited by anti-tax radio
talk show hosts and conservative research groups as evidence of profligate
spending. But the $18.9 billion
figure is nearly 2 1/2 times the $8 billion that taxpayers actually pay in
state taxes. The total budget
includes billions of dollars that state government does not spend and that
are from sources other than state taxes. Last year's budget, for
example, accounts for $6.7 billion of federal dollars that flow to and
through the state - up from $4.5 billion five years ago. It also contains $1.3
billion that is "double counted" for accounting purposes because it
passes from one agency to another, nearly $700 million collected by the state
for cities and counties, and more than $528 million from student tuition and
fees. It even includes $44
million in receipts from University of Tennessee football games, although
that money is spent on UT athletics, and $300 million in child support
payments paid by one parent to another but which is routed through the state
by court order and federal mandate. Despite assertions that
TennCare is the root of state financial problems and is siphoning money from
other programs, the proportion of state tax dollars going to each of the
budget's broad program categories has not changed substantially over the past
five years. Health and social
services, including TennCare, accounted for about 22 cents out of every state
tax dollar in fiscal year 1995-96 and 24 cents in FY 2000-01, the budget
analysis shows. Education accounted for
about 44 cents five years ago and 43 cents last year. Other categories
include transportation, 11 cents in 1995-96 and 8 cents last year; law,
safety and corrections, 9 cents in 1995-96 and 10 cents last year. Aid to cities and
counties was unchanged at 8 cents of every dollar, as was resources and
regulation, 3 cents. General government
accounted for 2 cents of each dollar in 1995-96 and 3 cents last year; and
business and economic development was unchanged at 1 cent. The analysis also shows
that the state's mental retardation program is the single fastest-growing
segment of the budget - an increase driven by federal court orders. But much of the increase
has been borne by the federal government through TennCare, a program that has
allowed the state to draw millions of dollars in federal matching funds that
would not have come to Tennessee otherwise. Those matching funds help pay for
children's services and supplement other health-related programs, as well as
mental illness and mental retardation services. Public education, and
specifically kindergarten through 12th grade (K-12), remains the greatest
single expense for state taxpayers. But funding for colleges
and universities has seen an actual decline in dollars per student when
adjusted for inflation. Most of the state's
real spending growth over the past five years has been mandated by the courts
or by federal government and is not discretionary, the analysis shows. Our Budget Counts
Every Penny Other states don't
build their budgets the same way Tennessee does, by counting virtually every
dollar state government touches, so simple bottom-line comparisons are
misleading at best. The FY 2001 budget's
total figure for higher education, for example, is $2.1 billion. But that
figure includes the $528 million in tuition and fees paid by students; $116
million in federal money, including student aid; and $378 million in
"other" money. The "other"
list includes endowment gifts from donors, college bookstore sales, dormitory
and dining hall receipts, contracts with outside agencies for specific
services and even $44 million from UT men's athletic events that is used to
subsidize other athletics. That means Tennessee
taxpayers directly subsidize their public institutions of higher learning -
everything from UT, the University of Memphis and community colleges to
technical institutes and technology centers - to the tune of just over $1
billion, or less than half what the budget might imply. The budget also
contains all other federal funds channeled through the state for specific
purposes and other money that merely passes through state hands, such as $300
million in child support payments that Congress two years ago ordered the
states to collect and forward to custodial parents. House Finance Committee
chairman Matt Kisber (D-Jackson) said the budget's bottom-line figure
"clouds the real policy debate that should be taking place, which is,
what are the appropriate services of state government and at what level
should we fund them?" More than 85 percent of
the state's general fund is dedicated to items required by court order,
federal law or the state Constitution, he said. "Then you can look
at what remains, and you could abolish the entire departments of Tourism,
Agriculture, Veterans Affairs and those things and you still wouldn't make up
the shortfall the legislature is trying to address." This analysis uses inflation-adjusted
figures included in an annual study of state spending published by
legislative budget analysts. It also takes into
account that Tennessee has more inmates to house, more children to educate,
more drivers on more miles of state roads and more businesses to regulate,
because of population growth. In Tennessee's state
prisons, for example, the number of inmates grew from 13,295 to 18,408, a 39
percent increase in the last five years. Yet the state's average cost per
year per inmate actually declined, from $17,473 to $17,083, because of newer
prisons with improved efficiency. The number of students in Tennessee K-12
public schools has grown from 819,831 to 851,000 at a time when the state's
Basic Education Program mandates for smaller class sizes has pushed up the
need for teachers. The state has 8,400
more classroom teachers now than in 1996. During those five years, the BEP's
allocation per student has gone from $2,870 to $3,213, a 12 percent increase.
K-12 education,
TennCare, mental health, mental disability services, children's services, and
corrections are all under court orders stemming from the state's past
failures to deliver services according to the law. This means that this is
not spending that the state can legally do anything about, it is required by
law to spend these funds. TennCare—everybody’s
favorite “whipping boy”. While a five-year
analysis shows little substantive change in spending priorities, Kisber said
he recently reviewed a 10-year comparison of the state's "general
fund" portion of the budget, which funds most general governmental
operations. He found there were
three areas where spending has grown faster than revenue - corrections,
children's services and health care. "It's basically
taken all our growth dollars to fund those areas, with nothing left to make
investments in things like early childhood development and higher
education," Kisber said. TennCare has been a
whipping post for critics of state spending, many of whom believe that it's
the source of the state's budget problems. Kisber contends that the opposite
is true. TennCare has several
major components. The largest include the medical program that covers 1.3
million Tennesseans' physical care and the TennCare Partners mental health
program that covers the state's seriously mentally ill as well as the mental
health needs of others eligible. Other programs under
the TennCare umbrella include services for the mentally retarded, children in
state custody and the nursing home program for seniors. The cost of those
programs has grown from $3.2 billion in 1995-96 to $5.3 billion in 2000-01,
spurred both by an increase in recipients and by medical inflation, which
grew 18.3 percent over five years, according to the federal Bureau of Labor
Statistics. The federal government
pays about two-thirds of TennCare's cost. The rest is paid by state taxpayers
and by TennCare members' premiums, nursing home bed taxes and drug company
rebates. Contact Nashville
Bureau reporter Paula Wade at (615) 242-2018. Caption: By Frank
Bertelt The Tennessee
Budget: Where the money goes 2000-01 (Adjusted
for inflation using the Consumer Price Index) TennCare $4,671 billion
1995-96 TennCare $3,191 billion
Where the money
comes from Where it's
changing/what the state pays Mental Retardation K-12 education Higher education Sources: Legislative
Fiscal Review Committee and state budget document. Keywords: TN BUDGET
STATISTIC FINANCE TAX Document Number: 0108060020 All content herein is © 2001- Commercial Appeal, The (Memphis, TN) and may not be republished without permission. |