Posted on 02/08/2003 11:39:53 AM PST by GailA
Economist says state's fiscal woes not as bad as they seem
By AMBER MCDOWELL, Associated Press February 7, 2003
NASHVILLE - Tennessee's fiscal problems aren't as "dire as they seem" compared to other states, despite projected budget shortfalls of more than $800 million for this year and next, economist William Ford said Thursday.
Ford, an economist at Middle Tennessee State University, told the Tennessee Press Association that the state's tax system - which includes one of the highest sales taxes in the country - makes Tennessee better off than places like California.
"Under Gov. (Gray) Davis, California has a $35 billion deficit thanks to an income tax," said Ford, former chief executive of the Federal Reserve bank. Ford said he dislikes state income taxes because when the economy's good, they make government even bigger than it should be, and when it's bad, they don't produce. For example, he said that when the economy turned sour in California, collections on taxes from capital gains, dividends and interests went down. That's not true with a sales tax, he says.
"When a person is unemployed and not paying an income tax, are they not shopping at Wal-Mart? Of course they're still out there shopping. No matter what they have to do to get the money, they'll still eat. That means they're still paying the sales tax," he said.
Ford has been an outspoken critic of earlier proposals to institute an income tax in Tennessee. He says TennCare, the state's health care program for the poor and uninsured, is the reason for Tennessee's fiscal troubles.
"(Former) Gov. Don Sundquist, as his last official act, left a time bomb under (new) Gov. (Phil) Bredesen's seat: $200 million of unreported extra deficits on TennCare, which was already totally out of control," Ford said.
Ford also cited "out-of-control highway spending" as a contributor. Currently, taxes on gasoline go into a highway trust fund for projects like roads and highways.
Budget hearings find nearly $15 million in cuts
By BONNA de la CRUZ Staff Writer
Bredesen wants 7.5% trimmed by departments
Cuts identified by state departments yesterday during budget hearings with Gov. Phil Bredesen included slashing the state's industrial marketing fund, scaling back forest fire prevention staff and belt tightening on the little things, such as paper copying, mailing, cell phones and pagers.
Bredesen will continue to wade through more departmental budgets during public hearings today as he targets 7.5% cuts in most parts of state government.
Yesterday, he said he was astonished to learn the state fleet includes 5,000 vehicles.
Although unable to pare that number during his rushed budgeting process — Bredesen must submit the 2003-04 budget by March 10 — he signaled to Cabinet members where he hopes they can cut even as they struggled to trim their budgets this year.
After two days of hearings, Tuesday and yesterday, 16 agencies and departments had identified nearly $15 million in cuts, some Bredesen may adopt and others he asked commissioners to look at.
For instance, Tourism Commissioner Susan Whitaker proposed cutting 14 hostesses working at Welcome Centers. Bredesen asked her to try again because he does not want to lose those services.
Proposed cuts have included eliminating 202 positions, of which 69 are currently filled.
Bredesen will review the military, higher education and education budgets today. Tomorrow will be a working day with health, human services and children's services in hearings. Bredesen plans to complete the work early next week with some of the state's largest departments, including transportation and TennCare.
As for the state fleet, Bredesen said 5,000 seemed too high for a workforce of 37,000. ''We need to control that a lot better,'' he said.
In his own office, Bredesen's top five staffers, including his deputy governor, were not assigned cars as others have been in the past, spokeswoman Lydia Lenker said.
Yesterday, Economic and Community Development Commissioner Matt Kisber told Bredesen that he could meet the 7.5% target without cutting positions. Instead, he'll cut the state's industrial marketing fund, partly by doing the work in-house instead of through outside contracts.
Grant money for industrial recruitment, including $10 million to build infrastructure and $2 million for job training, was not part of proposed cuts, but Bredesen said it probably will be included.
Agriculture Commissioner Ken Givens said he would abolish 20 vacant forest fire prevention positions, adding that he does not feel safety will be compromised.
The Department of General Services, which supports other parts of state government with purchasing, copying and mailing, planned to eliminate 40 vacant positions.
Belt tightening will mean delays with outgoing mail, pickup of surplus goods and maintenance, General Services Commissioner Gwen Davis said.
Bredesen a DEM is demanding cuts and is willing to lay off state workers.
Who'd a thunk a DEMOCRAT would be demanding CUTS??? Hurry where is the smelling salts I'm gonna faint!
Finance chief expects most budget-cut ideas to be used
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