By: Ken Whitehouse,
March 30, 2009

Senate Majority Leader Mark Norris says he's concerned about growing debt in the governor's budget. Josh Anderson for The City Paper
Senate Majority Leader Mark Norris says he’s concerned about growing debt in the governor’s budget.
Josh Anderson for The City Paper

In 1970 the soft pop duo The Carpenters unleashed what would become their signature song, “We’ve Only Just Begun,” onto an unsuspecting world.

That song might as well be the theme song for members of the Tennessee State Legislature this year, humming it into the wee hours of the morning as they look to slash the state’s budget in order to come up with a bottom line that minimizes their fiscal consternations.

Yes, these are painful times for legislators wanting to trim the fat without hitting bone.

It has been a week since Gov. Phil Bredesen put forth the budget that he wants the legislature to approve, but some details are causing distress among elected officials.

Perhaps the one budget item that is starting to get the most buzz in the capitol has to do with prisons. Bredesen is proposing the closure of an “overflow” prison in Whiteville (West Tennessee), that a state-owned but Corrections Corporation of America-operated prison not be built in Trousdale County, and halting construction on a state-run facility in Bledsoe County.

Legislators are questioning where prisoners will be housed with the changes and why Bredesen is proposing an increase in the budget for the Board of Pardons and Paroles. There is fear that the changes proposed would lead to early release for some offenders.

Another aspect of the Bredesen budget that could bring controversy is future debt. Bredesen is calling for raising $800 million in state bonds, which basically means the state will owe money in the future.

Senate Majority Leader Mark Norris (R-Collierville) understands Bredesen’s plan and says he will listen intently, but is concerned. He told The City Paper, “If cash is king, then debt is the devil.” Norris said that he has fears that the move “would eat up 1 to 2 percent of growth for more than a decade.”

House Finance, Ways, and Means Chairman Craig Fitzhugh (D-Ripley) said that assuming the bond plan goes through, Tennessee will still be one of the lowest bonded states in the country.

Both legislative leaders said that future budget years will be just as lean, if not leaner, and said that the 2010-2011 will be 12 to 14 percent smaller than this year’s budget.

Commenting on the budget reductions Fitzhugh issued a warning to one recipient of state funds. “I think we have a good opportunity with stimulus funds to work on things now, but higher education officials should know that the cuts they have contemplated will still have to be made. They should use the stimulus to increase efficiencies and overcome those cuts.”

In an effort to minimize cuts, Bredesen and members of the legislature have and will be looking for new revenue streams and closing exemptions in perceived tax loopholes. A high-profile revenue stream is closing a loophole on Family-Owned Non-Corporate Entities, or FONCEs.

Bredesen and his budget team are recommending that FONCE exemptions be amended to exclude commercial rents. Budget estimates project the changes would generate approximately $25 million annually, money that the governor would like to put toward law enforcement.

Mark Hill, the government affairs committee chair for the group Real Estate Investors of Nashville and vice president of James Talley & Associates, sees it differently and is hoping that legislators block what he perceives as move that would be detrimental to small business.

“The current family exemption,” Hill states, “has become a tool for many small businesses to shield themselves from this extremely litigious society without having to pay the enormous costs placed on the corporate entities by the state government. Taking an extra 6.5 percent of the net earnings will drive many small businesses out of business especially during this economic downturn.

“The additional one-quarter percent tax on the net worth would just be the twisting of the knife after killing the small business,” he added. “During a time when we should be promoting small businesses and innovation the governor is looking to squash it to temporarily feed the hunger of an already bloated state government.”

Finally, one of the biggest legislative issues that will keep elected officials up late is devising a new “Tennessee Plan,” the system by which judges are selected.

While there won’t be any money on the table in this debate, it could be the most partisan and contentious aspect of the entire legislative session. Should judges be directly elected by the citizens of the state or should retention elections stay on the books.

It is safe to say that the current process once championed by former Lt. Gov. John Wilder is on the way out. Also, trepidation is high concerning direct election of judges because lawmakers fear politicizing the judicial process.

Most likely lawmakers will settle on a plan that reconfigures the Tennessee Judicial Selection Commission, a commission that current Lt. Gov. Ron Ramsey has called “self perpetuating.” He wants the ability to choose from a wider range of citizens that decide who sitting governors can appoint to the bench.

With fewer state dollars to grapple over, this issue could be the one that brings out the knives honed on budget cuts.

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