GOP tweaks state budget

On June 11, 2009, in News 2009, by Mark Norris

Dems’ leader in Senate opposes program cuts

By Tom Humphrey,
June 11, 2009

NASHVILLE — Republican senators moved Wednesday to eliminate several revenue-producing provisions from Gov. Phil Bredesen’s tax legislation while cutting about $100 million more than the governor proposed from the state budget.

“The purpose is to provide a budget that borrows less, has a little more protection for the rainy day (savings) fund and is closer to balance between recurring and nonrecurring expenditures,” said Senate Finance Committee Randy McNally, R-Oak Ridge, sponsor of the GOP plan.

The Republican proposal, approved on a party-line vote in the Senate Budget Subcommittee Wednesday evening, is expected to be moved to the Senate floor for a vote late today or Friday.

Senate Democratic Leader Jim Kyle of Memphis, who sponsors the budget bill for Bredesen, said the Republican move was a “stunning development” that makes unnecessary cuts to construction projects as well as social programs.

Senate Republican Leader Mark Norris of Collierville said Democrats’ concerns were exaggerated. “This is Bredesen’s budget. We just moved it a little farther down the road,” he said.

The Republican plan, Norris said, eliminates spending on “bricks and mortar” while “avoiding several tax increases we deem harmful to business in this tough economic time.”

Among the biggest changes to Bredesen’s budget plan in the McNally amendment:

Eliminating $350 million in bonds for bridge construction and renovation, a move that saves $36 million in debt service and other costs in the 2009-10 fiscal year, which begins July 1.

Shifting $22 million for prekindergarten programs to the nonecurring budget category, which means it would be scheduled for elimination in the 2010-11 fiscal year. The money for 2009-10 would come from lottery reserves, not the state’s general fund. Finance Commissioner Dave Goetz said the move “stands out” as the administration’s biggest objection to the Republican plan. Otherwise, Goetz said, “we want to digest this” before commenting further.

Cutting $16 million for development of a West Tennessee megasite for a solar power generation project.

Scrapping several higher education capital projects to save about $15.3 million in debt service next year. Affected projects at the University of Tennessee’s Knoxville campus include infrastructure development, such as a Solar Research Institute building proposed by Bredesen. Other projects cut include relocation of the Music Building and renovation of Estabrook Hall.

Cutting $6.5 million for providing day care for those at risk of becoming eligible for welfare.

Eliminating $6 million that Bredesen appropriated to the Department of Environment and Conservation, most for state parks.

The GOP proposes dozens of smaller cuts to social programs such as AIDS prevention, women’s health, efforts to lower infant mortality, and indigent legal defense.

Funding of several million dollars in other appropriations is withheld until Oct. 1, when they will be made on a contingency basis if revenue collections indicate the money will be available.

The proposal also envisions restoration of some cuts if federal stimulus money can be rechanneled.

In addition to the budget bill (SB2355), Bredesen has proposed a technical corrections bill (SB2318) that makes multiple changes in the state’s revenue laws. In the Senate Tax Subcommittee, Republicans on Wednesday proposed several amendments to reduce or eliminate provisions that raise revenue. Collectively, it appears the moves would eliminate about half of the $60 million in new revenue the Bredesen budget plan anticipates.

Among Bredesen revenue proposals to be eliminated:

Increasing the tax on long-distance telephone calls paid by business to 9.5 percent from 7.5 percent, generating $9 million. Sen. Jamie Woodson, R-Knoxville, proposed amending the provision out of the bill, saying it was unwise to increase business taxes in a “challenging economy.” Sen. Jim Kyle, D-Memphis, noted that businesses, with the increase, would be paying the same rate residential customers pay now.

Applying sales taxes to cable TV boxes to generate $2 million. Woodson also proposed deleting that provision.

Requiring hotels and motels to pay sales tax on food they provide for “complimentary breakfasts” to guests. The amendment to eliminate the provision was proposed by Sen. Tim Burchett, R-Knoxville.

Eliminating a provision that Sen. Paul Stanley, R-Germantown, said effectively turns general contractors into “tax collectors” by making them responsible for business tax payments due from their subcontractors.

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