No New Taxes Budget:
ByMatt Kroplin
Democratic Caucus Press Secretary
www.tnhousedems.com
matt.kroplin@legislature.state.tn.us
615.741.6620
In order to offset proposed cuts
of over $400 million from K-12 Education (including $373 from the BEP which
would have caused either a loss of 8,352 teachers or a property tax increase on
the average of 27% to offset local cuts), the state will instead retain a
portion of state-shared taxes ($368 million) from Tennessee cities and counties
to cover this cut (this will likely cause an increase in local property taxes
but will protect basic education and teachers);
Cuts over $107 million from
Higher Education (including elimination of over 2500 positions and likely
resulting in another substantial tuition increase);
Reduction of uninsurables on
TennCare (causing around 145,000 individuals statewide to lose health
insurance);
Cuts in Health (causing 20,000 Tennesseans with serious mental
illness who are currently in active treatment will lose mental health coverage
and 301,200 additional Tennesseans to lose mental health benefits);
and,
Across-the-board reductions of 12.5%.
Closing all non self-sustaining state
parks and
Reductions of 12.5% in areas of state government including, but not
limited to, the elimination of funding for: TN Preparatory School, the
Governor's Regional Offices, TN State Guard, Wetlands Acquisition Fund, TN Fire
and Codes Academy, Adult Basic Education Program, TN Occupational Safety and
Health Administration (about 2,500 state workers will lose their jobs) as well
as a reduction in funding for the Retired Senior Volunteer Program and the Tax
Relief Program for Elderly and Disabled.
Funding Gap:
The total funding gap
for next year's budget is $945.2 million. This is the amount that must be cut
for a No New Taxes Budget to be enacted.
This year's shortfall, coupled with
previous shortfalls, is $477.4 million which must then be added to mandatory
improvement items.
The necessary budget reductions are needed to offset the
net available funds (-$477.4 million) which is negative due to the
state's recurring deficit, the FY2002 shortfall, and the negative net revenue
growth.
Mandatory improvement items are, in largest part: the Basic Education
Program, TennCare, Group Insurance, Children's Services and Statutory Salaries.
These improvements do not include: non-recurring grants such as fireman's
supplement pay, education grants, state parks; or salary increases for state
employees and teachers.
As these cuts are made, further expenses are incurred.
For example, to close a state park would cost unemployment for laid-off
employees, capital outlay to close the park and mothball it, etc.
When you
include capital maintenance (UT schools, State Board of Regents schools, radio
towers, etc.), the reduction of over-appropriation (abolishing current positions
and shifting load to existing positions), the cost incurred to close facilities
(terminal leave, unemployment benefits, continuing contract liabilities,
mothballing expenses), and the mandatory yearly allowance to the Rainy Day Fund,
the total funding gap is $945.2 million
Thus, the $945.2 million figure is the
bare minimum needed to create a balanced budget for the next fiscal year with no
new taxes and no improvements that are not mandated or court ordered.
This
amount must be removed from the current structure to create a no new tax budget.
As this removal occurs, however, other expenses must follow.
Framework for
creating a No New Taxes Budget:
This budget is not intended to be a "stop-gap"
budget--rather, a new paradigm for Tennessee government to live within its
existing means
It is expected that no new taxes will be enacted.
This is a
conservative process--virtually no reserves will be left as a cushion for
ensuing years.
The stated priorities are: basic education, health and safety
activities.