June 12, 2007 @ 12:30 PM
$28 Billion Budget Passes
Tennessee Governor Phil Bredesen got more than he wanted and establishes his legacy as an Education Governor in Year 1 of his second and final 4-year-term now that the Senate and House have worked out minor differences in the state’s $28-billion spending bill just after high noon on Tuesday (June 12, 2007) when the Senate concurred in two House amendments.
Some legislators, though not all, got what they wanted as well Monday (June 11, 2007) when first the Senate and then the House approved that Appropriations Bill, Senate Bill 2334, to fund state government from July 1, 2007, to June 30, 2008 and close out the current fiscal year which ends June 30, 2007.
Weary legislators ironed out those differences Tuesday and can now wrap up their legislative work and head for home. This comes none too soon for many whose vacation schedules and summer plans have been cancelled, disrupted, or otherwise imperiled.
Despite remarks in recent weeks by Senator
State employees, teachers and higher education will see a 3-percent pay raise and an increase of $10 a month in the 401(k) match, bringing it up to $50 a month. It also provides the basic $20,000 life insurance for those who do not have their health insurance with the state. And it funds the second installment of a 3-year phase-in of the state employee pay compression package.
Firefighters will also now be on an equal footing with police with a training pay supplement.
Community enhancement grants will send a $20 million windfall back to the districts to help community level nonprofits, such as volunteer fire departments and libraries.
The Rainy Day Fund will rise to a record $750 million.
“Tennesseans are a big winner in this budget,” said Senator
SB2334 passed the Senate 28-3 with Senators Mae Beavers (R-Mt. Juliet), Jack Johnson (R-Brentwood), and Paul Stanley (R-Memphis) voting no. Senators Jerry Cooper and Ophelia Ford were not there.
The spending bill passed the House late Monday night with the minor amendments by a vote of 87-8. Representatives voting no were Stacey Campfield (R-Knoxville), Glen Casada (R-Franklin), Chris Crider (R-Milan), Bill Dunn (R-Knoxville), Brian Kelsey (R-Germantown), Jimmy Matlock (R-Lenoir), Donna Rowland (R-Murfreesboro), and Nathan Vaughn (D-Kingsport).
Vaughn, the lone Democrat to vote against the budget, had stated last week that it would be "political suicide" for him to vote for the budget.
Vaughn stated, "I had some concerns whether the budget made sense in my district." He specifically pointed out the BEP [Basic Education Program] and the county and city districts.
"I believe it was the right thing to do for the people," he said, referring to the people of "the 2nd District of Sullivan County."
A Few Details of Spending Amendments
The Senate worked through 10 amendments to SB2334, the Appropriations Bill.
Amendment 6 is the big appropriations amendment, followed by Amendment 7, the Administration Supplemental Amendment, and Amendment 8, the final Administration revision to include $250,000 for the Nashville YMCA for a domestic violence center program in which it is already engaged. Amendment 9 deals with the realty transfer tax that had been diverted from the land acquisition fund and similar funds and is now reallocated back to that purpose.
Amendment 10 is the Senate Finance, Ways and Means amendments and supplements the Governor’s amendments.
Amendment 3 by Senator John Wilder (D-Mason) to fully fund the state employee pay compression issue failed.
Amendment 2 by Wilder to delete spending $82 million to purchase additional park land was tabled.
Amendments 1, 4, 5 were withdrawn.
The House put on House Amendment 1, a stripper and replacement amendment, and House Amendment 2 with minor modifications, such as deleting funding for a road project and paying the first year of the 401(k) match out of non-recurring funds.
Senate Concurs in House Amendments
The Senate voted to concur in the two House amendments early Monday afternoon by a 28-4 vote with Senators Beavers, Dwayne Bunch (R-Cleveland), Johnson, and Stanley voting no. Senator Cooper was not there.
Other Matters
In other matters, SB2329, the Bond Bill, passed the Senate 31-0. It passed the House 91-1-1 with Kelsey voting no and Campfield registering as present not voting.
SB2332, the 2006-2007 spending indexing bill to allow spending $46 million over the cap, passed 29-2 with Senators Beavers and Johnson voting no. Senators Cooper and Ford were not there. It passed the House 72-23.
SB2333, the 2007-2008 spending indexing bill to allow spending $57.3 million over the cap, passed 28-3 with Senators Beavers, Johnson, and Stanley voting no. Senators Cooper and Ford were not there. It passed the House 69-25
Arcane Copeland Cap
Senator Kyle stated that, by putting $250 million in the state’s savings account, also known as the Rainy Day Fund or more precisely as the Revenue Fluctuation Reserve Fund, some believe that they need to pass the spending indexing bills for the current and next fiscal years.
This arcane issue is dubbed the Copeland Cap and is based on a section in the state Constitution which requires the General Assembly to pass a separate bill just to acknowledge that proposed spending exceeds a defined level.
Senator Mark Norris (R-Collierville) said he had never voted to break the Copeland Cap before but that he was for it this time since the amount over the cap went into savings.
The Copeland Cap, found in Article II, Section 24 of the State Constitution, states: In no year shall the rate of growth of appropriations from state tax revenues exceed the estimated rate of growth of the state's economy as determined by law. No appropriation in excess of this limitation shall be made unless the General Assembly shall, by law containing no other subject matter, set forth the dollar amount and the rate by which the limit will be exceeded.
The State Funding Board is to look at this difficult issue in a working group over the summer to decide whether saving money actually constitutes spending.
UPDATE June 12, 2007 @ 7:00 PM:
In fact, a June 6, 2007, Tax Report article on page D3 of The Wall Street Journal, titled State Tax Collections Start to Taper Off: Revenue Slowdown Since Peak Dims Hopes for Tax Cuts, by Tom Herman states: "The report says expenditures include one-time spending from surplus funds, transfers into budget stablization funds and other reserve funds and payments to local governments to reduce property taxes."
That would support Comptroller John Morgan's interpretation that deposits into the Rainy Day Fund constitute spending.
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