May 29, 2007
June 1, 2007
SB 2326
voted 17-16
Andy Womack to Adminstration
May 29, 2007
Administration Rolls Out Appropriations Amendment
Finance and Administration Commissioner Dave Goetz, former business lobbyist, rolled out the long-awaited Administration Appropriations Amendment Tuesday, May 29, 2007, at a Joint meeting of the Senate Finance, Ways and Means (FW&M) Committee with the House FW&M Committee.
As expected, the Governor is going full steam ahead with his plans to spend $500 million ultimately in additional monies on education improvement to establish a credible legacy during the 1st year of his 2nd and final four-year term of office. Education Legacy is a time-honored bipartisan tradition for Tennessee's finest CEOs. Former Tennessee Governor (1979-1987) and U.S. Secretary of Education and now U.S. Senator Lamar Alexander (since 2002) and former Governor (1987-1995) Ned McWherter are recent examples. BEP Reform is set to receive $290.1 million in Fiscal Year 2007-2008 with the remaining $209.2 million (in current dollars) coming in future phase-ins.
For fiscal conservatives, the Administration amendment includes $200 million in additional contributions to the state's Rainy Day Fund (Fluctuation Reserve Fund) to bring the June 30, 2008, figure to $733.5 million, a whopping $200 million over the originally proposed $36.6 million. This would give back to back records with nearly $500 million set to be in the fund on June 30, 2007. It also gives ammo to tax attackers who argue a tax is not needed now.
The Administration amendment includes a tax hike in the form of a Cigarette Tax Increase netting $149.2 million, a reduction of $70.4 million from the Governor's originally proposed hike.
Also, there is something for those familiar with the Bredesen Administration's favorite tax hike vehicle using the annual Technical Corrections Bill. In the Governor's first term, the annual bill was successfully used to raise millions in additional revenue by closing loopholes and removing exemptions. Past experience is no guarantee of future performance, but the bills usually bring in many times over the projected amounts. This year the Technical Corrections Bill, Senate Bill 2223/House Bill 2281, is said to raise $5 million in revenue. Time will inevitably tell, but by next year's tolling of receipts, the bill could add much higher tax bills to S-Corps. This year, though, legislators may face a grilling over a proposal to tax propane fuel sold for outdoor grills.
This is just a drop in the bucket of the amendment which will be carefully scrutunized by the General Assembly before they adopt their version of the future of Tennessee. We project that the final bottom line of the budget will be between $29.2 and $29.4 million.