Looking Back: A TAXING TIME AHEAD (9/1/99)

Looking Back: A TAXING TIME AHEAD (9/1/99)


It is two-and-a-half months away, and numerous distractions (Memphis', most notably, is the mayor's race) lie in between, but the special session of the legislature that Governor Don Sundquist is preparing to call for the first week of November will doubtless be one of the stormiest and most controversial periods in the state's political history. Several events of the past week or so make that clear. Among them: á As part of his preparation for the session, Sundquist is on a speaking tour of the state. Last Thursday that took him to a luncheon meeting of the Memphis Exchange Club, during which he used a variety of newly prepared charts and graphs to document his point that, without significant tax reform (and, in practice, that means increased taxes), the state will incur a $382 million deficit next year. Sundquist spelled out the areas most vulnerable to a revenue shortfall -- education, prisons, TennCare, roadbuilding among them -- and joked that he had ordered all state departments needing new vehicles to buy white ones instead of orange ones to save money on the paint. "This year's budget was put together with Scotch tape and baling wire," said Sundquist, who added he would be hesitant to propose specific formulas himself after seeing several versions of his tax reform plan shot down by the legislature last spring. The governor reiterated, however, that he would be willing to accept a state income tax if the legislature proposed one. "I'm willing to take responsibility and the political hit because I know what's required," Sundquist said. á The hits weren't long in coming, and the first salvo was lobbed in from a fairly lofty and distance source. The Wall Street Journal weighed in the very next day with a Friday editorial attacking the Sundquist administration for backing off from what it noted had been the governor's onetime commitment not to support a state income tax. "[L]ike many governors in their second term, he [Sundquist] is building a legacy that includes $582 million in new spending this year," the newspaper said, continuing, "The prospect of a special session has supporters of an income tax salivating: They range from teacher unions to businesses that want to shift their tax burden to ordinary folks." The WSJ editorial noted that Tennessee in 1978 passed "a constitutional amendment capping budget increases to the rate of economic growth unless the legislature specifically authorized an exception," but that the cap had been exceeded "nine times over the last 20 years." The paper quoted Michael Gilstrap of the Tennessee Family Institute, an ad hoc organization opposed to new taxation, as saying, "Tennessee is growing its government faster than the big spending states of the Northeast." The Journal called for the issue of a state income tax to be put on a state referendum ballot. "Of course, that won't happen," the editorial concluded, "because the real crisis is a lack of courage to reform the budget coupled with the knowledge that the voters of the Volunteer State aren't about to sign up for a tax they know will never go away." á Meanwhile, two conservative anti-tax groups promised anew to organize stout opposition to Sundquist's tax reform program. One of them was Gilstrap's Tennessee Family Institute. Another, the "Free Enterprise Coalition," is headed by former state Republican chairman Tommy Hopper, who this week likened the pending conflict to "war" and invokes the blood-and-guts rhetoric of the late General George S. Patton to justify his opposition. "It will tear apart parties. It will dramatically change the makeup of the legislature. And it will be one tough campaign," vowed Hopper of the upcoming special session struggle. á On the other side, several state PR firms are offering support to the state's main ad hoc pro-tax group, Citizens for Fair Taxes, which has already enlisted the services of former Senator Howard Baker and former Governor Ned Ray McWherter. Among those offering their aid and comfort as of this week: former McWherter spokesman Ken Renner; Lewis Lavine, a longtime aide to former Tennessee Governor Lamar Alexander; and Mark McNeely of the prominent Nashville agency, McNeely Piffot and Fox. Bo Johnson of the PR firm of Smith, Johnson, and Carr, which is heading up the main effort for CFT, announced that the ad hoc organization will spend $1.8 million to convince Tennesseans that the state is in a fiscal crisis. Johnson said, however, that the campaign would not specifically mention or endorse a state income tax in the TV, radio, and newspaper ads it will purchase, acknowledging that polls show that most Tennesseans are not yet convinced that the state needs to raise money. á Agreement to that last point came from outgoing Nashville mayor Phil Bredesen (see "Editorial," this week), who told the Nashville Tennessean in a weekend interview, "The argument being made is we [the state] need more money. But I'm saying I'm not on board with that notion, even though a lot of people are." Bredesen went so far as to say that the whole notion that the state is in fiscal crisis has been "overstated." (Perhaps not coincidentally, Bredesen -- the unsuccessful Democratic gubernatorial candidate against the GOP's Sundquist in 1994 -- also indicated that he may harbor political ambitions for 2002. "It [being governor] is something I've wanted to do. I wish I'd been governor, and I tried hard to be governor," Bredesen said.) The Nashville mayor did say that he thought a state income tax would be a fairer method of taxation than further reliance on the current state sales tax.

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