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A New Ball Game

Governor Phil Bredesen puts the brakes on state spending -- big-time.




Tennessee's new governor, former Nashville mayor Phil Bredesen, was careful during his campaign last year against Republican Van Hilleary not to promise anything but a determination to "manage" the state's difficult financial predicament. How much worse it was than he foresaw became obvious, he says, shortly after his inauguration in January, when budget shortages amounting to half a billion dollars turned up.

This was despite the passage last year -- during the waning days of the administration of Republican governor Don Sundquist, an income-tax advocate -- of a sales-tax increase designed to net a billion dollars, presumably enough to catch the state up with its obligations.

What Democrat Bredesen did, after a series of highly public meetings with his cabinet, was decree a 9 percent across-the-board cut in state spending -- excepting only TennCare, K-12 education, and a few like programs and including the heretofore sacrosanct state road-building funds and the state-shared funds normally returned to local governments, themselves needy.

So far at least, Bredesen is enjoying a honeymoon with the legislature -- both houses and both parties. After a visit to Memphis' AutoZone Park on Friday, March 14th, during which he continued his tireless advocacy of his unprecedentedly austere state budget, Tennessee's surprising new governor sat down with the Flyer and discussed the reasons for his live-within-your-means budget strategy. What follows is a sampling from that Q & A.:

Flyer: Why was the need for budget cuts of the magnitude you've proposed not foreseen after last year's 1 percent sales-tax increase, the largest tax increase in Tennessee history?

Bredesen: The tax increase was an 11th-hour solution to a problem they thought was going to be solved by the income tax. Much of that increase went to fill a hole that was made by spending one-time funds in previous years. I don't think there was really thoughtful fiscal planning the last two or three years. It was: 'Once we get this Holy Grail of an income tax passed, we'll have plenty money and won't have to think of these things.'

I always thought, looking from the outside in at the income-tax debate, there were two things getting confused into one: One thing was, How much tax do you want to collect? and what is the level of services you want to have for the state of Tennessee? Do you want to be 45th or 25th or 15th on education funding? That's a longer-term issue having to do with how you want to position your state in the United States of America and so on.

Then there was the short-term issue of "We've had some really good years and the economy has gone south and we've got some pressure and how're we going to solve that problem?" And I think the income tax got used as a solution to problem number two. Because if you look at the numbers, Tennessee grew its budget substantially over the last couple of years. We created between two and three thousand new jobs in the middle of the huge budget crisis. The percentages by which our jobs grew in that period were among the highest in the country. What happened was that no one ever got focused on how you deal with these tough times because they were reaching for the Holy Grail up here.

Would an income tax have brought in more revenue than the sales tax did?

No. The amount of money that was raised [in sales tax], I believe, was $933 [million]. That's virtually the same amount of money that an income tax was going to raise. It was right at a billion, as I recall. Whatever good things were going to happen with an income tax really should have happened when they passed that sales tax.

Last year you seconded Van Hilleary in promising to "repeal" an income tax if the legislature passed one. House Speaker Jimmy Naifeh, who was just then trying to pass an income tax, was publicly displeased about that, as were other Democrats. Your take on that now?

My assessment from the beginning was that if this election is about an income tax, I lose. And while I was not in favor of it, no Democrat is ever going to "out-seg" a conservative Republican on how much you can be against an income tax or any of those kinds of things. I would just say there was a campaign strategy: Don't let it be about the income tax. I ruffled some feathers and had some hurt feelings. But I also felt that when I got there by exercising some judgment I would get it back. And the relationship with the legislature right now is wonderful. Privately, relations [with Naifeh] are very good, and I would say that my relationships on both sides of the aisle are very good.

Some observers consider you to be more like the traditional Republican than the usual Democrat. Your reaction?

I've reflected on the irony of this, but I also think that's way too glib. There certainly are differences in ideological views between Democrats and Republicans. But I don't think there's anything about being a Democrat that forces you to be irresponsible in the way you handle fiscal matters. This was the third time in 30 years that the actual state appropriation has gone down. The last time was in [Ned] McWherter's administration -- another Democrat. The first time was with [Lamar] Alexander, a Republican. Alexander had one, McWherter had one, Sundquist had none, and I had one. I think realistically to manage state budgets occasionally you're going to have to go down, as the economy goes down. Sundquist didn't, but I think it's more of an anomaly in the way Don Sundquist ran the office, different from Alexander or McWherter or me, than it is a general statement about Democrats or Republicans.

Why, then, do you consider yourself a Democrat?

I grew up in a single-parent family, living with my grandmother. My grandmother took in sewing for a living, and I think Democrats have always had a lot more concern about people who take in sewing for a living than Republicans have. And one of the things that I didn't like about my life before I got involved in politics was that I'd gotten into the business world and I'd made a bunch of money and I looked around. None of my friends took in sewing for a living. Or were bank tellers like my mother was. I'm betting a lot on being able to fix TennCare. It would be the easiest thing in the world to flip that back to Medicaid, drop 400,000 people off the rolls, and go. To me, it's worth risking your governorship to try and keep 400,000 on the TennCare rolls. And, you know, I think the Democratic Party in general is a place I'm more comfortable in, with those kinds of concerns.

During the 1994 campaign, when you lost to Sundquist, there were probably some unpleasant memories. Such as election night.

[laughs] For example. ...

But there had to be high moments too, like your well-received speech to the Kiwanis Club here about "10 Things I Can Do for Memphis." One of them was bringing an NFL franchise to Memphis.

[laughs]They didn't want me, so I brought one to Nashville.

Another concerned giving the University of Memhis its own governing board.

I certainly have said that the University of Memphis occupied this kind of middle ground between a lot of the other Board of Regents schools and the University of Tennessee. And I certainly think that one thing that ought to be considered is to find some way to make it more of a research university, to engage the leadership of Memphis. To give it its own board would be one of the ways of doing that. I think I stopped short in the campaign of saying, "Elect me and there will be a new board for this university by June 30th" or something. But I expect over the next seven years and 11 months, I'll spend a lot of time on higher education, and I'd like to just move that system into a whole different plateau.

Do you consider the previous administration disingenuous about the shortfalls you discovered?

The thought has occurred to me, okay? And there's stuff that I don't know how to read. TennCare, everyone was announcing right up to the 5th of November, was solved after this last waiver. It clearly wasn't. And in fact it has dramatically overrun its budget. And the waiver has some problems in it that make it difficult to handle the overrun, the cap, and that kind of stuff. And whether, you know, somebody said, well, let's just keep our chins up until November 5th, when it'll go away and be somebody else's problem, or whether they genuinely didn't know what they were doing.

I don't know the answer to that. You sit there at night and stay up wondering which it is, but I don't spend a whole lot of time worrying about it, because it doesn't make any kind of difference for me. We're not going to handle it differently, whichever it was. There were issues like the failure to budget any increases in health-care costs for state employees this year, and it was a $60 million problem that I have upon entering the office. How did you forget to budget $60 million? Somebody had to say, "Well, let's just push that one aside and make this thing work."

More of Governor Bredesen’s reflections — on the lottery, on tort reform, on a variety of other subjects — will be featured in next
week’s Politics column, along with additional coverage from the General Assembly.

Endgame in Sight?

Cohen's version of the lottery faces a few obstacles one of them named Bredesen.


s his newest and, in some ways, most unexpected adversary, Governor Phil Bredesen, put it on a visit to Memphis last week, state Senator Steve Cohen has made passage and implementation of a state lottery his "life's work." That acknowledgment has not, however, eased the way for Cohen's vision of how that lottery should come about.

The latest obstacle to the Midtown senator's 17-year campaign to establish a state lottery with proceeds destined for college scholarships came last week when Bredesen almost offhandedly made a proposal to delay for a year establishing the terms of scholarship arrangements for the lottery. (A "suggestion," Bredesen called it, though in this honeymoon stage of his tenure the idea will be given special weight, especially by the legislative leadership.)

Though the exact disposition of its proceeds would be postponed, said the governor, the lottery itself could be enacted this year, with sales authorized for the Christmas-season deadline which Cohen has considered a desideratum.

Though cloaked in concerns for fiscal solvency, which, for this unusually fastidious former health-care executive and ex-Nashville mayor, are unquestionably sincere, Bredesen's proposal also touches upon concerns that are expressly political. One is the simple issue of control. The governor first bristled last month when a legislative panel headed by Cohen announced its proposal for a governing board of seven members three to be appointed by Speaker of the Senate John Wilder, three by House Speaker Jimmy Naifeh, and only one to be named by the governor.

That just wouldn't do, said Bredesen, who pointed out that lotteries in various other states including Georgia, so often cited as a model by Cohen are overseen by boards appointed by the governor with legislative approval. Cohen called Bredesen's resistance a "mistake" and referred to the lottery as a "creature of the General Assembly." He went on to suggest that maybe the governor wanted to stack the board in order to funnel business to friends.

Understandably, that implication was not to the liking of Bredesen, who declined to budge from his insistence that the governor, not the legislature, should be the primary overseer of the lottery. Cohen, who held to the opposite point of view, was equally unmovable.

Interviewed in Memphis last week about a variety of subjects, Bredesen had this to say about this disagreement with Cohen on lottery issues: "This thing has been marked a little bit by I mean, I like Steve, there's no enmity there, but, you know, Steve is the guy, this has been his life's work, getting this thing done. And the only argument we've got with him is: This is not your lottery. This is a lottery that lots of people have got some investment in, lots of people have got some reason, and I got elected governor of this state, and I'm not prepared to just stand aside and say, 'Oh, by the way, this is your lottery.' I'm going to have some opinions on some of those things."

Sideshows and Roadblocks

For the last month, relations between Bredesen and Cohen have been sometimes simmering, sometimes serene. Responsibility for legislation on the issue, meanwhile, was assigned by Wilder to the Senate Government Operations Committee, whose chairman, Nashville senator Thelma Harper, put the brakes on the bill and sought changes of her own one of them, coincidentally or not, on the issue of increasing the number of gubernatorial appointees to the lottery's board of directors.

When Cohen who wanted to move the bill forward to other legislative stops, including his own State and Local Government Committee, where he thought it should have gone in the first place complained publicly about what he saw as Harper's delaying tactics, Harper lashed out at Cohen. "Slavery is dead,'' she informed the Memphis senator, whom she accused of "going across the state and city pouring out venom that are pure lies." Harper asserted that her committee was ''not going to be whipped with straps and made to do anything.''

Cohen's criticism had made his point, however, and other members of the Government Operations Committee grew restless enough to force a vote last week on moving the bill over to State and Local, Cohen's own, where presumably it will have clearer sailing.

There remains one more potential legislative obstacle in a proposal from Cohen's Memphis colleague, fellow Democrat and sometime rival Jim Kyle, who believes the lottery bill, as currently formed, is politically misdirected. Kyle, whose Senate district comprises most of Frayser and Raleigh, is dubious both about provisions of the bill which he regards as unfriendly to his working-class constituents and about its administration, as currently proposed, by a nonprofit corporation.

Kyle wants the lottery board to be reconstituted as a formal agency of state government so as to ensure direct legislative control over the lottery as well as fiscal solvency. "As things stand," he maintained in Government Operations last week, all the legislature was empowered to do was "take a check" at the end of the year. Kyle introduced an amendment to bring the lottery board a governmental agency but withdrew it when he sensed a lack of support among his committee colleagues partly, he believes, because the committee contains a number of freshman Republicans disposed to favor private arrangements over public ones, partly because the committee was antsy about the Cohen-Harper contretemps and wanted to move the bill out, and partly because "I just haven't had time to make the case yet."

Kyle will try again, he indicated, when lottery legislation makes its inevitable stop, just before floor consideration, in the Finance, Ways and Means Committee, of which he is vice chairman.

His other concern that the bill as now written discriminates against the less well-off he expresses this way: "People in my district are going to be playing this lottery so somebody else's kids can get to college. I have a problem with that, and I don't know why other people don't see that." Kyle regards the existing lottery framework as "elitist," especially its current provision under challenge by Harper and other members of the legislative black caucus limiting scholarships to students with a 3.0 grade point average.

Kyle sees himself as a populist on the lottery issue, not only opposing the GPA restriction but those limiting scholarships to members of the currently enrolled senior class. "If everybody plays the lottery, everybody should get a piece," he says including adults who have been out of school for some time as well as students already enrolled in college who need some additional pocket change.

But Kyle is careful to distinguish his differences of opinion from issues of personality, though he and Cohen have often clashed in the past. He is, in fact, commendatory of Cohen's motives. Cohen just as carefully reciprocates. Each describes the matter as one of "philosophical differences," though each discerns political motives in the other as well.

Politics Is Politics

Politics is certainly a given in what is, after all, the expressly political arena of the legislature. Ron Ramsey of Blountville, chairman of the Senate Republican caucus, made it clear last week to reporters that GOP support of lottery implementation depends on keeping the 3.0 GPA floor as well as opening scholarships to private school students as well as those attending public colleges and universities. House GOP leader Tre Hargett of Bartlett backs up that position. Meanwhile, many members of the black caucus want the GPA requirements lowered, and some also favor an income cap for recipients.

Cohen's task is to hold his legislative coalition together while balancing the various pulls and tugs. He got a boost of sorts last week from Memphis' Kathryn Bowers, an influential House member of the black caucus, who suggested a compromise whereby 3.0 would be the GPA floor for two trial years, after which revenues permitting the requirements might be relaxed to admit more students.

Cohen's legislative style has always had a confrontational edge. During a hearing last week on predatory lending practices, Senator Roy Herron of Dresden responded to a North Carolinian testifying about a bill which had passed his state's senate by a margin of 49 to 1. "Oh, so you had a Senator Cohen," Herron joked. And Ramsey suggested that one reason why Bredesen seemed to be faring better with Republicans than with Democrats (though the governor is making out just fine with both) was that "Senator Cohen's sponsorship of the lottery may have antagonized the relationship."

But Cohen also possesses accommodationist tendencies, and his hard work and intellectual acumen, augmented by an impish wit (as when he introduced an amendment to his own bill last week as "Number 004533 and the Power Ball is seven") command the respect of most of his colleagues.

Bredesen, too, expresses an appreciation for even an admiration of Cohen, but he makes it clear that he, like the senator, is dug in on the issue of who controls the final product. Much of the argument between the two is based on their different reading of revenue estimates Cohen believing that his "conservative" figures show more than enough income during the coming year to complete action on the lottery, scholarship provisions and all, while Bredesen remains skeptical.

Something or someone will give before final passage of the bill, which most observers estimate will take until the last week of the current legislative session, scheduled to end either at the end of April or in mid-May. JB

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