Look for tight state budget

Frank CagleFrank Talk

What happens when our tax-cutting, fiscally conservative legislature is faced with a recession and a revenue nosedive?


Some experts are predicting that we are headed for a recession because, well, we’re due. There is no downside to predicting a recession because sooner or later it will happen. Give or take a year or two. The UT economic research team told state leaders to get ready and that the state has experienced less revenue growth because of “policy decisions.”

Frank Cagle

The policy decisions since the Republicans have gotten control of the legislature have been to cut taxes.

It’s a funny thing about politics. You don’t get enough credit for cutting taxes and you catch hell for increasing them. Which explains why taxes don’t get cut very often and legislative bodies often prefer to borrow money rather than pay the bills when they come due.

And if you cut taxes in good times, it’s very difficult to raise them again in bad times.

Nashville has been socked with infrastructure needs due to explosive growth and the city has chosen to borrow money rather than pay the bill. It has reached the point the state Comptroller’s office has threatened to take over the city’s checkbook if the debt problem isn’t addressed.

The Republicans in the state legislature have been merrily cutting taxes since they took over. House Speaker Beth Harwell, Lt. Gov. Randy McNally and Gov. Bill Haslam eliminated the inheritance tax and the gift tax and started a process to phase out the Hall Income Tax on investment income. They also made small cuts in the sales tax on groceries. The “rainy day” fund is at $1.1 billion.

The rosy financials and tax cuts have been possible because of a good economy, and increases in manufacturing jobs. But should that recession come along, what will the tax-cutting Republicans do? Repeal the tax cuts? I don’t think so. Borrow money? Not a chance. I think you can expect a slash and burn budget. But the good and bad news is that the state budget bedrock is the sales tax on food and it is the most reliable source of revenue. The taxes that have been eliminated are significant but they are not the driver of the state budget, which is the sales tax.

The session starting next month will likely feature a tight budget with a low spending cap. As has been usual in recent years, you set the bar low and at the end of the year you have a surplus. Former House Speaker Glen Casada slipped a $4 million slush fund into this year’s budget for pork projects. Meanwhile, the Beacon Center discovered $730 million in federal funds stashed away rather than used to help poor working families. Last year the state spent just 37 percent of the money allocated for Temporary Assistance for Needy Families.

So pet projects were set to get funding while the money to help poor working families climb out of poverty were hidden away? Could some legislative committee bother themselves long enough to hold hearings and discover when the funds started being withheld and who made the decision? Did Gov. Haslam know? If not, then who did it and on whose authority?

Anonymous whistleblower: Eric Ciaramella. Everybody in Washington and anyone with internet access knows that’s the name of the “anonymous” whistleblower whose complaint began the House Intelligence Committee impeachment hearings. Democratic Chair Adam Schiff makes speeches about the importance of keeping the whistleblower’s name secret and therefore make him unavailable to testify. It would be ridiculously funny if the media didn’t sit there with a straight face and solemnly give credence to Schiff’s logic. Given how many national security secrets have been leaked and reported on in Washington in order to secure a scoop it is passing strange that the big media outlets are playing along with this gag. Is it germane to the investigation that, according to the Washington Examiner, he is a close friend of Schiff’s top aide?

Chickens! If you live in the city and are thinking about being an egg entrepreneur there is something you need to know. Chickens lay eggs for two or three years, but they live forever. And I believe a city ordinance forbids your slaughtering them for food.

Frank Cagle is a former managing editor of the Knoxville News Sentinel.

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