Republicans plan to unveil deep new budget cuts

Monday, April 26, 2010 at 11:45pm

Senate Republicans are promising to unveil deep new cuts in state spending this week as part of an alternative budget plan that’s certain to touch off an acrimonious election-year debate with Democrats.

Senate speaker Ron Ramsey said “everything’s on the table” — except pay cuts for state employees.

For two weeks in the media, Ramsey has been trading jabs with Gov. Phil Bredesen over how to bridge a $105 million gap between the administration’s February budget proposal and slumping revenue projections.

The governor is touting his proposal to lift the state sales tax cap on purchases of more than $3,200. That would raise the tax from 7 percent to 9.75 percent and bring in $85 million. The administration would exempt automobiles, manufactured homes and boats.

Democrats would like to portray it as a “luxury tax” on furs, jewelry and the like. But Ramsey, who quickly shot down the idea, called it a tax on “backhoes and Bobcats” aimed primarily at small businesses.

“It couldn’t be worse timing,” he said. “We don’t need to be taking $85 million out of small businesses’ back pockets when they’re struggling right now.”

Bredesen countered by demanding that Republicans offer their own alternatives, suggesting Ramsey is politicizing the issue to benefit his campaign for governor.

Without a tax measure, Bredesen contends a 5 percent state employee pay cut would be needed. Ramsey disputes that. “That’s never legitimately been on the table,” he said.

Ramsey has declined to discuss in any detail what is on the table. Republicans have been working with the state’s constitutional officers and finance committee staffs to develop their plan. One likely possibility is the cancellation of construction bonds that have been authorized but not issued. Democrats say they suspect Republicans might target funding for the governor’s pre-kindergarten program.

Democrats and some House Republicans — including Speaker Kent Williams — favor digging deeper into the state’s $900 million reserve funds to help make up the shortfall. Bredesen already proposed allocating $202 million from those accounts. Senate Republicans are against spending more.

“The worst thing we can do is take money out of our savings account to pay for our house payment,” Ramey said. “The savings account disappears, but the house payment keeps going. We need to make sure we spend recurring money for recurring expenses.”

Bredesen’s $28 billion budget recommendation already contains 9 percent spending cuts for some departments. It also includes $50 million in new revenue — $21 million by ending a sales tax exemption for cable TV customers.

Republicans are against that tax too, as well as another one the governor has proposed. It would raise $2 million by forcing hotels to pay the sales tax on the free continental breakfasts they serve.

That makes the budget hole as high as $150 million by Ramsey’s own estimation. The governor clearly is frustrated by all the Republican objections to his spending blueprint.

“My question is for anybody, ‘OK what’s your solution?’” Bredesen asked. “It may well be one that I’d be perfectly comfortable with. But this is the point where the legislature has got to stop saying, ‘I don’t like this, and I don’t like this, and I don’t like this’ and come forward with what it is they want to do to solve the problem if it’s something different than what I’ve proposed.”

To which, Ramsey responds: “… Governor Bredesen is always welcome to veto the budget and argue to the people of the state as to why our small businesses need to be paying more in taxes when they should be growing jobs."

“I think he realizes that I’m going to be constructive,” Ramsey added. “I’m going to come up with an alternative proposal that includes cuts. I think that’s what the general public wants us to do as legislators. Don’t be raising taxes in economic times like this, especially on the people who are trying to provide jobs.”

15 Comments on this post:

By: richgoose on 4/26/10 at 11:26

Gut & Cut until the the budget meets the income.

This is the way every family and every company has to operate.

If services have to be cut it is part of the life cycle.

By: Anna3 on 4/27/10 at 6:33

Ron Ramsey is showing some real leadership rather than to use the old "Pass the buck" to the next administration tactic Bredesen is using. Using the rainy day fund is just plain dumb...the economy will not get better until America replaces the folks running until then, we just gotta cut.

By: Kosh III on 4/27/10 at 7:35

Cutting back is NOT the only way.
Sure, plenty of families will cut back during hard times, and the state is already doing that.
Some people find ways to bring in more income, such as getting a second job. I've done that.

For the state to bring in more income means raising taxes. There are hundreds of millions in sales tax exemptions that can be eliminated to bring in more income and make the sales tax more equitable.
Lawyers SELL their services, yet no sales tax is required. How much is sales tax on $300 per hour lawyers? Ditto accountants, architects and more.
Many agricultural products are exempt because the Farm Bureau owns the Legislature and buys preferential treatment.
The list goes on and on.....

By: localboy on 4/27/10 at 7:48

Sorry, won't wash...the record's with Bredesen. He's prepared and submitted a budget with some cuts and revenue increases while the Legislature has worried about us being able to carry a weapon into a bar (i'm sorry, an eating establishment-legally we don't have bars in this state). Now it's their turn to counter and they'll propose more cuts to TennCare that Bredesen can't initially make but can take after political cover is provided. Passing the buck to the next administration? Why do that to the next Democrat - didn't happen before, either as gov. or mayor. Using the rainy day fund? If anybody understands it's use it's him - he built it back up from zilch left by the Sundquist administration. Both sides will get something out of this process - Bredesen some cuts he can live with and Ramsey some face time to try and counter the Wamp juggernaut.

By: nashtnman on 4/27/10 at 10:37

Remove tax exempt status from all churchs, that will solve the problem. The liberals will love the idea. After all they want God out of the government.

By: trtay2004 on 4/27/10 at 10:50

Did Ramsey propose anything? No, he's simply arguing anything the governor says. What a joke? I hate that party affiliation will hurt our state. Can't we get someone not so extreme to run for office. Go INDEPENDENTS!!!

By: Kosh III on 4/27/10 at 10:59

Taxing religious organizations is not a solution.
The exemption is to avoid taxes being used as a tool of repression and control. Do we want Ramsay and Bredesen choosing the pastors and bishops as is done in the UK?

That's just the view of this liberal and maybe since I'm left of Tony Benn, I'm not left enough for you.

By: geekinstein on 4/27/10 at 3:43

More from the sole of Ramsey's cow boot will not help us balance this budget, no matter how often he offers it.

The tax on alcohol is less on the alcohol in beer than it is on the alcohol in whiskey. Bring the beer tax in line with the whiskey tax. This is not big bucks but it eliminates overtaxing Tennessee distillers.

Ramsey has a single point about not taxing small businesses for basic equipment we need for them to grow us out of this recession.

A tax on the full amount of the purchase price of an automobile, even if for business use, seems to make sense since it lets everyone pay tax on 100 percent of the purchase price, Now only poor folks pay tax on 100 percent of the purchase price of a (used) car while rich may pay tax on only 5% of the purchase price of a tricked out new car.

Tennessee should consider some green taxes if we have to raise money. Taxes / deposits on the top three things that seems to accumulate on our roadsides would be a good starting place. (Maybe drink containers)

By: tv8527 on 4/27/10 at 7:05

Cut pre k ,The states own steady has proven it doesn't work.

By: pswindle on 4/27/10 at 8:36

Pre-K is one of the most valuable programs that has been started in the state. The Governor knows this.

By: TNCitizen on 4/28/10 at 6:21

Money in small business men's and women's back pockets does not create jobs. They will not hire unless there is a demand for the goods and services the business produces and they have reason to expect that the demand will continue. In order to get over this recession, we need a tax cut for the working man and woman so they will have money to spend on the necessities they have cut from their budgets. Cut the sales tax and replace it with an income tax. Then there will be more consumer spending to create the demand for the small business's products.

By: idgaf on 4/28/10 at 6:56

Cut pre K. The last thing we need is another ongoing inefficient entitlement.

By: Kosh III on 4/28/10 at 7:32

"The last thing we need is another ongoing inefficient entitlement"

Yes. No more welfare checks to pro sports teams or mega-corporations.

By: vechester on 4/28/10 at 9:24

I see a pattern developing here: Liberals want more taxes placed on citizens who are already struggling with high unemployment and a weak economy, which reminds me of a Reagan quote:

“Government is like a baby: An alimentary canal with a big appetite at one end and no sense of responsibility at the other.” - Ronald Reagan

Truer words were never spoken!

By: localboy on 4/28/10 at 11:58

Sure there have, such as
"40 And the King shall answer and say unto them, Verily I say unto you, Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me." Matthew 25:40.
and along the same line...
"44 Then shall they also answer him, saying, Lord, when saw we thee ahungered, or athirst, or a stranger, or naked, or sick, or in prison, and did not minister unto thee?
45 Then shall he answer them, saying, Verily I say unto you, Inasmuch as ye did it not to one of the least of these, ye did it not to me." Matthew 25:44,45