Lt. Gov. Ron Ramsey vowed Thursday Republicans will reject Gov. Phil Bredesen’s proposal to balance the state budget by lifting the state’s sales tax cap on purchases of more than $3,200.
Ramsey said Senate Republicans will present their own alternative plan making new cuts in state spending. He wouldn’t rule out an across-the-board cut in state employee pay.
Ramsey agreed more spending cuts will be painful, but he said: “Go out in the real world where people have 10 percent unemployment, where they’re worried about their job tomorrow, where they can barely get by, and tell them that cutting another 3 or 4 percent out of state government is painful. I think people understand that we need to be living within our means.”
The governor unveiled his proposal in a private meeting with legislative leaders Wednesday. It would exclude vehicles, boats and manufactured homes, but apply to luxury items like jewelry and furs and also to office furniture, computers and other equipment purchased by businesses.
Purchases of items exceeding $3,200 already are taxable at the 7 percent state rate. The new proposal would add another 2.75 percent to the purchase of single items exceeding $3,200. It would raise $85 million to plug the state’s latest budget shortfall.
To reporters Thursday, Bredesen challenged Republicans to present other ways to balance the budget. He said lawmakers probably would have to cut state employee pay if they refuse to go along with his plan.
“I guess I’d say to anyone, not specifically to Speaker Ramsey but to anybody, look these are difficult times and you can’t just say ‘no’ to everything,” the governor said. “At some point, you’ve got to decide what it is we’re going to do to get through these things. I’ve put a path forward that relies primarily on cuts, has a couple of revenue enhancements in it that I think gets us through. If the legislature wants to handle this in some different way, that’s certainly their prerogative. But it has to be handled.”
In response later, Ramsey said: "Absolutely, I do anticipate making more cuts. This bill as presented would take $85 million out of the economy and mostly from small businesses that buy those backhoes and Bobcats to create jobs and bring it to the state treasury. It couldn’t be worse timing. I think we’ll find alternatives, I do.”
Ramsey said Republicans were “shell shocked” when Bredesen first told them his plan “because he’d gone this far without raising taxes, but obviously, as he’s going out of office he’s changed his mind.”