The $500 million question


By Scott Robertson

Legislators in Nashville have the pleasant opportunity this session of dealing with the question of what to do with unbudgeted money. The state took in about $500 million in tax revenue beyond what was planned for last year.

Some will immediately ask if this means the state is overcollecting. After all, if one follows the conservative doctrine that money is best used in private hands, then the idea that a government has more than it needs means that money is being handled inefficiently. But looking into this too closely might lead one into questions about whether taxes are being collected fairly and efficiently, which then gets you into questions about raising the gas tax and instituting a state income tax, and not too many people want to go there.

A more useful question about the surplus is how to best put it to use to serve the taxpayers of Tennessee. The easiest answer would be to augment the state’s Rainy Day Fund. If you go by the old political saw that you want to run a government budget the way you’d run your own household, that’s what you’d do. Because Tennessee mandates balanced budgets, there is no massive debt to pay down, so it makes good sense to put the money back and have it in reserve for a future year (or years) when tax collections do not meet budget needs.

Of course, a state government runs much more like a business than a household. No household has billions of dollars of mandatory spending on education (though if you have college tuition to pay, it may feel like it). No household has six billion dollars in planned road, bridge and highway projects to pay for. And no household has a fleet of vehicles, campuses of buildings, and several departments of staff to keep up.

So what would a business do?

That depends on the business, obviously, and on its situation in its own market, but it’s safe to say that most businesses owners want their businesses to grow. They want to improve their profitability.

Translating that into state government terms, Tennessee wants to grow its tax base. The more taxpayers you have, the lesser the burden is on each individual taxpayer to meet the same budget. It wants to be able to bring more investment and more jobs to the state. The process of achieving those goals is called economic development.

And statewide, the biggest problem we have in economic development is our workforce. We need a better-educated, more reliable, less drug-addicted, healthier pool of employees in order to attract high-paying new companies to Tennessee.

And when you look at what’s needed to address those problems, you see how paltry the surplus is. Yep. $500 million is paltry. It’s a relative drop in the bucket. With almost 100 counties in the state, that’s only a little more than $5 million per county.

Suddenly the pleasant task of figuring out what to do with $500 million is tempered by the realization that we are already behind by several billion dollars in terms of meeting our own needs to bring Tennessee’s workforce up to a competitive standard.

And that’s with the federal government already funding Tennesseans’ lives more than almost any other state in the union. An article in the Washington Post last week showed Tennessee is the third largest acceptor of federal funds in the United States. Makes that moral stand not to accept Medicaid expansion seem pretty hollow in retrospect.

So nobody should be surprised if the majority of the $500 million goes to education and workforce development, nor should we be particularly disappointed. There are a lot of worthy uses for tax money in Tennessee. I personally would like to see our roads and highways protected so they remain among the best in America. But it’ll do us no good to have great roads if the 18-wheelers are all servicing manufacturing and distribution centers in other states.

Governor Haslam understands the needs of business and industry. The need to meet those needs is why he put the Drive to 55 program in place, and that need has driven each of the higher education reforms under his administration.

It’s a cycle. We need healthy, well educated, drug-free citizens in order to provide good employees to bring good businesses to the state, bringing with them a higher standard of living that makes it easier for our citizens to be healthy, well-educated and drug-free.

We have to cut into that cycle at some point, and the state executive branch is trying. I would encourage you to let your legislators know you’d appreciate them using these funds in working to solve the state’s significant problems, rather than spending the current session grandstanding on high-visibility, low-return distractions.



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