Everyone agrees that Tennessee has a revenue and budget problem. Everyone
also agrees that our state sales tax is too high, is regressive, and that higher
sales taxes are not the answer.
There is much less agreement on what to do about it. Regardless of whether you
think we should have a state income tax or not, one question that is not being
asked in the debate is whether we the people of Tennessee getting our money's worth for the taxes we already pay? Are other states doing more with less? How do you think we compare?
Should be demand better accountability before agreeing to higher taxes?
Take a look at the budget comparisons below and decide for yourself. (Note: budget figures and percentages vary depending on the source, i.e. the
governer's office or the budget office or the legislature, and subject to some interpretation depending on how they are
categorized or what report was used. If you have corrections or suggestions or something to add, please leave a comment in the guest
book. See sources and additional reading at the bottom of this page).
"You
will hear from those who say we ought to preserve special breaks for some
businesses and impose an income tax on working Tennesseans. That's not tax
relief, it's not tax reform, it's not tax simplification, and it's not tax
fairness. All an income tax does is raise the tax burden on Tennesseans and
create a way to finance the easy and endless expansion of government.
Tennessee does not need a state income tax."
- Governor Don Sundquist - February 8, 1999
Select Budget Comparisions:
TENNESSEE
GEORGIA
NORTH CAROLINA
FLORIDA
Population
5,700,000
8,200,000
8,000,000
16,000,000
State Budget
$18,907,000,000
$23,687,000,000
$23,445,000,000
$48,331,000,000
Education
41%
40%
35%
28%
Health/welfare
27%
19%
12%
31%
Per capita
$3,317
$2,889
$2,931
$3,021
Avg. teacher salary
$36,500
$39,675
$36,098
$35,916
Unemployment
4.00%
4.00%
3.20%
3.90%
College degree
17.70%
21.50%
23.90%
21.60%
Home ownership
71.90%
71.30%
71.70%
67.60%
Gross product
$138,000,000,000
$222,000,000,000
$228,000,000,000
$405,000,000,000
Per capita
$24,211
$27,073
$28,500
$25,313
Average annual salary
$29,518
$32,339
$29,453
$28,911
Doctors/100K
246
211
232
238
State health spending
$5,104,890,000
$4,500,530,000
$2,813,400,000
$14,982,610,000
Per capita
$896
$549
$352
$936
State health ranking
41
35
33
43
School age children
1,026,000
1,574,400
1,416,000
2,704,000
Education spending
$8,130,010,000
$9,474,800,000
$8,205,750,000
$13,532,680,000
Per
capita
$1,426
$1,155
$1,026
$846
Per child
$7,924
$6,018
$5,795
$5,005
College Ranking
44
20
3
18
Student/faculty ratio
17/1
15/1
14/1
22/1
Classes
under 20
35%
37%
42%
28%
Classes over 50
8%
13%
12%
24%
Graduation rate
56%
63%
82%
65%
In-state tuition
$3,362
$3,276
$2,768
$2,606
Out of state tuition
$10,166
$10,794
$11,934
$9,594
Avg HS GPA at college
entry
3.19
3.50
3.44
3.70
Freshmen retention
78%
88%
95%
91%
8th grade reading scores
258.5
257.0
263.0
253.5
Percent proficient or
better
25.5%
24.5%
31.0%
23.0%
Percent less than
proficient
74.5%
75.5%
69.0%
77.0%
Here are some questions that come to mind with regard to
our two biggest budget categories:
On Education:
Our state politicians are constantly promoting new
education “initiatives” and chastising us for not being committed to
educating the children of Tennessee with new taxes. What is happening to all the
money we already spend for education? Why does it appear that we spend more than
other states, but other states are getting better results?
For example, it appears that NC roughly the same as TN on education, yet has
nearly three million more residents. Their university is ranked third, while
TN’s is ranked 44th. NC has lower tuition, smaller class size,
higher freshmen retention, an almost 50% higher graduation rate, and
significantly higher 8th grade reading scores, yet TN spends nearly
33% more per child. The high school GPA of Tennessee students
entering college is the lowest in the region, and only 17% of us get
college degrees versus nearly 24% in NC.
And why does the University of Tennessee promote spending
for a new "Ag Campus" bridge to handle football traffic? How many new professor salaries could U.T. pay with the $15 to $25 million being
spent on this bridge? This money could pay good salaries for
twenty-five new professors for the next ten years.
Or, how about the $1 million spent for a new “recruiter
reception area” skybox at Neyland Stadium? Why do we need this? That money could pay
twelve or so professors a good salary for a year. No wonder professor’s are
leaving U.T. and going to other states to make better salaries.
These are just a
couple of examples, but the $1 Billion U.T. Budget is not discussed openly so one must wonder how
much waste is built in. Why can’t we pay professors, but we can somehow find
the money to build huge, ugly sports monuments like the Thompson-Boling Arena. Yet, we keep raising tuitions (15% more this year) which are already some of the highest in the South. Why aren't we talking about this?
(And yes, we all know that U.T. Sports is a moneymaking business, the question
is where does the money go?)
On Health Care:
Most knowledgeable people agree that TennCare is an innovative program that is helping people, and helping more people with lower cost to the state than the Federal programs it replaced. TennCare spending, however, appears to be out of control. The 17% increase in
last year's spending is roughly the same amount of our current budget deficit.
But we are in denial about fraud and abuse, and there is no
possible way that state and local politicians and corrupt health care
organization executives can keep their sticky fingers out of a $5 billion pie.
Stories of abuse are rampant, such as insurance companies selling
“uninsurable” certificates, employers enrolling ineligible workers to save
on benefits, out of state or deceased enrollees, enrollees who do not qualify
financially, fraudulent billings by managed care organizations, even enrollment by state
employees whose earnings disqualify them. Tennessee has the
highest percentage of its population receiving public health assistance of any
state in the nation. How did this happen and why aren’t we talking about it?
Physicians and health care providers don’t like the
system because they can’t get paid. Patients don’t like the system because
they get assigned to unqualified providers, or shuffled around from doctor to
doctor as physicians leave the program or have to drive 100 miles to see their
doctor. Managed care and HMOs don’t like it, because the funds they receive
don’t cover the cost of services. If nobody is happy with the program, why
aren’t we talking about fixing it? But according to some experts simply ending
the program would be a monumental disaster for health care in Tennessee,
virtually guaranteeing a total collapse of the system. This
is a serious problem that we should be discussing, and more money won’t necessarily fix
it.
Some other observations:
Tennessee spends only about $13 million per year, or 0.07%, on
developing tourism. Dolly Parton probably spends more than that. With our
natural beauty and abundant recreational opportunities, Tennessee could be one
of the top tourist destinations in the U.S. Tourism should be Tennessee’s top
industry, and tourists bring dollars to the state economy. But we can’t leave
it up to Dolly.
Tennessee spends only about $116 million per year, or 0.6%, on business
and economic development. With its close proximity to 70% to 80% of the U.S.
population, diverse natural resources, intersection of two of the busiest
interstate highway systems in the nation, a river system that supports extensive
barge traffic, a trained labor pool of displaced Federal technology workers, and (for
now, anyway) no state income tax, Tennessee should be a Mecca for business
startup or relocation. Instead, we have increasing unemployment, plant closings,
and a general lack of respect in the business and financial community as a
serious place to do business.
Tennessee spends a combined $9 billion (that’s billion with a
‘b’) on health and welfare. We have
reduced welfare rolls by nearly 50%, but spending has gone up by 25% since 1998, and over 15% in the last
year. This just simply
doesn’t compute. With nearly 25% of our population receiving public health care assistance,
and half of our school children on federally assisted free or low-cost
school lunch programs, and over half our budget spent on social programs, Tennessee
appears to be one of the most needy welfare states in the nation.
Tennessee appears to be headed for a vote on a state lottery to
"fix" our budget problems. This is not a fix at all. It is
instead quite simply a "stupidity" tax on the mathematically
challenged. Based on comparisons of per capita lottery revenues for states
with similar demographics (KS, IN), a state lottery would raise
approximately $168 million in revenues (based on the national average of 32%
of the revenues going to the state after expenses and prize payouts). This
is a drop in the bucket and will not fix our budget problems. And don't be
fooled by wildly optimistic estimates of $800 million in income from a state
lottery. That would represent revenues of approx. $416 per year from every
resident of the state of Tennessee, and would be outrageously higher than
the average per capita revenue in other states including New York, Florida,
or even Georgia (which enjoys border buying from TN, AL, and SC.)
Tennessee’s “secret” Hall Tax punishes savings, investment,
and entrepreneurship. Most people don’t realize that Tennessee already has a
state income tax. If you are a small business owner who is paid mostly through
distribution of profits, you pay a 6% tax on that income. If you are an investor
or saver who earns interest or dividends, you pay 6% tax on that income.
One might conclude that the State of Tennessee's finances are being seriously mismanaged. If this were a business, there would only be one party to hold responsible:
management. If a publicly traded company were run like the State of Tennessee, there would be shareholder class action suits
and the senior management and board of directors would be out the door.
