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Published in Print: August 8, 2001, as Education Funding Looms Large In Tenn. Budget Fight

Education Funding Looms Large In Tenn. Budget Fight

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Tennessee lawmakers were expected to continue their budget wrangling this week, after Gov. Don Sundquist vetoed a hard-fought state budget that he saw as shortchanging education and other spending priorities.

The legislature had passed a $19.6 billion budget last month for the fiscal year that began July 1 after extensive battles over how to overcome revenue shortfalls. The Republican governor faulted that budget, among other reasons, for its failure to provide funding for a statewide reading and early-childhood- education initiative that lawmakers had approved in June, and for using all of the state's $560 million share in tobacco-settlement proceeds in a single year.

"What I've seen makes my stomach hurt and my heart ache because I know that this General Assembly, as evidenced by the budget it chose to pass, doesn't much care about the future of our state, or the future of our children," Gov. Sundquist said July 26 as he issued the veto.

But some legislators believe the governor had asked for far too much new spending on education and other programs at a time when state revenues are falling short of projections.

Mr. Sundquist "proposed a budget that was out of balance and could only be balanced with new taxes," said Matt Little, a spokesman for the Senate Democrats.

Tripped Up by Taxes

Taxes were a major sticking point throughout the session. For several years, lawmakers have debated instituting an income tax or raising the state's 6 percent sales tax, but they voted down both those options last month. The governor supported creating a 3.5 percent income tax.

One day before the fiscal year ended, the legislature approved what its members intended to serve as a temporary budget to keep the government running. Officials say it was the first time in state history that the legislature missed the June 30 deadline.The House and the Senate, both of which are controlled by Democrats, were slated to meet again Aug. 7 to decide their next steps. Overriding the governor's veto would require simple majorities in both the 33-member Senate and 99-member House. Lawmakers could also choose to leave in place the temporary budget—which the governor could not veto—for the rest of the fiscal year, or work on a different spending plan.

House leaders have said they believe they have ample votes to override the veto, but Senate Democrats are closely divided on the issue. In the area of education spending, the main difference between the vetoed budget and the temporary one is that the former would include a 2.5 percent pay increase for teachers, while the other would provide no raise.

Income-Tax Issue

In January, Gov. Sundquist asked for more than $800 million in spending increases and new programs in education and other areas. The vetoed budget would provide about $300 million for some of those requests, but education would see few increases.

In recent weeks, residents on both sides of the income-tax debate have held rallies at the state Capitol in Nashville.

The National Taxpayers Union, based in Alexandria, Va., is organizing its 5,000-member Tennessee delegation to lobby for the vetoed plan. Its president, John Berthoud, said in a written statement last week that the legislature was wise to rein in the governor's plans.

"A few big spenders claim that without a tax increase, the state will have to cut spending for important programs like education," he said, "but the truth is that there is no lack of money in Nashville, only a lack of fiscal discipline."

It's the second year in a row that Gov. Sundquist has vetoed the annual budget. He rejected last year's plan because he believed it was based on overly optimistic revenue projections, but the legislature overrode his veto.

"I thought we couldn't do much worse than the 'fudge-it budget' that I vetoed last year," said the governor, who completes his second term in January 2003 and cannot run for re-election. "Turns out I was wrong. In fact, if the legislature had set out to wreck the state's finances, I doubt it could have done a better job."

Flanked by a group of kindergartners, Mr. Sundquist in June had proudly signed an education package that included plans for expanding a pilot preschool program to provide statewide prekindergarten for all 4-year-olds and poor 3- year-olds. The plan also included money for school-based reading specialists and for training teachers in reading instruction, at a total cost of more than $60 million a year.

While the package had enjoyed bipartisan support, legislators realized they could not pay for it without raising existing taxes or imposing new ones.

Shortly before his veto, the governor toured the state, visiting schools, colleges, and hospitals in serious need of repairs and supplies.

Vol. 20, Issue 43, Pages 28,35

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