Republicans gut governor’s tax revenue plan

Democratic Gov. Phil Bredesen may have to dip into the state’s cash reserves to find more than $120 million after Senate Republicans gutted his revenue tax plan to balance the state budget.
Part of the governor’s proposal included raising $85 million by lifting a sales tax cap on big-ticket items.
The Republican-majority Senate Finance Committee passed legislation May 13 that stripped out that measure, as well as other revenue sources, such as eliminating a tax exemption for the first $15 on cable bills.
Senate Democratic Leader Jim Kyle of Memphis said the legislation, called the “technical corrections bill,’’ is sometimes used as a “revenue vehicle in order to try to close the budget gap.’’
“The governor used it this year to create the revenue he needed to balance the budget,’’ Kyle said.
He said the deletions leave the state more than $120 million in the hole, and that the state’s cash reserves may have to be tapped again. He said the governor has already had to siphon $100 million from reserves because of revenue loss in the current year.
“We can reduce spending by $120 million, or we can go into the rainy day fund,’’ Kyle said.
State Finance Commissioner Dave Goetz said earlier that about $330 million should remain in the state’s rainy day fund at the end of the next fiscal year, and another $170 million is expected in TennCare reserves. TennCare is the state’s expanded Medicaid program.
As for the state’s spending plan, Kyle, who is carrying the legislation for the governor, said he hopes to begin seriously discussing it this week. And if last Thursday’s vote is any indication, he said there’s still a lot of work to be done before a consensus is reached.