Speaking for the first time to the state’s overwhelming Republican General Assembly, Gov. Bill Haslam Monday night reiterated calls for bipartisanship while calling for a limited school voucher program, further tax cuts and more focus on higher education.
“I believe we have to begin this evening by addressing the elephant in the room, or I guess I should say, the elephants in the room,” Haslam said from the podium in the House of Representatives, pointing out that two-thirds of the General Assembly is now made up of Republicans.
“There is a narrative already being written for us this legislative session: Republicans will be fighting internally, and Democrats will be focused solely on playing politics instead of working across the aisle to find common ground for good government. But I think that makes caricatures out of us and sells all of us short.”
The comments came as Haslam released his $32.7 billion budget plan for the spending year that kicks off July 1. For the full text of Haslam's address as released by his office Monday, click here. For a word cloud illustration of the words that appear most frequently in the address, click here.
Haslam's budget assumes $392 million in revenue growth, returning tax collections to an estimated $9.4 billion, reminiscent of FY 2008 budget year just prior to the economic recession.
The governor argues those extra dollars will largely be eaten up by $350 million in increases in TennCare, the state’s Medicaid program for low-income children, pregnant women and the elderly. Those increases are without expanding the program, an option under the Affordable Care Act the governor has yet to weigh in on.
“We have to be very deliberate about making a decision to add that many and more back to the roll,” Haslam said. “But I also understand that the decision isn’t just as easy as standing here today and saying ‘We’re not going to expand Medicaid.’ There are hospitals across this state, many of them in rural communities, that are going to struggle if not close under the health care law without expansion, and that’s not something to take lightly.”
The governor’s plan also includes keeping pace with education funding, which means covering the cost in the state’s education funding formula, capital projects and spending and extra $51 million to upgrade technology.
Haslam’s budget also builds in 1.5 percent pay bumps for state employees, teachers and higher education, and sets aside about $60 million for merit pay raises the administration has yet to decide how to divvy out. The budget also calls for eliminating some 300 jobs across state agencies.
The governor’s budget includes increasing funding to the Department of Corrections to largely address the growing cost of housing additional inmates, and the Department of Children’s Services to increase reimbursements to people who foster or adopt children and to increase pay and standards for service workers. Haslam’s budget also increases funding meant to speed up lines at the DMV.
The governor’s plan includes reducing the tax on food to 5 percent from 5.25 percent, which amounts to saving 25 cents for every $100. The move would subtract an estimated $21.2 million from state coffers.
In addition, Haslam plans to exempt more seniors from having to pay taxes on interest from bonds and notes and dividends from stock, which the state calls the Hall tax. The tax is one of Lt. Gov. Ron Ramsey’s favorites to cut. Under the plan, an extra 7,400 seniors would be exempt from paying the tax, which would mean $1.5 million in lost revenue.
Right now, individual seniors making less than $26,200 a year or joint-filers making less than $37,000 a year are exempt. Under the governor’s plan, those thresholds would rise to $33,000 a year for single filers or $59,000 a year for people who file jointly.
The governor’s office also made his case for supporting a school voucher program that would allow 5,000 parents of low-income children in the bottom 5 percent of schools to send their student to private school using taxpayer dollars. Under his plan, the students could begin using the vouchers in the school year that begins in the fall of 2013, but would climb to up to 20,000 students by the 2016 school year, according to the governor's legislation.
House Speaker Beth Harwell, who is hesitant to throw her full support behind vouchers, said phasing the program in makes the idea more palatable to her.
“One of the things I respect about the governor is that's part of his trademark, is let's phase this in,” she said.
The governor's proposal also seeks to cap college tuition increases at 6 percent at four-year schools and 3 percent at 2-year colleges.
House Minority Leader Craig Fitzhugh said he doesn’t want to see “more of the same” from the Haslam administration.
“More of the same is not going to put people back to work," he said. "More of the same is not going to fix our education system and more of the same is not going to be what’s best for the people of Tennessee. Democrats have a different vision.”
Any budget proposal will need approval from the legislature, which is expected to debate the governor’s proposal and offer their own ideas before the close of session predicted in late April or early May.
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