For the second year in a row, Tennesseans are watching state senators and state representatives twist and turn in a political cyclone in an effort to balance the state budget. Even the horn-honking characteristic of last year has begun around the State Capitol and Legislative Plaza.
Last year, the legislative session dragged on well into June, even approaching the July 1 deadline of the shutdown of state government. Although that lengthy a session is unlikely this year, there still appears to be no solid consensus on a solution as we head into the latter part of May.
Legislators might choose to just patch things up again, avoiding a painful long-term solution of either massively cutting state government or reforming the tax system. Any patched-up solution this year would likely be designed to also get us past next year since that is when lawmakers face re-election.
Why is the state in such a pickle? And what really are the alternatives for dealing with it?
One of the most important characteristics of a state tax system is its income elasticity