In recent speeches, including his State of the State address two weeks ago, Governor Don Sundquist has made much of his desire to keep Tennessee a "low-tax" state. Indeed, the Volunteer State is at the bottom amongst the 50 states or close to the bottom in almost all indices of taxation -- a fact which makes the special pleading of statewide and local anti-tax groups seem especially strident and beside the point. Two weeks ago, in commenting on his State of the State remarks, we commended the governor for parts of his proposed legislative package but professed ourselves troubled at the social costs of his much-vaunted belt tightening.
A fortnight later, we're more concerned than ever. In at least three areas, the Governor seems determined on what we called then a penny-wise, pound-foolish course. Those areas are: (1) higher education; (2) mental health; and (3) state housing programs.
The fact that an additional $40 million must be gouged out of the already straitened budgets of the state's colleges and universities augurs very poorly indeed for Tennessee's future. And a group of legislators and health care activists made compelling good sense last week when they sounded the alarm at the governor's new provisions for covering mental health under TennCare. Formerly guaranteed by state disbursements derived from federal funding, payment for such care is now subject to the check's-in-the-mail attitude of the state's private managed care providers.
Another Sundquist proposal, which has so far received less publicity, would stall and perhaps stop altogether the momentum of the Tennessee Housing Development Agency, which over the last decade has made it possible for numerous low- to moderate-income Tennesseans to become homeowners. Not incidentally, THDA has done much to fuel the state's economy in the process.
The Tennessee Network for Community Economic Development, a non-profit organization, is attempting to organize a mass protest in Nashville next Tuesday by way of persuading Sundquist to reconsider a plan which the Network and its allies sees as nothing less than a raid upon THDA's funding.
What the governor proposes, in order to help balance the state's general budget, is fourfold: diversion of $7.5 million from THDA's "HOUSE" grant program; siphoning off another $8 million from THDA's reserve fund;
diversion of the Agency's entire Assets Fund, totaling some $50 million; and reallocating another $15 million from the fund supporting THDA's "START" program, which helps low-income Tennesseans secure mortgages. Altogether, these measures would gut THDA's programs and render its future untenable, say the governor's critics.
Moreover, most of the proposed changes fly in the face of past legislative intent. The $7.5 million to be lifted from the HOUSE program, for example, will come from real estate transfer tax revenues especially enacted in order to pay for the program. Similarly, the THDA Assets Fund was created solely and totally from earnings on mortgages in order to allow the Agency to fund its operating costs. Diverting these monies to the state's general coffers merely in order to avoid a tax increase is both bad faith politics and bad policy.
In looking askance at the governor's diversion of state housing funds, we are not just copping a plea here on behalf of the state's underprivileged, so many of whom reside in Memphis and Shelby County. We also are aware that housing starts are a major indicator of economic health, and we doubt not that several mainstream builders and developers will join in next Tuesday's protest.
We'll say it again: Better to raise taxes than to undermine our state's fundamental structures.