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VOL. 125 | NO. 101 | Tuesday, May 25, 2010

Tenn. Lawmakers Work to Reach Budget Consensus

LUCAS L. JOHNSON II | Associated Press Writer

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NASHVILLE (AP) – State lawmakers are hoping to reach a consensus this week on a budget plan that will keep the state’s cash reserves strong and also provide assistance to Tennessee flood victims.

There are essentially three budget proposals being discussed: Democratic Gov. Phil Bredesen’s original plan, an alternative proposal from Senate Democratic Leader Jim Kyle of Memphis, and a Senate Republican plan.

Major differences between the three budget proposals involve tax increases and bonuses for state employees.

House Democrats are expected to release details of their plan this week, but Democratic leaders say it’s similar to Kyle’s.

All of the proposals seek to keep the state’s rainy day fund plentiful and provide additional support for victims of the historic flooding in West and Middle Tennessee the weekend of May 1-2, which recent estimates show has caused almost $2 billion in damage to Nashville alone.

“We’re looking ... to help the needy people of this state,” House Democratic Caucus Chairman Mike Turner of Nashville said last week at a press conference called by Democratic leaders to discuss their budget proposal.

Turner didn’t have any solid figures from the plan at the time, but he said it will contain funding to boost tourism in Tennessee – particularly after the devastating flooding.

“Come here and spend your money,” Turner said. “We’re not underwater, we’re open for business.”

Earlier this month, state Finance Commissioner Dave Goetz said about $17 million has been identified in the governor’s budget that can be pulled from different types of funds for emergency use.

Turner said Democrats are looking to increase that, partly through proposed legislation.

For instance, one measure would give property tax relief to flood victims and another would give a sales tax break to those individuals qualified under the Federal Emergency Management Agency to purchase building materials and major appliances.

Lance Frizzell, spokesman for Republican state Senate Speaker Ron Ramsey of Blountville, said Senate Republicans want to use about $100 million of the state’s cash reserves for flood victims. He said there’s about $331 million in the state’s rainy day fund and roughly $172 million in TennCare – the state’s expanded Medicaid program – for a total of about $502 million.

Kyle has said his proposal would use about $77 million more of the state’s reserves than originally outlined in the governor’s budget.

Nevertheless, all the proposals seem to leave the state in good shape fiscally.

“That’s something that very few states can say,” said House Finance Chairman Craig Fitzhugh, D-Ripley.

Some of the major differences in the proposals involve tax increases and what size bonus to give to state employees – or if one should be given at all.

The overall projected shortfall for the upcoming budget year is about $150 million beyond what Bredesen addressed in his original spending plan.

He hoped to plug the budget gap through a series of revenue measures. They included eliminating a sales tax cap on big-ticket items, restoring the sales tax on the first $15 of cable bills and increasing annual driver’s license fees by $2.

However, both the Senate Republican plan and Kyle’s strip out those measures.

On the other hand, the Republican proposal seeks to eliminate $113 million in one-time bonuses for state employees, where the other plans would give them either a 2 percent or 3 percent bonus. Those plans would also keep the Career ladder program for teachers.

Senate Majority Leader Mark Norris said the GOP just wants “a reality-based budget.”

“We will not achieve this by raising taxes or adding more pork projects to the budget,” said the Collierville Republican. “Hopefully, we can sit down to really work out the differences we face with this budget to achieve a realistic solution that can pass both houses.”

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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