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Tennessee's War on Tax and Spend Liberalism
(Part II)

July 15, 2002

In my June 1, 2002, I wrote of Tennessee's state spending (not budget) problem. The tax-and-spend liberals, who dominate the state Assembly and Senate and are mostly long time incumbents along with a "conservative" GOP governor, were working furiously to install an income tax and to raise the sales tax - simultaneously. The state constitution says that spending cannot rise faster than state economic growth, unless overridden by a majority (should be a 2/3 vote!) of the state legislature. Well, the legislature, at the governor's request, has overridden the constitutional requirement the last two years therefore spending has grown much faster than economic growth. And - prepare for shock - the state budget has been in crisis for two years!

Before I tell you the conclusion of the crisis, I want to describe the shameless scare tactics (aka news stories) used by both the legislature liberals and the "conservative" governor to warn us what will happen if we don't send in more of our money (aka new taxes). In a sense this column is a variation of "Headlines We Will Never See" article found here on rightturns.com.

"Shut Down of State Government"
When this actually happened the non-essential employees (now there is an interesting label from the very politicians that said there are no more cuts to be made!) were told to stay home. All sort of stories were reported on the suffering we could expect because of the services we could not get. The hubris behind the thinking that we citizens will suffer if the state government is not there to intervene is disgusting. Reality: I have yet to hear of any extra suffering during the shutdown. In my driving back and forth to Nashville to see clients, I wondered why the tree huggers did not celebrate the shutdown. The reduced amount (aka to tree huggers as less pollution) of traffic 6am-9am and 3pm-6pm was very noticeable. NOTE: Here is another interesting irony of leftist policies. The very government that spends $millions on trying to get US out of OUR cars may well be the cause of the problem!

"UT Football Season In Jeopardy"
Remember the football coaches are state employees. Labeling them as non-essential will probably cost some the tax and spend legislators their jobs! I suggest that Florida or LSU are more real potential threats to the UT football season.

"UT Plans to Layoff Over 750 Faculty"
This was meant to frighten the parents of college age kids. When investigated it turns out that over one half of these "layoffs" were of people who did not exist. The faster-than-economic-growth spending increases of the last few years have added positions faster than the universities could fill them. So the "layoffs" included mostly unfilled positions. Sounds like someone lied to us.

"All Highway Work Suspended"
This is a scare tactic that was never fully explained. The highway trust fund pays for all the highway work in Tennessee. And the Trust Fund is not connected to the state budget. So why were these folks sent home?

One final anecdote puts it all in perspective. I mentioned in my 6/1/02 column the impressive work of Nashville radio talk show hosts Phil Valentine (WLAC 1510AM) and Steve Gill (WTN 99.7FM) in repeatedly mobilizing the anti-tax forces on the streets surrounding the capitol. In the last mobilization, they arrived at their usual sidewalk broadcasting spots to find pro-tax advocates already encamped in the spots with their sound/PA systems set up and making noise. So they moved down the street and set up their broadcast gear, including the portable generators to power the equipment. One enterprising person followed the power cords used by the pro-tax group to power their PA systems. Guess where it led? Straight into a state government building!

What happened to conclude the spending crisis? A few days after the "shutdown" and "suffering" began, the legislature passed a large sales tax increase and went home, still believing that raising tax rates raises tax collections. Of course, all the non-essential employees received pay for staying home during the 4th of July week. I guess that was to compensate for their "suffering". Before year-end we will most certainly start to hear howls about the slowdown in state tax revenues. Why? Because it will happen. Remember prices go up (tax increases are essentially price increases) and demand/purchases go down.

On the political side, good things are happening. One long time, pro income tax senator has backed out of re-election - after his name was already on the ballot. He would have lost anyway.
The campaign of my local State representative candidate (47th district) Judd Matheny is making real progress against the incumbent, a tax and spend private in House Speaker Jimmy Naifeh's tax and spend army. Campaign contributions are growing based on his message of "NO Income Tax" and "Responsible Spending". Unsolicited requests for him to speak from district clubs and organizations are flowing in. I smell a general house cleaning of incumbents/Jeffersonian revolution coming to Tennessee in November.


Sam T. Harper graduated cum laude from Vanderbilt University.  Following a tour in the US Navy and a stint as Operations Manager at Roadway Express, he earned his MBA from Stanford University Graduate School of Business.  He was a contributor to “In Search of Excellence,” the best selling business book of all time.  Sam was also Manager, Economic Planning & Analysis at Sohio Petroleum, Partner and Chief Financial Officer at investment-banking firm Bridgemere Capital, and Chief Operating Officer of the Institute for Contemporary Studies, a San Francisco Bay Area-based think tank and international publishing firm that specializes in self-governing and entrepreneurial public policy.  Sam was a chairman of the San Francisco Republican party and the GOP co-host of California Political Review on KALW-FM in San Francisco.  Sam is currently the co-owner of the Tennessee based Institute for Local Effectiveness Training, LLC – a management consulting, training, and coaching firm.