TN TAX BATTLE: Budget clock running out (BOTH HOUSES START @ 9AM shut down looms, doom & gloom)

The possibility of at least a partial state shutdown will loom large today over the state legislature, which has until midnight tomorrow to approve a state budget. Little progress was made yesterday. The Senate yesterday broke a self-imposed deadline to pass new taxes, delaying votes on two tax proposals, one of them an income tax. A Senate vote was taken on House Speaker Jimmy Naifeh's income tax plan

http://www.knoxnews.com/kns/politics/article/0,1406,KNS_356_1237567,00.html

BOSS HOGG II

AP photo by John Russell

Lt. Gov. John Wilder responds to a charge by Sen. Mike Williams that Wilder hasn’t shown leadership during the budget crisis.

Wilder chided for alleged role in budget 'mess' By News-Sentinel Nashville bureau June 29, 2002

NASHVILLE - In a novelty for the state Senate floor, Sen. Mike Williams on Friday questioned the leadership of Lt. Gov. John Wilder.

Wilder, 80, who has served as speaker of the state Senate since 1971, has often said he hopes to continue serving as long as "the Senate is the Senate." Another favored Wilder phrase is, "The process is working." "The Senate is not the Senate, Mr. Speaker," said Williams, R-Maynardville, in a floor speech. "The process is not working. You have said in the past that when the Senate is not the Senate, you did not want to be speaker any more.

"Mr. Speaker, we may need some new leadership if you are not going to lead and continue to allow this mess to go into the next fiscal year."

Williams went on to say that the "6-and-0" plan supported by Wilder is "still an income tax" and is "still unconstitutional."

"The Senate is still the Senate," responded Wilder, D-Somerville. "It hasn't looked like the Senate, but it is the Senate. It is going to be the Senate, and we are going to do the best we can. We are not going to let this state shutdown."

Wilder concluded: "It's not an ego trip. I'm not going to retire. I'm going to do something. You watch."

http://www.gomemphis.com/mca/midsouth_news/article/0,1426,MCA_1497_1237595,00.html

State braces for shutdown

By Richard Locker and Paula Wade

locker@gomemphis.com wade@gomemphis.com

June 29, 2002

NASHVILLE - Administration officials prepared to notify 12,000 to 15,000 state employees not to report to work Monday as the government braced for a partial shutdown if the legislature's budget stalemate isn't broken by midnight Sunday.

The General Assembly adjourned Friday night after a day of sound, fury and infighting but little progress toward a budget. Neither income tax proponents nor advocates of other tax options have garnered the 17 Senate and 50 House votes required to approve any of the tax plans on the table.

Gov. Don Sundquist called a meeting of his Cabinet for 8 a.m. today to review plans to continue essential operations of the government if no budget is adopted. Those services would include prisons, health and mental health institutions, law enforcement and children's services. But even those operations depend on the legislature approving an essential services act, expected today or Sunday, to allow such spending.

Across the state, local governments, college and university officials, local school systems and other agencies that depend heavily on state funding are watching the budget fight and reviewing their own options. The Memphis City Council adopted a resolution Friday urging lawmakers to adopt a state income tax after Finance Director Joseph Lee said the city would have to choose from a range of options from layoffs to property tax increases, depending on the severity of cuts.

Both the City Council and the State Board of Regents - governing board for the University of Memphis, Southwest Tennessee Community College and all state colleges and universities outside the University of Tennessee system - will meet Sunday night to take action depending on what the legislature does. UT's Knoxville campus ended its first of two summer sessions three days early on Friday out of concern that state funding will be shut off Monday.

Alex Fischer, deputy to the governor, said he estimates that 12,000 to 15,000 state employees would be furloughed if only the essential services budget is adopted by Sunday night. State Web site http://www.Tennesseeanytime.com is being updated during the weekend to keep state employees and the public informed about last-minute actions.

On Friday, Sen. Jim Kyle (D-Memphis) and state Comptroller John Morgan presented an updated version of a proposal to enact a 6 percent income tax coupled with business tax increases and sharp reductions in sales taxes. But Kyle delayed action until today, saying he lacks the votes on the floor for its approval.

The proposal would temporarily raise the sales tax from 6 percent to 7 percent until Jan. 1, when the income tax would go into effect, but then the state sales tax would be abolished on all but ''nonessential'' items. A 2.75 percent uniform local sales tax would be applied to all purchases.

The Senate opened with denunciations of chamber leaders, led by Sen. Mike Williams (R-Maynardville), and closed eight hours later with denunciations of failure to act.

''Mr. Speaker, we may need some new leadership if you are not going to lead and continue to allow this mess to go into the next fiscal year,'' Williams told Speaker John Wilder (D-Somerville) in a speech he read on the Senate floor. ''No matter how much you dress it up, the 6 and 0 plan (the income tax plan Kyle has resurrected but which Wilder has long advocated) is still an income tax. It is still unconstitutional and the people of this state do not want it.

''Those who have created this crisis for their own personal and political benefit are as shameless as they are ruthless,'' Williams said.

Wilder responded, ''We are going to do the best we can. Whenever I'm not the right person for this job, I want the right person to do it.''

Sen. Doug Jackson (D-Dickson) succeeded in an attempt to call his plan to raise the sales and other taxes as a one-year stopgap measure to the floor, bypassing the finance committee, but he declined to press for a vote because he also lacks the 17 needed.

Finally, opponents of an income tax led by Sen. David Fowler (R-Chattanooga) attempted to call the 4.5 percent income tax plan advocated by House Speaker Jimmy Naifeh to the Senate floor for a vote but failed after Sen. Steve Cohen (D-Memphis) called it a ''Trojan Horse.''

''This isn't an attempt to solve the problem. This is an attempt to put Democrats on the record on a bill that may not ever come up in the House. This is an attempt to play politics at the 11th hour,'' Cohen said.

Lawmakers are working with a state budget that is $1.2 billion in the red, and are trying to avoid a budget balanced with draconian cuts to health care, education, local governments, higher education and almost every other state service.

In the House, Naifeh made a passionate, rambling speech late Friday asking members to consider the thousands of state employees who will be without a paycheck next week, and the thousands of Tennesseans affected by reduced services. He urged them to think about the progress that legislative policies have made over the years, and think about their being wiped out by the cuts.

Naifeh acknowledged that he is ''begging and pleading'' for tax votes now. ''I don't know what else to do,'' he said.

Naifeh said he's still not giving up on his tax reform plan. It includes the 4.5 percent tax on income above $15,000 for singles, $30,000 for couples, $22,050 for single heads of households and the removal of all sales taxes from grocery food, clothing and non-prescription drugs.

Contact Nashville Bureau reporter Paula Wade at (615) 242-2018 or Nashville Bureau chief Richard Locker at (615) 255-4923.

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