(NASHVILLE, TN), April 27, 2012 — The Senate passed and sent to the House of Representatives a $31.1 billion budget today for the 2012-2013 fiscal year, which will begin on July 1. The budget, sponsored by Senate Majority Leader Mark Norris (R-Collierville), spends $31.1 billion, nearly $1 billion less than the almost $32.1 billion budget estimated for the current budget year. The proposal also incorporates $50 million in tax cuts for Tennesseans.
The legislation makes deeper cuts to the budget sent to the Senate by the House of Representatives on Thursday by further reducing local appropriations that do not have statewide application. In addition, the Senate appropriations bill gives the House another option for a budget with more moderate cuts if they so choose, a step that would avoid the need for a conference committee if Representatives choose not to accept the additional cuts. Norris said the budget was cautiously optimistic, as he pointed to a recent poll conducted by MTSU which says that although Tennesseans are more upbeat in general, they are on edge regarding the future.
“This is an upbeat budget despite some of the difficulties we’ve encountered in making the adjustments,” said Leader Norris. “We have a third disappointing claims report in terms of unemployment claims and negative data in terms of durable goods orders. But most disturbingly, perhaps, were comments made on April 25th by Federal Reserve Chairman Ben Bernake who said the size of the fiscal cliff that the federal government faces is such that there is no chance that the fed could or would have any ability whatsoever to offset that effect on the economy. This is in addition to comments made on April 26th by U.S. Treasurer Timothy Geithner who yesterday warned the economy will encounter a fiscal cliff at the end of the year.”
“Although most people may not be following Bernake and Geithner, they do have a sense that there is a little uneasiness about what the future may hold,” Norris continued. “Tennesseeans are upbeat but on edge. With this budget we are upbeat too, but on guard. This budget reflects a renewed sense of confidence in our destiny and a renewed sense of responsibility to safeguard as best we can against the inevitable uncertainty of life in the 21st century.”
The budget as further cut by the Senate includes:
–$60 million increase in the Rainy Day fund and over $50 million in reduced taxes
–$160 million in salary improvements, including a 2.5 percent raise for all employees, $30 –million for salary market adjustments and $5 million for step raises
–$59 million for economic development
–$80 million for public safety and corrections programs
–$547 million for capital outlay, including $335 million for higher education, the first significant investment in 5 years
–Restores $125 million of the core services that were scheduled to go away July 1
Separate tax cut legislation also advanced through the Senate as members voted to phase out the state’s inheritance tax and to reduce the sales tax on food. Senate Bill 3762, sponsored by Leader Norris, takes the first step in a four-year process to phase out the state’s inheritance tax, also called the death tax.
“I am thinking about the family farms in Tennessee and the folks who paid taxes many, many times over to hang on to them,” said Norris. “And, when the patriarch or the matriarch of that family farm passes, they are going to lose it all because they have to pay again. That’s why we call it the death tax. It is the death tax to those folks who stand to lose everything when that moment of truth comes along.”
Similarly, Senate Bill 3763, sponsored by Senate Majority Leader Mark Norris (R-Collierville), would reduce the state portion of the sales tax on grocery food from 5.5 percent to 5.25 percent, with the goal of lowering it to 5.0 percent in three years.
“This lowers food tax by phasing it in, just as we are endeavoring phasing out the inheritance tax. It enables us to properly balance priorities as we move forward to stay optimistic but on guard. One thing is certain as we leave here with a balanced budget, and that is people will be paying less in taxes and we will be living better,” he concluded.