Tennessee lawmakers busted a constitutionally mandated limit on state spending again this year, signaling that the Volunteer State’s annual budget is still growing faster than the economy.
In the spring of last year, lawmakers voted to exceed the cap, but in May they decided they would need to spend even more — some $123 million more than they estimated last year and $250 million, or 2.15 percent, beyond the state’s economic growth.
Caucus leaders for neither party are sweating it, though. They say “popping the ‘Copeland cap’” has become standard bipartisan operating procedure at the Capitol while acknowledging it’s still an important yardstick for keeping the budget in perspective.
So far, they say they will not break the cap in the next budget year. If that estimate holds, it would be the first time in four years.
Named after Rep. David Copeland, who pushed for the budget restraint measure, the language was added to the Tennessee Constitution in 1978. It requires lawmakers to limit any increase in spending to estimated growth in the state’s economy — measured by estimated growth in personal income in the state — or vote to disregard the cap.
“I think it’s important to remain vigilant against runaway spending, and that’s a good reason to have that sort of check in place because it puts you to the test each time that the matter arises,” said Senate Republican Leader Mark Norris.
In the final days of the legislative session, lawmakers almost unanimously acknowledged the current year’s budget would exceed the state’s economic growth by 2.15 percent, or $250 million.
The House voted 91-6, and the Senate OK’d HB2136 exceeding the cap on a 27-0 vote — although five Republican members of the legislature who were present the day of the voting did not weigh in, including Sens. Mae Beavers, Stacey Campfield, Rusty Crowe, Jack Johnson and Kerry Roberts. On the House side, votes against popping the cap were cast by Republicans David Alexander, Glen Casada, Joshua Evans, Joey Hensley and Matthew Hill and Democrat John Mark Windle.
Norris, who sponsored the bill to break the cap in the Senate as part of Gov. Bill Haslam’s budget package, blamed the increase on the hospital assessment fee and bond bills for economic development projects like the Electrolux manufacturing facility. He said the Legislature may have technically broken the Copeland cap but is still “meeting the spirit of the restriction.”
Beavers, who took a pass on the Copeland cap vote, says she opposes breaking the cap “under any circumstances.”
“I just don’t believe that we should be spending more than the growth in the economy,” said the Mt. Juliet Republican. Beavers added, though, that the cap system should be reexamined to allow for budget maneuvers like depositing money into the state’s savings account without coming off as an increase of state spending like it does now.
In 2009, lawmakers agreed on spending that exceeded the economy’s growth by 2.25 percent, or $248.5 million. The state also received and spent millions of dollars in federal stimulus funds that year and last year, Norris pointed out.
It’s actually rather unrealistic to believe that the state can always keep government spending below the growth of the economy, budget director Bill Bradley told the state Senate in one of the final meetings of the Finance, Ways and Means Committee.
“Had you never allowed for a spending limit increase … you’d be at a level of $8.6 billion appropriations today from state tax revenues, and that’s almost a $4 billion difference,” said the Haslam administration official. The state’s education funding alone is $4 billion of the $13 billion state-funded portion of the budget, Bradley said.
Democrats often advocated popping the cap when Gov. Phil Bredesen was in office, and they were not opposed to doing so in the first year of Gov. Haslam’s tenure.
“There’s no problem about occasionally the budget growing faster than the state’s economy,” said Rep. Craig Fitzhugh, the House’s top Democrat. “But don’t say we finished early and that we were able to cut the budget, because you can see by what we did with the Copeland cap that is not the case.”
Clearly, the built-in spending safeguard isn’t particularly effective, according to Bill Cunningham, a spokesman for Tennessee Tax Revolt, an organization focused on restraining government growth and keeping taxes low.
“It’s pretty meaningless, unfortunately,” said Cunningham, who is also active in the state’s tea party circuit.
The problem with the cap is it’s a “toothless tiger,” he said, allowing the Legislature to override the constitutional requirement with a simple majority vote from the General Assembly. The provision would have more bite if the General Assembly needed a supermajority, or two-thirds vote.
That’s something the Tennessee tea party may choose to focus on next year, said Cunningham, who has catalogued the state’s history of exceeding the cap.
Norris and Beavers both attempted to add that higher threshold to breaking the Copeland cap in past years, but the measures never gained much traction.