Gov. Bill Haslam ran on the mantra of reducing the size of government, but acknowledges his most recent edits to the budget don’t completely achieve that end — at least when it comes to adding back spending he originally said he’d cut.
And he says that’s OK because his goal is more about trying to “right-size” state government rather than shrink it.
“I’m a conservative Republican, and I don’t apologize for that,” Haslam told reporters after moderating a discussion about higher education goals at the Spring College Completion Academy in Franklin Tuesday.
“But I don’t think government’s evil. I don’t even think it’s a necessary evil. I think it’s a critical way that we provide needed services. We just believe in doing that in as small a way and as cost-effective way as possible,” he said.
The governor released his latest round of budget adjustments to the Legislature Monday, such as cancelling $12 million in cuts he built into the spending plan earlier this year.
In total, though, his administration’s budget tinkering doesn’t move the bottom line much. It saves almost $279 million through projected increases in revenue and budget reductions, but puts most of that back into the budget, to the tune of about $265 million in new spending and backtracking on earlier cuts.
For example, the administration has backed off a $795,000 proposal to adjust class sizes and offer merit pay for teachers, and also deleted a $2 million miscellaneous fund while adding $1 million for land acquisition and maintenance at Radnor Lake State Natural Area in Nashville.
Haslam characterized the changes as “actually adding to the size of government because we’re actually adding costs” that weren’t in his original plan.
But the price tag for next year’s budget still looks to be lower than the current year’s. The proposed budget is $31.1 billion, about $900 million less than this year’s expected bottom line.
Haslam was quick to point out he is still aiming to lower state taxes on inheritances and groceries this year, as are other legislative leaders.
“When government receives more money — which we have, revenues are up — our goal is not to spend that money. Our goal is to return it to the taxpayers, the rightful owners,” said House Speaker Beth Harwell.
She and other House Republicans are pushing for a reduction in the gift tax, which kicks in when someone gives an expensive item like a car or a boat. The move has a $14.9 million annual price tag the governor did not include in his budget.
Neither did the Haslam administration factor in the cost of increasing the exemption to seniors who pay income taxes on their interest from bonds and stock, a plan near and dear to Lt. Gov. Ron Ramsey, who admitted Wednesday he may have to wait until next year to reduce that tax.
“If we give a tax cut, we have to cut somewhere else in the budget to make that happen. We have to have a zero bottom line to make it work,” said Ramsey. “Is it still a priority of mine? Absolutely. But is it as big of a priority as restoring some of the cuts the governor put back? Probably not.”
State tax revenues this year have so far exceeded what the governor built into his budget by $28 million, Finance Commissioner Mark Emkes said, but the governor plans to hold that money, and any other overages, in reserves for future budget years.
“I believe in smaller government,” said Haslam, “but I also think some of those things, some of those services, are really vital ones. … If we can do that under our current tax structure, or our future lower tax structure, than I want to try to do that.”
The night he won his Republican primary in August 2010, Haslam made a point of saying one of the key things the next governor has to do is make government smaller.
“We need a governor that understands that right now, facing the challenges, it’s about shrinking the size of state government and making do with less,” he said.
Alex Harris contributed to this report.