Special session appears unlikely
The General Assembly's flirtation with a special session on an income tax this year appears off again for now, a move that could prompt lawmakers to search for more spending cuts, other taxes and reallocation of ex-isting state funds to balance the budget.

Among the options are using state highway funds, cutting certain grants such as those given to local libraries or seizing tax revenue that would typically go to local governments.

''We could use those things this year, but that will not get you through the next fiscal year,'' said Sen. Bob Rochelle, D-Lebanon, the Senate's speaker pro tem.

The budget shortfall this year is projected by Finance Commissioner Warren Neel to be $300 million and to grow to $800 million in the 2002-03 budget.

Gov. Don Sundquist and House Speaker Jimmy Naifeh, D-Covington, said they want to hold a special session as soon as possible, with Monday as a possible start date, that would consider a flat-rate income tax of 3.5% that included some tax relief measures and a constitutional convention.

However, Senate leaders have been unable to find consensus on that or any other tax plan.

''A special session looks unlikely unless they can convince some people to change,'' said Sen. Joe Haynes, D-Goodlettsville, Democratic Caucus chairman.

Haynes has been the point man the past two weeks as a small group of Senate leaders held private negotiations to seek consensus on a tax plan. Haynes said he has ''turned over'' negotiations to Lt. Gov. John Wilder, D-Mason, speaker of the Senate.

Sundquist met with several Senate leaders yesterday and said, ''Discussions are continuing,'' according to Alexia Levison, the governor's press secretary.

''There was a little hope for a little while, but nothing's changed,'' said Senate Minority Leader Ben Atchley, R-Knoxville.

Rep. Beth Harwell of Nashville, who is also the state Republican Party chairwoman, said she doubts a special session will take place.

''If they haven't announced by now, I just don't think they have the votes,'' she said, adding that lawmakers should consider more cuts.

''I think we are definitely going to look at some additional taxes, and I think we are going to look at prioritizing state government. With the uncertainties in the economy as a whole, you can't expect people to give more to government.''

Among options available to lawmakers are:

• Tapping the highway fund administered by the Tennessee Department of Transportation, which contains about $618 million in highway user taxes.

''There are revenues available there, and some people think there are excess revenues available,'' said Sen. Mark Norris, R-Collierville. Last year the General Assembly allocated $7 million from TDOT to the general fund to cover administrative costs to collect those taxes.

Efforts to transfer more to fund the state Safety Department, which operates the Highway Patrol, have failed under pressure from road builders and lawmakers who want to protect roads as one thing the state does well.

''I will not do this, but I think there is strong sentiment out there to take funds out of TDOT,'' said Rep. Jim Boyer, R-Corryton, chairman of the House Repub-lican Caucus. ''If we turn around and put that money into the general fund, we have lied to the public again.''

• Seizing $20 million in growth money that local governments will collect next year as their share of sales and other taxes collected by the state. Earlier this year, the General Assembly put cities and counties on notice that such an option was on the table.

Boyer said such an arrangement would probably force cities and counties to raise property taxes to continue their level of services.

But Sen. Jim Kyle, D-Memphis, said the state is in the bind of making cuts and giving paltry raises while local governments can afford to give their employees healthier raises.

''Because of our state subsidy, we allow Davidson County to pay their employees more than we pay ours for the same service. It demoralizes our employees, and we can't keep people.''

• Dipping into reserve funds. The state's Victims Compensation Fund contains almost $80 million. The state could also dip into the Tennessee Housing Development Agency's reserve fund. It is unlikely lawmakers would approve raiding the state's $23 billion retirement fund.

• Spending the state's rainy day money, which is at $178 million.

• Cut off grant money to 24 projects worth $42 million, including public television, libraries, school safety programs and development districts. Earlier this year, the General Assembly voted to no longer make those grants recurring in the state budget.

• Making more cuts. Already, Sundquist has sliced about $110 million from the budget. About $70 million of that is expected to be reductions undertaken during the normal course of business, such as not filling vacant positions.

Some lawmakers have suggested across-the-board cuts. Neel has said that would be difficult because so little of the state's $19.6 billion budget is discretionary. Of that, $7.2 billion is state funds and $317 million is discretionary, Neel said. Also, some departments are required by court order or federal or state law to carry out certain functions that can't be cut.

A 4% across-the-board cut is about $300 million.

• Other taxes. Lawmakers have addressed at one time or another almost every type of tax available. An increase in the state sales tax and higher car-tag fees are still on the table, Haynes has said.

Harwell said she thinks an increase in the state tax on cigarettes will be looked at seriously. Norris said imposing a $200 professional privilege tax on 40 licensed professions now untaxed would raise $78 million.

• Removing the sales tax exemption. Naifeh has said that, if lawmakers plan to do this, the exemption needs to be taken off everything, even health care and residential energy, which would be politically unpopular. Haynes has disagreed, saying some exemptions are more worthy than oth-ers.

Norris said he'd like lawmakers to consider a wartime suspension of the sales tax exemptions. ''People are thinking we don't want to take on this lobby or that lobby, but times have changed here with the safety and security we have to deal with and pay for today.'' 

Among the options are using state highway funds, cutting certain grants such as those given to local libraries or seizing tax revenue that would typically go to local governments.

''We could use those things this year, but that will not get you through the next fiscal year,'' said Sen. Bob Rochelle, D-Lebanon, the Senate's speaker pro tem.

The budget shortfall this year is projected by Finance Commissioner Warren Neel to be $300 million and to grow to $800 million in the 2002-03 budget.

Gov. Don Sundquist and House Speaker Jimmy Naifeh, D-Covington, said they want to hold a special session as soon as possible, with Monday as a possible start date, that would consider a flat-rate income tax of 3.5% that included some tax relief measures and a constitutional convention.

However, Senate leaders have been unable to find consensus on that or any other tax plan.

''A special session looks unlikely unless they can convince some people to change,'' said Sen. Joe Haynes, D-Goodlettsville, Democratic Caucus chairman.

Haynes has been the point man the past two weeks as a small group of Senate leaders held private negotiations to seek consensus on a tax plan. Haynes said he has ''turned over'' negotiations to Lt. Gov. John Wilder, D-Mason, speaker of the Senate.

Sundquist met with several Senate leaders yesterday and said, ''Discussions are continuing,'' according to Alexia Levison, the governor's press secretary.

''There was a little hope for a little while, but nothing's changed,'' said Senate Minority Leader Ben Atchley, R-Knoxville.

Rep. Beth Harwell of Nashville, who is also the state Republican Party chairwoman, said she doubts a special session will take place.

''If they haven't announced by now, I just don't think they have the votes,'' she said, adding that lawmakers should consider more cuts.

''I think we are definitely going to look at some additional taxes, and I think we are going to look at prioritizing state government. With the uncertainties in the economy as a whole, you can't expect people to give more to government.''

Among options available to lawmakers are:

• Tapping the highway fund administered by the Tennessee Department of Transportation, which contains about $618 million in highway user taxes.

''There are revenues available there, and some people think there are excess revenues available,'' said Sen. Mark Norris, R-Collierville. Last year the General Assembly allocated $7 million from TDOT to the general fund to cover administrative costs to collect those taxes.

Efforts to transfer more to fund the state Safety Department, which operates the Highway Patrol, have failed under pressure from road builders and lawmakers who want to protect roads as one thing the state does well.

''I will not do this, but I think there is strong sentiment out there to take funds out of TDOT,'' said Rep. Jim Boyer, R-Corryton, chairman of the House Repub-lican Caucus. ''If we turn around and put that money into the general fund, we have lied to the public again.''

• Seizing $20 million in growth money that local governments will collect next year as their share of sales and other taxes collected by the state. Earlier this year, the General Assembly put cities and counties on notice that such an option was on the table.

Boyer said such an arrangement would probably force cities and counties to raise property taxes to continue their level of services.

But Sen. Jim Kyle, D-Memphis, said the state is in the bind of making cuts and giving paltry raises while local governments can afford to give their employees healthier raises.

''Because of our state subsidy, we allow Davidson County to pay their employees more than we pay ours for the same service. It demoralizes our employees, and we can't keep people.''

• Dipping into reserve funds. The state's Victims Compensation Fund contains almost $80 million. The state could also dip into the Tennessee Housing Development Agency's reserve fund. It is unlikely lawmakers would approve raiding the state's $23 billion retirement fund.

• Spending the state's rainy day money, which is at $178 million.

• Cut off grant money to 24 projects worth $42 million, including public television, libraries, school safety programs and development districts. Earlier this year, the General Assembly voted to no longer make those grants recurring in the state budget.

• Making more cuts. Already, Sundquist has sliced about $110 million from the budget. About $70 million of that is expected to be reductions undertaken during the normal course of business, such as not filling vacant positions.

Some lawmakers have suggested across-the-board cuts. Neel has said that would be difficult because so little of the state's $19.6 billion budget is discretionary. Of that, $7.2 billion is state funds and $317 million is discretionary, Neel said. Also, some departments are required by court order or federal or state law to carry out certain functions that can't be cut.

A 4% across-the-board cut is about $300 million.

• Other taxes. Lawmakers have addressed at one time or another almost every type of tax available. An increase in the state sales tax and higher car-tag fees are still on the table, Haynes has said.

Harwell said she thinks an increase in the state tax on cigarettes will be looked at seriously. Norris said imposing a $200 professional privilege tax on 40 licensed professions now untaxed would raise $78 million.

• Removing the sales tax exemption. Naifeh has said that, if lawmakers plan to do this, the exemption needs to be taken off everything, even health care and residential energy, which would be politically unpopular. Haynes has disagreed, saying some exemptions are more worthy than oth-ers.

Norris said he'd like lawmakers to consider a wartime suspension of the sales tax exemptions. ''People are thinking we don't want to take on this lobby or that lobby, but times have changed here with the safety and security we have to deal with and pay for today.''