A Pleasant Problem? Maybe, But Still A Problem.

News out of Nashville once again brings up the question of whose money it is that the government collects and disburses.

As reported in the Tennessean, as the June 30 end of the state’s fiscal year approaches, it is a virtual certainty that Tennessee’s government will see a budget surplus of at least 37 million dollars, although it could be as high as 88 million.

So can we set aside any further talk of a state income tax?

Of course, I’m hoping that, come next January, the Volunteer State will be swearing in a first-term governor and, as has been oft-cited, first-term governors never support a state income tax. Rather, they hold that idea in their pocket until they are safely elected a second time, knowing they won’t have to fear the voters again.

But regardless of who occupies the governor’s office next year, can we not see that the state is quite capable of collecting enough revenue to meet its obligations without the income tax? Well, most of us can.

Nevertheless, there are always those who see the state’s obligations as including things not on the budget that they desperately want to put on the budget as they constantly look for new ways to take money away from the people. And these always see surplus money as something to be spent, or at least held until something can be found to spend it on.

Granted, there is the possibility that some new legitimate budget item does exist that there has been insufficient revenue to cover prior to now, but fairness to the taxpayer demands that 2006 revenues be spent on items that were understood to be state’s obligations when the 2006 budget was formulated. It may be that the new, rosy revenue picture may enable forecasters to increase the amount of revenue the state can expect in coming years, allowing for new items, but some form of tax relief that the excess 2006 funds could make possible is only right – before any new items are added to the budget.

At present, both of the most visible candidates for Governor – incumbent Democrat Phil Bredesen and Republican State Senator Jim Bryson – favor placing the surplus revenue into the state’s “rainy day” fund. And while that is not as objectionable as immediately adding new programs to the budget, it still leaves unresolved the problem that surplus budgets always present: That the government has taken more money from the people who earned it than it needed to.

My personal preference is for at least a significant portion of the surplus revenue to be returned to the people. But at the very least, the state’s tax structure should be re-evaluated to determine how, in future years, the state can do a better job of taking as little money as possible out of the pockets of wage-earners while still meeting its legitimate obligations.

The process determining of the right tax-and-budget structure is one that never ends, as situations like this reveal that adjustments need to be made. The fact is that providing meaningful relief to the taxpayer will most likely only increase the state’s revenues further. But at least that approach will allow those who want new programs to push for them in an environment of increasing individual prosperity.