In his own words: Why Jim Haslam supported a state income tax

If you want the background, you can read some of my other posts on the matter.  There’s really nothing I can add to the discussion about whether or not Mayor Bill Haslam’s father, Jim Haslam, was “leading the effort” to enact a state income tax that Jim hasn’t said himself.  When you write an editorial in The Knoxville News-Sentinel on September 5, 1999 entitled “Taxing Questions: Balancing the Budget – Tax structure should benefit UT, higher education” you leave little room for speculation as to WHY you were leading the effort.  Sorry Bill, but you can’t put that cat back into the bag.

Taxing questions: Balancing the Budget – Tax structure should benefit UT, higher education
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The Knoxville News-Sentinel-September 5, 1999
Author: James A. Haslam II

Last night Tennessee opened the defense of its national football championship. There were 105,000 orange-clad fans in the stands. The atmosphere was festive, and from all appearances, all is well in Big Orange Country.

But that really is not the case. While all is well with the university’s athletic programs — a national championship in football and six national championships for the Lady Vol basketball team — all is not well with the University of Tennessee. As one veteran dean told me several weeks ago, “The university is rotting from the inside out.”

Why is this? As a state university, UT’s primary source of funding has always been funds appropriated by the state Legislature. In the past 15 years, the state’s portion of UT’s budget has dropped from about 70 percent to 54 percent this year. UT-Knoxville has received no increase in operating funds from the state in the last seven years. State funding increases over the last two years ranked dead last in the South and near the bottom of the nation.

Faculty salaries in engineering, agriculture and business are 18 percent below those at Florida, Georgia and Kentucky. The College of Veterinary Medicine cannot replace equipment. While our competitors expand their library holdings, the UT library has cut back on the purchase of journals. These are just a few ways in which UT’s outstanding academic reputation is being put at risk because of this lack of funding.

Now you will probably ask, “Well, can’t we cut costs?” As a businessman, I have learned that, no matter how lean your operation, there are always ways to cut costs. While this is certainly true at UT, the university has already taken steps to cut costs, improve efficiency and improve revenue programs within the university. Three hundred fifty fewer people are employed than five years ago. The athletic department provides more than $6 million each year to the academic side of the university.

The students have recognized the problems, and this year they were in unanimous support of a 15 percent fee increase. One UTK student leader told me, “I want my degree to be worth something.” Despite the university’s efforts to cut costs and generate additional funding, the only solution must be at the top line or at the revenue side. Simply put, if Tennesseans want the university to compete in the 21st century, we must have more revenues.

Why is it so important that UT and all other higher education institutions in this state be strong and vibrant? No state is any better than its educational system, especially its higher educational system. Surveys prove that, the higher the level of education, the higher the level of earnings in an individual’s lifetime.

Tennessee’s economic future depends on a labor force that will enable us to compete throughout the world. Unless we improve our higher education system, there is no way that we will be able to compete. Just as the 20th century was the century of manufacturing, the 21st century will be the century of technology. If we do not have a vibrant higher education system, how can our state compete?

The Governor’s Task Force on Higher Education has recommended that the Legislature appropriate an additional $445 million for higher education in the next 10 years. However, the state is currently in a budget crunch. Just as when we talk about the university’s fiscal problems, the same can be said for the state — why not cut costs, eliminate programs and tighten your belt?

I’ve talked with Bill Sansom, Lewis Donelson, Bob Corker and John Ferguson about this. All are tough, cost-conscious businessmen who have served our state as commissioner of Finance and Administration. They all agree that TennCare has deep and serious administrative problems. Tennessee is 47th in the country in its level of taxation, yet we cover more people than any state except Hawaii.

This is an issue that we must consider. They also agree that with existing priorities in place there is very little discretionary spending, and the needs for spending on things such as higher education far outweigh the amount of money that could be saved in budgetary cuts. Like the university, the state must look at the top line, and the top line is revenue.

So what is the solution? First, the state must fix TennCare and take a critical look at all of its spending. Second, the state should come up with the exact amount needed for the next few years. This would include the money needed to adequately fund higher education. Third, the state should have a comprehensive examination of all of its revenue options. We need a tax structure that provides a stable revenue stream but not a tax structure that takes a bigger bite out of Tennesseans’ paychecks. Whatever solution we come up with, the tax should be broad-based so that as many people as possible pay as little as possible.

In closing, we need to get the academic programs of UT up to the same level as our athletic programs. The same level of skills that makes the UT football team among the nation’s best is required of UT graduates if they hope to compete in the 21st-century world economy.

We would never settle for a football team that was not in the top echelon of the Southeastern Conference. Don’t we want the same standards for the university’s academic standing? To do this, higher education must be better funded by the state.

For many decades, governors, legislators and administrators have worked to make UT one of the nation’s outstanding public universities. The university’s reputation is such that it is the leading contender for the management contract at the Oak Ridge National Laboratory.

Are we going to stand by and watch this progress waste away because of inadequate funding? We have a Republican governor and a Democratic Legislature. Now is the time for all of us in Tennessee to quit fighting and to work together to make this happen.

It is my hope that the thousands who cheered for UT’s football team last night will lend their support for improving the funding and thus protecting the future of both this university and state that we all so dearly love.

UPDATE:

The former “cost-conscious businessmen who have served our state as commission of Finance and Administration,”  Bill Sansom and John Ferguson, have made sizable contributions to Bill Haslam’s campaign.  Sansom and his wife each gave the maximum $2,500 for the primary, while Ferguson gave $1,000.

Also, I found it interesting how Jim cites how UT’s outstanding reputation “is such that it is the leading contender for the management contract at the Oak Ridge National Laboratory.”  We should be proud of the work at Oak Ridge, and we should also thank Zach Wamp for ensuring that Federal dollars are allocated there.  The Haslam family seems to think now that Zach’s earmark for Oak Ridge is “pork.”  Which one is it? Is Oak Ridge an asset worthy of support and attention, or is it mere pork? I’m glad that Zach Wamp understands how Oak Ridge can play into the larger economic development plan for Tennessee, helping to create jobs for Tennesseans.  That is another reason why I Back Zach.