By Candice Ludlow
http://stream.publicbroadcasting.net/production/mp3/wkno/local-wkno-909253.mp3
Memphis, TN – The next governor faces a very difficult task, balancing the state budget in the face of falling tax revenues. WKNO and public radio stations across the state asked the four top contenders for governor how they would balance the books. "We gotta hold the line on taxes, right size state government and then grow our state's economy based on strengths," Chattanooga Congressman Zach Wamp said.
He speaks for the Republican candidates when he says there's only one way out of the state's budget woes. Cut state government.
"Our state could actually generate more revenues during a recession because we're a right to work state with a high quality of life, no state income tax, low cost of living," Wamp continued.
The current governor, Democrat Phil Bredesen, signed a budget that dips into the state's rainy day fund and lays off state employees.
Cutting expenses is one of just a few options because not one candidate is for a state income tax, not even Mike McWherter, who's seeking the Democratic nomination and is unopposed.
"People in this state have made it very clear, and I agree, and I'm totally supportive of it, that they do not want a state income tax, and they prefer to have a sales tax-based economy," McWherter explains.
Because Tennessee doesn't have a state income tax, that puts us in this position.
"Our state sales tax is our major source of income for state government," Republican Lieutenant Governor Ron Ramsey. "I think everyone needs a stake in their government. If you're buying a candy bar, or if you're buying a soft drink, or if you're buying a Mercedes car, you have to pay sales tax on that. I know that some will say that the sales tax that we have on food is regressive, but at the same time it's the most dependable source of income we have."
Tennessee has a 5.5 percent tax on food. Critics say it's regressive because it requires lower income families to pay a greater proportion of their income for food than higher income families.
Here's where two candidates stand out. Republican Zack Wamp and Democrat Mike McWherter say the tax on food is regressive. Neither is ready to roll that tax back just yet, but both say they would consider it two years from now.
"It's a hard time to take away any taxes," Wamp explains. "I could list a half a dozen taxes that are disincentives for investment in our state, too. And so you need to role back those kind of taxes if you can. I think that's an issue that can come up in time when we see a little light in the budget."
Republican Knoxville Mayor Bill Haslam, like Ramsey, says the tax on groceries is necessary.
"While I think it does put a disproportionate burden on folks who, lower income folks, particularly with sales tax on food. I think the alternative is to go to an income tax. I'm against for philosophical reasons, but also for practical. I'm convinced not having an income tax actually generates a lot of revenue for the state because we attract a lot of businesses," Haslam says. "Volkswagen specifically said that's why they came to Tennessee. I talk to retired people all of the time. They say, That's why I'm here. Without it, I wouldn't have come here.' Our only alternative at this point in time is really for our next governor to cut expenses in state government."
On August 5th Republicans will choose between Ramsey, Wamp and Haslam. Again, McWherter is the lone Democrat in the race, and he will face the Republican nominee in November.
To hear the candidates' full responses to our questions about taxes, visit our TN Governor's Race 2010 page.