Despite a growing government budget surplus in Tennessee, Finance Commissioner Larry Martin has asked all department chiefs to submit proposals for cutting their spending by 2 percent in the next fiscal year.
In a memo to department and agency officials, Martin acknowledges “strong revenue growth” but cites enactment of a law earlier this year that cuts the Hall tax on investment income from 6 percent to 5 percent immediately and mandates full repeal in six years.
“At a minimum, reductions will be necessary to offset the phaseout of the Hall Income Tax,” the memo says. “In fiscal year 2014-15, collections for the Hall tax totaled $303.4 million. Because certain areas of the budget tend to outpace our average revenue growth, it would not be prudent to address tax cuts with revenue growth alone. It’s also important that we continue to look for savings and efficiencies throughout state government and bend the curve on government spending.” Continue reading