Lawmakers fear TennCare will gobble new revenue estimates

By Thomas Wilson
STAR STAFF
twilson@starhq.com

   Glowing tax revenues mean little if state government continues to shift dollars from needed programs to fund TennCare say two upstate lawmakers
   "We have become the depository for uninsurable people in this nation," Sen. Rusty Crowe, R-Johnson City, told local community leaders at a legislative breakfast event hosted by the Elizabethton-Carter County Chamber of Commerce on Friday morning.
   Crowe and state Rep. Jerome Cochran said estimates by Gov. Phil Bredesen of $500 million to $600 million in revenues to use over last year meant little if the new dollars were merely shifted into funding TennCare.
   The Tennessee Department of Revenue has reported considerable gains in tax revenue through February 2004 over last year. The department recorded more than $591 million of revenues for February representing a 6 percent or $25 million increase over last year. January revenues were $48 million from one year ago, according to TDOR. The state withheld 9 percent of state-shared revenues from local governments last year.
   "It doesn't matter what kind of tax program you have in this state, it can't keep up with the one billion dollars a year in growth," said Cochran, R-Elizabethton.
   Created by executive order in 1994, the much-maligned TennCare program provides health care insurance for 1.3 million poor, disabled and uninsured Tennesseans. Lawmakers have criticized the program since its inception for its costs.
   The $7.1 billion program now accounts for roughly one in four dollars in the state budget. An independent report by McKinsey & Company, a global management-consulting firm, found that TennCare -- if left unchecked -- will consume 91 percent of new state tax revenues in 2008.
   Both said cuts made to local government funding did not constitute actual budget cuts, but rather shifts in spending. Cochran said the notion of budget "cuts" was not entirely correct, citing the growth of the state budget from $19 billion two years ago to the almost $23 billion proposed this year.
   "I don't think we can afford those kinds of cuts anymore," he said.
   Lawmakers also expressed concern about a bill moving through the Legislature to allow some tax-exempt organizations to hold one annual gambling event to raise money. Sponsored in the Senate by state lottery godfather Sen. Stephen Cohen, D-Memphis, the "Charitable Gaming Act" would allow organizations chartered by the Internal Revenue Service as tax-exempt 501(c)3 status to hold an annual charity gaming event such as a raffle, duck race or cake walk as a fund-raiser.
   Crowe said the bill did not cover veterans organizations registered as 501(c)19 organizations with the IRS, which are not eligible under their existing status, to take advantage of the event. "My guys in the American Legion are concerned about it," said Crowe.
   The IRS grants different tax-exempt status to a charitable or civic organization based on its mission. Bingo gaming was effectively outlawed as a fund-raising mechanism for the Carter County Rescue Squad in 1999.
   Crowe said organizations might have to redefine their mission to win 501c3 status to take advantage of the new law. Lawmakers said they expect the bill to come before the House and Senate for a vote this week.
   Lawmakers also said they hoped the $28 million Northern Connector highway project would be facing a hold-up of no more than one year. Tennessee Department of Transportation officials halted the project's movement after American Indian artifacts were discovered on the Connector's proposed path.
   "We can't do anything right now as far as land acquisition goes," said Cochran.