The Pew Charitable Trusts

NASHVILLE, Tennessee - Jan. 31 - Following is the text of Gov Don Sundquist's 2000 State of the State Address:

Governor Wilder, Speaker Naifeh, Madame Speaker DeBerry, Members of the 101st General Assembly, Constitutional Officers, Justices of the Supreme Court, Attorney General Summers, Members of the Cabinet,

My fellow Tennesseans...

Before we begin I'd like to congratulate our AFC-Champion, Super Bowl team and performance yesterday in Atlanta. Their resilience and relentless determination are an inspiration to us all.

Titans owner Bud Adams and his wife Nancy, along with Coach Fisher and his wife Julie were unable to join us this evening, but let me just say how proud we are of every member of the team, a team that didn't really lose, it just ran out of time.

Let me begin by asking each of you: When you think ahead and envision the State of Tennessee in 10, 50 or 100 years, what do you see?

Do you see a state that is prosperous and proud because we cared enough to make tough decisions today? Did we take risks? Did we dream of being the best? Did we expect enough of ourselves?

I'm here this evening to report to you the state of our great State and to present to you a budget that doesn't just carry us through the next fiscal year, but a budget that's built on a vision for how Tennessee should proceed through this new Century.

Despite our differences, I believe we all want a state with low, fair taxes. I believe we all want a healthy start for our children, excellence in education, good jobs and a safe, clean and healthy place to live, raise families, work and retire.

For the last five years, the General Assembly and the executive branch have worked together to achieve these things. Thanks to our common vision we enacted one of the nation's toughest crime-fighting packages, cracked down on those that drink and drive and made Tennessee an all-around safer place to live.

We are being held up as a national model for our innovative highway safety programs and their resulting decreases in traffic fatalities. We made Tennessee the first state in the nation to connect all of its public schools and libraries to the Internet.

One million students and teachers now access over 10 million Internet pages a day. To that end, we also were the first state to install software that enables local school districts to block access to inappropriate web sites.

Through Families First, we helped thousands of Tennesseans off welfare.

Over in Rutherford County, for example, a young mother named Melynda was unable to work because of complications from the birth of her third child. With nowhere else to turn, she enrolled in Families First.

From there, she was sent to a job training course, where talk of her medical condition surfaced, and Melynda was referred to a local doctor.

Thanks to TennCare coverage Melynda received medical treatment that her doctor said saved her life. With her health back, she was able to get her kids into day care, complete her job training, get back into the workforce and get off public assistance.

Because of our comprehensive approach, thousands of others just like Melynda have traded in self-doubt for self-sufficiency.

In the last five years we also brought Tennessee's immunization rates to an all-time high and took our infant mortality and teen pregnancy rates to all-time lows.

We became the first state in the nation to make health insurance coverage universally available to children. And while the gap between the rich and the poor grew in most parts of the country during the past decade, Tennessee this month was recognized as one of just three states where that gap narrowed significantly.

While the incomes of all Tennesseans grew during that time, the incomes of our poorest families grew by 23 percent.

We just experienced the fifth straight year of record levels of private investment in our state, a record $6 billion last year and an astounding $23.7 billion during my time as governor.

That has meant the creation of more than 160,000 new jobs. Welfare roles have dwindled to their lowest levels in 20 years.

I want to thank this General Assembly for making good on its commitment to support the Spallation Neutron Source in Oak Ridge.

That $1.3 billion facility will attract some of the best minds in the world. The research conducted there will benefit Tennessee's automotive, chemical and medical industries, just to name a few.

We can all be proud of this wise investment in Tennessee's future.

Thanks to our shared vision and bipartisan leadership, we helped build the stadium that's now home to the AFC-Champion Super Bowl team, our very own Tennessee Titans.

Just imagine if we would have missed the opportunity to invest in the Titans. Some people criticized the state's involvement. In the end, though, we did what we knew was good for Tennessee, and we made a wise investment.

Imagine, if you will, all the opportunities we will miss if we fail to make equally wise choices this year when it comes to education, teachers, health care, our state employees and public safety.

Let me ask you again: What kind of state do we want Tennessee to be? Because it's only after we agree on an answer that we can move forward.

Where will Tennessee rank in this fast-paced, global-economy? How will Tennessee compare with the rest of the nation when we enter the 22nd Century

? I can tell you where we are today. Because of the investments we've made, more Tennesseans are employed now than ever before. More Tennesseans have health-care coverage than ever before, including half a million children.

We've doubled our investment in K through 12 education, and we're making progress. The General Assembly, in conjunction with Governors Winfield Dunn, Lamar Alexander and Ned McWherter, set goals for K through 12. We've honored that commitment and watched our test scores, and our standards, rise.

We can't stop now. We can't stop investing in the progress we're making. Our roads are adequately funded, and that's why they're among the best in the nation.

With adequate funding, we could say the same about our higher education system and our TennCare program.

The only way we can make those investments is to change our outdated tax structure so it can keep up with the changing needs of our state. Tennesseans spend a smaller percentage of their personal income on taxes than any other state in the nation. The reason Tennessee is talking about a budget deficit while many other states are experiencing surpluses is because those states rely on a combination of income, sales and property taxes. Their tax systems adjust to the economy. Ours does not.

Tennessee also is growing in nearly every way. Many of the states with surpluses have few demographic pressures on spending because of slow population growth and stable or declining school enrollments.

The opposite is true in Tennessee.

We must decide whether we want to take pride in the history we are creating. Do we really want the history books to reflect the year 2000 as the year that Tennessee began to fail Tennesseans?

I know what I want.

I want the children that we lead out of poverty today to grow into tomorrow's bold leaders. I want to prepare them to help take Tennessee to the top of every performance category instead of to the bottom. I want to help our public universities become places that attract our best and brightest students. Last year, only 18 percent of Tennessee's best and brightest high-school seniors even applied to our public colleges and universities.

Too many choose to take their brainpower and promise beyond Tennessee's borders. This is a trend we must reverse.

I want us to invest in our future, not divest our interest in it. The budget I present to you this evening does just that.

It is a budget that is both fiscally and morally responsible, one that meets the baseline needs of state government and invests in the kinds of forward-looking initiatives that I believe are necessary to keep Tennessee competitive.

It is a budget that invests in our most valuable asset, our children.

When you look closely at the portion of the budget that the state actually controls, you're only talking about a little more than $7 billion. If you take out all the things that we have to fund, things like education, the criminal justice system, and TennCare, we're left with less than a billion dollars.

All of the revenue growth we do experience is spoken for by the federal Medicaid entitlement, by the 1980's court orders to improve prison conditions, by court decrees concerning our mental retardation system, by last decade's court-driven increase in public school funding, and more. I propose continued investment in our schools and universities. I propose continued investment in our teachers and state employees. I propose continued investment in the overall health of our citizens.

My budget provides for added investment in each of these critical areas.

First, I want to invest $12 million in the kinds of kid-tested, parent-approved Early Childhood Development programs that have proven to work in Tennessee.

Second, I want to invest $88 million in K through 12, including $27 million to meet our funding obligations for the Basic Education Program.

Third, and I think foremost, I propose an investment of $114 million in our state's higher education system.

This would be the first of a five-year excellence initiative, reflecting the recommendations of the Council on Excellence in Higher Education, the Tennessee Higher Education Commission, the University of Tennessee and the State Board of Regents.

Did you know that the share of state tax dollars being invested in higher education in Tennessee is at its lowest point in 25 years? When adjusted for inflation, our per-student expenditures decreased nearly $1,500 from 1988 to 1998, the greatest decline of any state in our region.

Meanwhile, undergraduate tuition and fees at our public colleges and universities continue to increase dramatically.

We can't price our citizens out of a college education. We can't afford to stay 48th in the nation in the number of adults with a high school education. And we can't afford to stay 48th in the nation in the number of adults with a college degree.

Thanks to minimal pay raises over the past decade, the salaries of our professors languished, making it more and more difficult to attract and keep the kinds of bright, motivated faculty necessary to have first-rate colleges and universities.

We can't afford to let this trend continue, especially when it's crystal clear that tomorrow's jobs will require a far more educated and better-trained workforce than we have today.

We need that kind of workforce throughout Tennessee, including state government. To that end, my budget includes 3 percent pay raises for all our state employees plus an additional $20 million to make up for inadequate pay scales in various departments of state government.

Lastly, it's imperative that we invest an additional $132 million in the state's health care program as well as another $14 million to improve our mental health services and $9 million for children in state custody.

During our administration we've cut the growth of government spending in half. Even with the improvements I've presented, this budget continues that trend.

There are fewer executive branch employees now than when I took office. The state's Rainy Day Fund has grown from $101 million in 1994 to a proposed $223 million by June of 2001.

I think the legislative and executive branches should be proud of the fact that we've been responsible enough, even when our revenues have failed to keep up with our growth, to set aside money to keep our state afloat when the economy slows. And it will slow down. When that happens, Tennessee's tax structure needs to be ready to handle it.

But instead of saying "reform taxes," many of you still say "cut."

Cut the budget. Cut services. Cut out the fat. I say to you, our administration does those things. Not a day goes by that we don't look for more efficient ways to run government and cut unnecessary spending.

As part of our ongoing attempt to operate more efficiently, this year we identified nine state parks where attendance was low and operational costs far outweighed revenue. Those parks will be closed.

In addition, 15 Department of Transportation garages across the state will be shut down and employees will be relocated to adjacent counties. This move will create more efficiency in our maintenance workforce and in equipment resources.

It is only through such responsible management that we have been able to continue to serve our citizens well. We're watching our spending and coming up with innovative ways to improve our state. Tennessee Looks Good to Me, for example, is a statewide clean-up initiative that relies almost entirely on private donations.

In our state departments, we've reduced the base operating budgets by more than $392 million. We've instituted a strategic planning process for every department, making efficiency and performance our top goals.

We've made Tennessee one of the top six states in adapting technology to cut costs and improve services.

We're making it easier for citizens to access government. Birth and death certificates can be ordered on-line and soon, you'll be able to renew your driver's license and order specialty tags from your home computer.

With the proper funding, Tennessee is positioned to be a 21st Century leader in E-government.

Allow me to recognize two gentlemen who have been integral to our planning and technology advancements, Lou Kompare, executive director of the Center for Effective Government, and Bradley Dugger, head of the Office for Information Resources.

Last fall, Mr. Dugger was named 1 of 10 national Public Officials of the Year. It was under his direction (and under budget, I might add), that the State of Tennessee ushered in the year 2000 without fear or folly.

Thank you, gentlemen, for your ingenuity and dedication.

We must continue these kinds of advancements. If we want to maintain Tennessee's momentum in the global economy we cannot overlook the clear, fiscal reality we face. I have been up front about that reality and have proposed several options. The reality is that even in the midst of the best economic years we've ever seen, Tennessee's revenue cannot keep pace with the state's baseline budget demands.

That's why my 2000-2001 budget proposal contains a 3.75 percent flat tax on income, a reduction of the state sales tax from 6 percent to 3.75 percent, the elimination of the Hall income tax and the elimination of the state sales tax on food.

I support a constitutional amendment that would require a 60 percent vote of the General Assembly in order to increase the flat-tax rate.

As I've said before, even with these changes Tennessee will remain one of the lowest taxed states in the nation. Under my proposal, our total sales taxes will be lower than those in every one of our neighboring states.

We will be able to deduct what we pay in flat tax from our federal income taxes. People who work in Tennessee but live in other states will pay their share, contributing new money of $114 million to our state coffers. Collectively, Tennesseans will pay less in taxes than they do right now.

That's reforming taxes, not raising taxes.

We can't, in good conscience, decide to fund this budget with an increase in our sales taxes when our sales tax burden is already the 7th highest in the country.

That doesn't even address the fact that it's a dying tax.

Just the other day, Martha told me about how the owner of a dress shop in town was falling prey to Internet competition.

People actually go into the dress shop, try on a dress to make sure they like it and that it fits, and then they go home and purchase it over the Internet.

The shop owner loses out on that sale, but so do state and local governments. When that sale is lost, so are the state and local taxes on that sale.

Considering Tennessee's reliance on the sales tax, a recent UT study found that untaxed Internet sales will hit our state harder than most. Estimates are that Tennessee lost $34 million in tax revenue to e-commerce last year alone.

If we can't tax Internet sales at a time when people are dot-comming their way to everything from cars to cat food, where will we be in the future we envision?

Where will we be when the very people who are successful in Tennessee but paying hardly anything in state taxes start escaping sales taxes, too?

It's ridiculous that we have senior citizens in this state who pay a greater percentage of their fixed incomes in taxes than our professionals and business executives, who make hundreds of thousands of dollars a year but pay almost nothing to the state in return.

It's unfair, and it's just not right.

Clearly, as I've said for a year now, without fundamental changes in our tax structure we will be unable to prepare our people for tomorrow. Without it, you will be forced to cut basic state services.

I know no one wants to cut services in their districts, but what options do you propose? What cuts can you make that affect no one? In fact, most of the cuts that I hear talked aboutcuts in education, cuts in employee pay and cuts in health carewill affect the most people, not the least. They'll also do grave damage to our state.

It would be a mistake to raid our transportation dollars to try to balance the budget. We don't owe a dime on our roads. Almost every dollar we take in in highway user fees goes into our highway maintenance program. Our investment in roads directly impacts our investment in local economies.

It's critical that we complete U.S. 64 from Memphis to Chattanooga and continue the economic expansion throughout that route.

It's critical that we continue our investment in the Highway 52 economic-development corridor, where we have some of the state's highest unemployment rates and some of its worst local economies.

Throughout the state, we're investing nearly $2 billion in 504 road projects.

Which of these projects do you want to end if you use transportation dollars to balance the budget?

Why would we stop investing in something we're doing right? We have some of the best roads in the country. Interstate 40 through Tennessee was voted the best interstate in the country in a recent survey of truckers. In that same survey, Tennessee's rest areas ranked in the top five nationwide.

We shouldn't tap into our transportation dollars to balance this budget.

It also would be a mistake to balance the budget with the money we receive from the national tobacco settlement.

We cannot continue to turn to non-recurring revenue to fund recurring expenses.

Together, with the help of this Legislature's bipartisan leadership, we will look for the most effective uses of this money and reach agreement that it should go toward addressing some of the state's long-term needs.

My vision for a better Tennessee is about children. It's about creating the opportunities for our children to be healthier, better educated and better paid than any child in America.

What better way to ensure an educated population than to reach our at-risk children before they have the chance to start kindergarten unprepared, to invest in our K through 12 programs and to make our institutes of higher learning among the best in the nation?

Thanks to the cooperation of the General Assembly, the state last year invested over $3 million to set up 30 early childhood development classes serving 600 low-income preschoolers across the state.

This year, I propose we invest another $12 million in our state's at-risk, preschool population.

Such an investment would touch the lives of another 2,400 children. It also would get us closer to the State Board of Education's goal of reaching all 12,000 children in need by the year 2005.

The better job we do of preparing our kids now, the less likely they are to turn to the state for help later.

We have three bright, young students with us in the gallery this evening who serve as true testaments to the power of early investment.

Please join me in welcoming Precious Springfield, Norvell Pickens and Andrea Smith. Precious, Norvell and Andrea all attended preschool at Anderson Early Childhood Center in Haywood County. Prior to preschool they were considered at-risk and unprepared to enter kindergarten.

Now, each of these promising third-graders has spent three straight semesters on the honor roll. Andrea and Norvell scored in the 94th percentile on their achievement tests. Precious scored in the 95th percentile. These children have gone from at-risk to the top of their class.

Andrea... Norvell... Precious... We're very proud of you.

With these kinds of results, we can't afford NOT to invest.

We must continue our commitment to fully fund the state's Basic Education Program. Even the toughest of budgetary times have not stopped our administration, or this General Assembly, from honoring that obligation.

Test scores have risen as a result, but Tennessee students still aren't where they need to be. It shouldn't take a court order to convince us to invest in our children's futures.

In 1992, rather than changing the tax structure, the state passed a half-cent sales tax increase to meet its education funding needs.

That still only funded about a third of what's been invested in K through 12 education in the past decade.

Through responsible budgeting, we've increased education spending in Tennessee by more than a billion dollars a year. That's almost double what the state spent on K through 12 in 1990.

We, as elected officials ... as public servants ... should consider why we're here. I think we're here to make things better for future generations. I think we were elected to come up here and create the kinds of opportunities that will allow Tennessee's children to grow up to be anything they want to be.

To do that we have to make sure we have qualified and effective teachers in our classrooms. Today's teacher shortage is affecting nearly every state of the Union, and every governor of every state recognizes that the only way to attract and keep good teachers is to offer competitive salaries and proper classroom funding.

My budget gives Tennessee's teachers a 3 percent pay raise come July 1. It provides money for valuable training and the completion of the state's educational computer network.

And it includes $5 million to help relieve school systems across the state that are experiencing extraordinary growth.

My budget also includes money to handle growth at our higher education facilities and offset the cost of rising tuition rates for those who can least afford them. The infusion of funds for our Student Assistance Awards will make college affordable for nearly 8,000 more students.

Faculty at our UT and Board of Regents systems will receive an average 6 percent pay raise effective July 1. Even then, it will take comparable raises the next two years straight to get our faculty pay on par with others in the Southern region.

The investments I propose will improve our university libraries, boost instructional and laboratory budgets, upgrade campus equipment, improve building maintenance and address critical equipment replacement needs at our university medical units, vet school and space institute.

I propose we invest $30 million in state funds over the next two years, combined with $120 million that UT has committed to raise, into helping UT double its federal research and development grants.

That would help put UT among the top 25 public research universities by 2007.

With that status, we would be in a far better position to keep our best and brightest students here instead of losing them to neighboring graduate programs in Georgia, North Carolina or Virginia.

The economic impact would be enormous.

In Seattle, which is home to one of the top public research universities in America, 60 percent of small businesses have direct or indirect relationships with the university.

Birmingham, Alabama had 21 companies organize there in the last two years as a result of research conducted at the University of Alabama at Birmingham, the top public-research university in the South.

Investment breeds investment.

I propose we invest in system-wide technology improvements to make higher education more accessible to every Tennessean, no matter where they live.

Investment now in that kind of distance learning will help eliminate the high cost of bricks and mortar associated with traditional campus expansions.

Throughout my five years in office, we have mapped out spending priorities.

We focused on putting more criminals behind bars and providing health care for our citizens. My budget continues our investment in these areas, including an additional $25 million for our court systems, child support enforcement, prison costs and trooper training.

I want to continue the excellent work of our Juvenile Justice Reform Commission by working with the General Assembly to come up with a comprehensive solution to the serious issue of juvenile crime.

Let's also work together to enact legislation authorizing innovative, public charter schools in Tennessee so that parents and teachers will have more flexibility and a greater voice in their children's education.

In health care, let's recognize that our health care costs like everyone else's have risen sharply.

It's important to remember that TennCare includes mental health care, nursing home care and care for our mentally retarded.

And while it accounts for one-fourth of our total budget, it's important to remember that the medical-service portion of TennCare still has cost us less than Medicaid.

We spend roughly one thousand dollars less per TennCare recipient than our neighboring states spend on Medicaid. And for every dollar we do put in, we get a $2 match from the federal government.

With TennCare, we help more people at less cost. A key factor in that success is our network of providers, many of whom have stuck with us through some tough times. For that, we thank you.

That's why we've been able to provide health insurance coverage to a half-million Tennesseans who otherwise would not have it. It's why folks coming off welfare can still access affordable health care.

Many of you say the way to balance the budget is to just cut those half a million Tennesseans from the TennCare program.

Let me tell you the consequences of that. Local hospitals, particularly rural ones, will go bankrupt. Charity care will force dramatic property-tax increases in local communities.

TennCare is worth saving.

It's worth investing an additional $132 million so we can implement at-home care options for our elderly, provide fiscally responsible reimbursements to our managed care and behavioral health organizations and improve program management.

I've included an additional $6 million for mental health community services. By now, we all realize the importance of offering our mentally ill options over institutions.

I look forward to working with this General Assembly to implement the proposed changes in the state's mental health and mental retardation code presented just last week by the Title 33 Commission. Some of the members of that commission are in the audience tonight, and I want to thank you.

This budget also recognizes the importance of home-based care for our elderly and disabled. I've included $5 million for long-term care solutions for 4,500 of our elderly and disabled who don't qualify for Medicaid services.

Another $11 million is dedicated to helping our Medicaid-eligible elderly and disabled receive care at home instead of a nursing home.

I asked you earlier to think about our state's future. When I think about it, I envision excellence. The budget I've outlined this evening puts us on that path.

Many have pronounced my vision for the future dead on arrival. I refuse to accept that pronouncement.

I think it's time for Tennesseans to speak up and help me fight for our children. If the future of Tennessee is not worth fighting for, what is?

We all recognize that the tough decisions we must make now may cause political discomfort in the short term. But when future generations look back on what happened in this place at this time in the executive and legislative branches, they will understand we did what was necessary to choose opportunity over decay. We did what was right.

Invest or regress. That is our choice.

In closing, I'd like to share something with you that my son Deke gave to me for Christmas. It's from an inspirational plaque that I keep on my desk to remind me what it's all about when the going gets tough:

"Excellence is the result of caring more than others think is wise, risking more than others think is safe, dreaming more than others think is practical and expecting more than others think is possible.''

My friends, let us choose excellence.

Thank you. May God bless Tennessee and the United States of America.