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Page 68

Tennessee

Don Sundquist, Republican

Legislature: Republican

Took Office: 1/95

Grade: B

These are boom times for Tennessee, with more than $12

billion in new business investment and 130,000 new jobs

lured inside its borders in just the last four years.  Per

capita income is up 14 percent since 1994.  Tennessee's

prosperity provides a textbook example of the benefits of

globalization and free trade, with much of the new employ-

ment-generating investing in the state being done by for-

eign-owned firms and trade-related manufacturing and finan-

cial services industries.  This favorable investment climate

begins with Tennessee's enormous advantage of being one of

only nine remaining states without an income tax.  Tennes-

see's overall tax burden is 23 percent below the national

average.  The Sundquist administration's policies have con-

tributed to the business friendliness of the state.  Sund-

quist ran for governor in 1994 promising "less government,

light regulation, and no new taxes."  For the most part he

has delivered.  Sundquist's 1997 budget called for $100 mil-

lion less in expenditures and 1,750 fewer government employ-

ees than did the budget of the year before, though his 1998

budget request was up 4 percent.  Sundquist points with

pride to his "Families First" welfare reform package as a

major success story.  Welfare enrollment has fallen by 35

percent in two years, nearly twice the national average.

But many of the "reforms," including free day care and job

training, sound Clintonesque.  Though Sundquist supports

charter school experiments, most of his education reforms

are conventional and costly.  Sundquist's most notable

achievement has been his steadfast resistance to the almost

annual pleas from the media and the political establishment

for a state income tax and for higher taxes in general.  To

the pro-tax lobby, Sundquist has steadfastly replied, "New

taxes would dampen the fire of enterprise and investment and

job creation."  He's right.  Why change a winning strategy?

Score

Grade

Rank

Overall Fiscal Policy Score

55

B

15

Spending Score

67

B

8

Revenue and Tax Rate Score

49

C

21

Amount

-1.7%

Average Annual Change in Real Per Capita Direct General Spending through 1996

-4.5%

Average Annual Change in Direct General Spending Per $1,000 Personal Income through 1996

0.7%

Average Annual Recommended Change in Real Per Capita General Fund Spending through 1999

-0.1%

Average Annual Change in General Fund Spending Per $1,000 Personal Income 1996-98

1.8%

Average Annual Change in Real Per Capita Tax Revenue through 1997

-0.2%

Average Annual Change in Tax Revenue Per $1,000 Personal Income through 1997

-1.5%

Average Annual Recommended Change in General Fund Revenue Per $1,000 Personal Income through 1999

1.2%

Average Annual Change in Real Per Capita General Fund Revenue 1996-98

0.0%

Average Annual Recommended Tax Changes as % of Prior Year's Spending through 1999

0.0

Change in Top Personal Income Tax Rate, proposed and/or enacted (% points)

0.0

Change in Top Corporate Income Tax Rate, proposed and/or enacted (% points)

6.0

1998 Combined Top Income Tax Rates (Personal plus Corporate) (*0.5)

0.0

Change in Sales Tax Rate, proposed and/or enacted (% points)

0.0

Change in Gas Tax Rate, proposed and/or enacted (cents per gallon) (*0.5)