Finance Commissioner's Freshman Year

Editor's Note: In this guest column, state Finance and Administration Commissioner Warren Neel reflects on his first tumultuous year in the cabinet of Gov. Don Sundquist.

Protesters surrounded the Capitol waving signs. Honking horns and shouting echoed from all corners of the grounds. One group advocated sustaining the governor's veto while another group raised its collective voice to override.

This was the second time during the summer a crowd had gathered. The first event was far more confrontational. The Capitol was filled with angry protesters. The Legislature, exasperated by six months of debate, passed a budget that was balanced with non-recurring tobacco monies. Senate members were spat upon and cursed as they came to the chamber. Windows were broken as the crowd became more bold, more belligerent, more uncontrolled.

In that setting, I completed my first year as a commissioner of Finance and Administration.

This year had been very different from those I spent as an academic dean at the University of Tennessee. Yet even with a dramatic change in responsibilities, I found myself thinking in the metaphors of a university. For example, like any freshman, I was too optimistic, indeed too idealistic during the last year. I thought the legislative leaders understood the dilemma facing the state. I thought they were tired of seeing the bond rating fall, education scores drop and our national rankings in economic and social indices plummet. Simply, I was na•ve.

I was even more na•ve about the breadth of issues that confront the Commissioner. Everything the state does comes through the office. Paleontology digs, civil rights museum leaves, and safety net payments to hospitals all somehow find their way to my desk. They arrive in written or verbal form. Filled with acronyms and abbreviations, they arrive at such a torrid pace that there is little time to gain detailed knowledge or comprehensive understanding of all issues. There are few patterns normally found in the private sector. There is no core business, just an array of unrelated events.

While there are no apparent patterns, there are fundamental shifts that can be viewed as long-term trends. These came to mind when recently I was asked if things had changed since I was in the governor's cabinet 15 years ago.

I am sure the issues then were just as daunting, the passion of advocates just as high, but it all seems different. Somehow certain trends, not so pronounced then, have arrived in full blossom to dictate the terms of governance and the response of government.

Perhaps the most important trend is the erosion of our prerogative to govern as, increasingly, decisions are moving to the courts. Some suggest this move is just part of a more litigious society where all grievances are ultimately resolved before the bar. Yet there are other signs to suggest that the trend is more pronounced and growing.

The trend is exacerbated in the state of Tennessee by the lack of funding and the increasing dependence on federal dollars. The growth of federal support began decades ago but it is now a consuming focus of most agencies as well as many legislators. So pronounced is the focus that a new breed of professional agency managers center their behavior toward this effect. Many see little chance to continue or improve a service if they cannot claim there are federal matching dollars. Others see more job security associated with a federal matching program than work supported only by state funds.

The quest for matching federal funds has become more important than the appropriateness of the program, distorting the thinking of many policy makers. On many occasions, federal matching funds committed without the necessary state support to comply with grant requirements ultimately become very expensive to the taxpayers.

The cycle goes something like this: The state qualifies for a federal grant to deliver services to a class of citizens. Matching taxpayer funds, usually one-third to one-half, are appropriated from the general fund, but no monies are provided for infrastructure to fully comply with the federal obligation. A few years pass, an audit report is issued and—to no one's surprise—the state is not in compliance. As a public document, the audit report is reviewed by a plaintiff's lawyer and filed with the court as evidence of non-compliance. The court issues a stay order, the state appeals, and in some cases settles with a promise to right the wrongs.

The court order is far more expensive than the original cost of the infrastructure required to fully comply with the federal obligation. This cycle has been repeated so often that a cottage industry has developed for the sole purpose of pursuing these cases in states across the nation. In Tennessee, this trend is particularly acute since we have convinced ourselves we only need to cut, reallocate, or find more federal funds to solve the state's financial problems. Each passing year, this strategy assures the relinquishment of our authority to govern ourselves. Instead, we tout our ability to garner federal dollars, noting a ranking among states of 18th in population and 11th in federal funds.

It is not difficult to imagine where this is leading as each week another court complaint arrives. At the end of the fiscal year, Tennessee had approximately $1 billion at risk in potential court settlements. In the context of the budget, this trend continues to dissipate scarce general fund dollars.

This trend has also affected other areas of state government. There are three major general fund expenditures—education, prisons, and health—budgeted with taxpayer revenues. Health is contracted primarily with the federal government and is overseen by a bevy of court advocate groups and existing court orders. Prisons have the courts behind almost every move that is proposed. K-12 education likewise has the court system in addition to the Tennessee Education Association and local school officials as advocates.

Higher education stands alone. It has no court-ordered sanctions, no broad-based advocates, and no vocal support. In hard budget times, higher education, so it is reasoned, can raise tuition and do for itself what other groups cannot. While health, prisons, and K-12 education seek the sanctity of the courts to argue the merits of their grievance in a period of rising costs, we are marginalizing all of the state's higher education and to some extent K-12. Likewise, we are suggesting to many groups that their needs are better addressed in the courts than through the legislative process.

The second trend overtaking the debates on the future of the state can be termed passion vs. principle. We think that if we are passionate about something, then it must be a worthy principle to guide our actions. The more passionate we become, the more principled we present ourselves.

The trend is in sharp contrast to what now appears to be an outmoded idea that principles are formed through reasoning, fact gathering, and deliberation. The result becomes the basis of actions. What is voguish today is the reverse; passion is first, principle comes after. In this adrenaline-filled world, it is much easier to vent our passion than consider the consequences of our actions.

Maintaining our passion for long periods of time requires a community of like-minded views. Much like a neighborhood comprised of families with common concerns and common interests, there is a need to feed our views from those who identify with us. Our common opinions come from common values. In most neighborhoods, difference is tolerated. Such is not the case with the "passion-before-principle" neighborhood.

One manifestation of this is the proliferation of TV talk shows, discussion groups on the net, and a host of radio prophets, each with a fragment of the citizenry, each with an agenda, each masking the agenda as information, each valuing passion before principle. We have at least seven talk radio shows in Nashville to help us through the day, spilling our passion in the name of principle, never in the name of market share. With each passing cycle of this protracted conflict, the decibel level rises as each opinion seeks to overpower a competing view. Devoid of logic and facts, we find our sensibilities attacked with a barrage of views cloaked as information.

The ultimate rally for this radio community is what has now become a spring rite of passage: a drive around the capitol honking horns against tax reform. Fifty drivers speak to the future of 4.5 million Tennesseans.

These two trends, in large measure, define the struggle the state is facing as our leaders debate their vision for the next generation. It is not a pretty picture.

Left alone, these trends will significantly impair the economic future of the state. The two trends will affirm the leadership model for the state's future as one that is passionate about what they are against without offering any realistic, thoughtful, and compassionate solutions. What kind of leader will we choose if we value the critic more than a creator?

At stake is not whether we have a franchise and excise tax, income tax, or some other proposed tax. What is more important is that we have become very comfortable being nationally ranked at the bottom in almost all economic and social indices that are published: 48th in education attainment, 50 percent of the rural households without a high school diploma, on and on it goes. We deserve better, but first we must expect better. Wishing won't make it so.

Like the student taking the summer off between the academic years, I took a few days off to get my perspective back, to reassure myself that this state values the dreams of the next generation. I seek a neighborhood of committed individuals as I enter my sophomore year to re-affirm the ideals I nearly lost as a freshman.

© 2001 MetroPulse. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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