NASHVILLE, Tenn. – Hoping to end a budget impasse that forced half the state's 42,000 workers to stay home, Gov. Don Sundquist on Tuesday proposed a compromise that would include a constitutional convention.
"If there was ever a time for compromise, it's now ... We should work around the clock if we have to," the governor said in a news conference.
A stalemate over whether the state should impose an income tax, which has plagued the Legislature for four years, came to head Sunday when proponents and opponents refused to give in and lawmakers failed to pass a balanced budget by the new fiscal year, which began Monday.
The result was a partial government shutdown that put thousands of workers on unpaid furlough and only essential services operating, such as prisons and mental health institutions.
Legislators have been divided over whether to close an $800 million budget gap by raising a variety of existing taxes, create the state's first broad-based income tax or, as a last resort, harshly cutting state programs. Tennessee is one of nine states without a personal income tax.
Sundquist's complex proposal would increase existing taxes, including the sales tax and taxes on cigarettes, and create a relatively small income tax, just 1 percent, effective next January. Voters would be asked to approve a constitutional convention, and if they rejected such a convention, then the income tax rate would increase to 3.5 percent on Jan. 1, 2005.
"This a plan that will work," Sundquist said.
Sundquist presented the plan to the legislative leadership after calling an emergency meeting. The House and Senate planned to resume discussions later in the day.
"We're going to recess," House Speaker Jimmy Naifeh told fellow legislators when the legislative leaders were summoned. "Maybe we'll come back with a new plan."
In all, 22,000 "nonessential" state employees were told to stay home for the week because the budget over how to cover an $800 million deficit in the state budget.
Sundquist said earlier he was discouraged that the Legislature had not made a decision on an income tax as a way to resolve the state's financial troubles, despite four regular and two special sessions.
The debate has one whimsical note: The plan to raise various existing taxes is called CATS, or Continuing Adequate Taxes and Services, and the plan to close the gap by sharply cutting state services is known as DOGS, for Downsizing Ongoing Government Services.
But for Greg Harris, an employee in the state's pollution control division, the stalemate means a week without pay. He's been on the job only four months and has no accumulated leave time to fall back on.
His pregnant wife, a nurse who had been cutting down her work hours, will have to take up the slack.
"She's having a hard time because she's eight months pregnant," he said. "But she'll have to take extra shifts so we can make our bills."
Harris and other furloughed state employees stood outside the Capitol in the wilting heat Monday as lawmakers haggled.
Charles McDaniel, 18, held a sign that said, "You wouldn't do your job, now we can't do ours." McDaniel works part-time as a maintenance worker at Pickwick Landing State Park and was to start classes at Middle Tennessee State University this summer.
Now, he has neither a job nor a class to go to. He was placed on furlough, and the summer semester was delayed.
"This changes everything," McDaniel said. "I'm just waiting to see what happens."
Meanwhile, in New Jersey, Gov. James McGreevey vowed Monday to send state troopers after any senators who don't show up Tuesday afternoon for an emergency session of the Legislature.
McGreevey signed a $23.4 billion budget Monday but ordered the Senate to return to vote on a $1.8 billion corporate tax proposal. Without it, McGreevey said he cannot balance the spending plan he spent months negotiating.
McGreevey met Tuesday morning with key Senate leaders, including lawmakers who refused to vote for the tax unless the governor agreed to a deal for a professional sports arena in Newark and similar perks for other communities.