Community Enhancement Grants

The State of Tennessee had a large budget surplus this year. So did several other states. I joined many Tennessee legislators in a call to resist spending every last penny, and do like other states have recently done, and institute a fair way to refund the budget surplus to the taxpayers.

In the end, the eventual compromise brought some satisfaction to the refunders as a combination of two sales tax holidays, a 1/2 cent reduction in the sales tax on food, and the more controversial Community Enhancement Grant Program were included in the final budget.

Initially, the plan for Community Enhancement Grants raised eyebrows because of the highly prejudicial process which gave individual legislators sole discretion to decide whom to give $100,000 and $300,000 to in their district.

Citizens criticized this process and rightly so. Ordinarily, government grants give fair notice of opportunity to all, have an application process, employ objective determination and a list of goals. And, of course, all government grants contain an assurance of nondiscrimination and post-grant auditing to ensure accountability.

Some may recall how strongly I objected to the proposal because it allowed for too many conflicts of interest. Nothing was to prevent a politician from “buying” political endearment and payback, or seeking kickbacks on grant funds. It was certainly possible that an elected official may direct money to a board on which he or she serves and thereby have a direct hand in spending the taxpayer’s funds. Therefore, I rejected this idea, and I did not create my own list of favored organizations in my district to whom I would grant money.

However, the final proposal voted on by the legislature in the appropriations bill created a much fairer process. This version formed a $20 million dollar grant fund administered by the secretary of state’s office. It also outlined who is eligible, gave a stated purpose, fair notice, created an application process, made applications easily available to all, and mandated an audit provision making organizations accountable for the taxpayer’s money.

Now the question remaining is, how will the secretary of state fairly distribute $20 million in available grant funds to over $185 million in grant requests? Secretary Darnell has asked for input from the legislators to figure this out. Will legislators suggest sticking to their original grant lists to the exclusion of many worthy organizations that qualified for the money? Will he evenly distribute the funds, giving each organization the same amount? Surely, even this process is still very complicated.

I must state that from the beginning I believed the best way to refund your money to you is through a sales tax holiday – perhaps at Christmas. That way you can use your money for any purpose, including gifts to non-profit organizations if you choose.

It is difficult to determine if we will have another massive tax surplus but the successive years of sales tax holidays and now enhancement grants seem to indicate that our tax rate is simply set too high. Certainly lowering the sales tax would be the best way to ensure your money is well spent, and that tax rates don’t raise more money than our budget requires.