Revenue Up, Teacher Pay Down

Economic analysts are predicting a slowing of the growth that has driven the Tennessee economy in recent years, according to an article in the Tennessean. Those same analysts indicate tax revenue growth in the state over the past 10 years has been 7% when adjusted for inflation. Here’s more:

Most of Tennessee’s cities have reaped the benefits during this longest economic boom in history with double-digit jumps in employment and gross domestic product. 

However, Tennessee tax collections have only increased 7% in the past decade, when adjusted for inflation. 

“That’s not a lot of growth,” said William Fox, director of the Boyd Center for Business and Economic Research at the University of Tennessee, Knoxville. “Revenue growth would have been stronger, but we had a number of policy decisions to reduce revenues.”

An analysis provided by the Tennessee Education Association (TEA) indicates that average teacher pay in the state is actually down by 2.6% over the same time period when adjusted for inflation.

TEA also notes:

For the past five years Tennessee has been running huge revenue surpluses as education needs go unmet. Over this five-year span the state collected nearly $3 billion more in general fund revenue than it anticipated. Last year alone the state general fund had a $580 million surplus. These are millions that could have gone to classrooms. 

Not only is Tennessee bringing in more revenue than anticipated but also, as Fox notes, the state has used that good fortune to reduce future revenue. In fact, the state of Tennessee phased-out the inheritance tax (previously paid on estates worth $5 million or more) and is phasing out the Hall Income Tax on investment income. Here’s more on that from the Department of Revenue:

The Hall income tax is being phased out through December 31, 2020.  The tax is fully repealed beginning January 1, 2021.  See important notice 17-09 for more information.

Some estimates indicate completely eliminating the Hall Income Tax means foregoing $180 million in state revenue each year. That’s roughly the equivalent of foregoing a 7% raise in teacher pay each year.

So, let’s be clear about a few things: 1) State lawmakers prioritized tax cuts for wealthy Tennesseans over raising pay for teachers and 2) Even with these tax cuts, there is significant money available to fund teacher raises and 3) Now that the economy is slowing a bit, legislators are being encouraged to exercise caution — which likely means less money to invest in teacher pay and other public service needs.

Shorter: Tennessee policymakers have not made investing in teachers a priority.

For more on education politics and policy in Tennessee, follow @TNEdReport

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