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Saturday, June 10, 2000-The streets of downtown Nashville around the Tennessee State Capitol were desolate. No cars. No people. A ghost town, typical for a Saturday in that part of the city. A day when state workers, who ordinarily swarmed over the several bureaucratic city blocks, headed for the relaxing haven of the lake or the park-anywhere to escape the grind of government work. The hot sun beat down on Legislative Plaza, the expansive municipal courtyard in the shadow of the State Capitol building. With its ornamental trees planted among concrete and marble and monuments to Tennessee history, it serves as an oasis in the midst of a bustling downtown. Underneath the plaza, like termites silently burrowing away inside an otherwise apparently healthy structure, state legislators and senators filed into the underground parking garage in preparation for a stealth assault on the pocketbooks of the state's citizens.
Tennessee was one of but a handful of states without a state income tax. The end result of the resistance to the state income tax was a relatively low tax burden. By most yardsticks, Tennessee ranked in the bottom five in per capita taxes. This fact was the source of a large degree of pride for many Tennesseans. The income tax had been proposed over the years-even passed at one point before being shot down by the courts-and each time it was met with the displeasure of a populace that enjoyed its low-tax status. That's not to say that Tennesseans don't care about people less fortunate. The state ranks thirty-fourth in average adjusted gross income of all the states, yet ranks third in charitable contributions. That's certainly putting your money where your mouth is. After all, Tennessee is the Volunteer State, and that certainly applies when it comes to volunteering money. That's the way the founding fathers envisioned our society. We were to rely on the government for very little aside from national defense and a stable currency. Otherwise, we were expected to take care of our own. In return, the federal government would lead a relatively austere and unintrusive existence.
While absence of an income tax was a source of pride for most, it was an irresistible target for those who wanted to expand the role of government beyond the tolerable bounds of the majority. The people enjoyed keeping more of their hard-earned money in their own pockets. The career politicians saw gold in them thar pockets, and they aimed to take it any way they could. A secret coalition of like-minded politicians had gathered to discuss how they would pull off the heist, all the while telling the public they no longer had designs on their income. If they could manage this sneak attack on the pocketbooks of unsuspecting Tennesseans, this would rival the genius of the Great Train Robbery.
The Tax Scheme
Leading the cabal was a crusty, chain-smoking state senator by the name of Bob Rochelle, the speaker pro tem of the Senate, whose penchant for wearing dark suits gave him the look of an undertaker. State Senator Marsha Blackburn, who helped lead the opposition to the income tax in the Senate, described Rochelle as "the stereotypical Southern politician." Like something out of a Faulkner novel, the bespectacled, bulldog-faced senator anxiously awaited the arrival of his fellow chamber-mates that lazy Saturday morning.
It's not hard to imagine Rochelle sitting behind his desk, his nondescript necktie loosened around his thick neck. The top button of his dress shirt undone. The top of his balding head glistening with perspiration as he takes another drag from his cigarette and tugs at his suspenders.
Rochelle had set his sights on that new vault of money, the state income tax. Once he got his teeth into something, he purportedly never let go. The Associated Press described him as "a consummate dealmaker who revels in the political game and usually wins." His backroom deals and arm-twisting were legendary. Lt. Governor John Wilder, the elder statesman of the Senate, was much too timid and apprehensive to carry the governor's water on the income tax. Rochelle was one of the few politicians who had shed the shroud of ambiguity and now openly supported the state income tax. He became the point man for the lobbyists and the union leaders and anyone else interested in squeezing more money out of the taxpayers. Confident his Senate seat was safe, he set about the task of propagandizing the issue in order to gain support.
His latest scheme would tax "the rich" in order to save "the children," raising an estimated $2 billion, a sizeable chunk compared to the state's $18 billion budget, especially when you consider the state portion in taxes was less than half of that $18 billion. All was going according to plan that sleepy Saturday. Another secretive, closed-door meeting the previous day had born fruit. Deals had been made. Arms had been twisted. At last he had the votes-tentative and fragile as they were-to pass his income tax plan, a plan considered dead in the water by political observers because of the overwhelming negative public backlash to it before. This was to be a stroke of political artistry and Rochelle relished the moment. He thrived on the gamesmanship of politics, and this was political chess at its best. As he anticipated his opponents' next move, it appeared to be checkmate, a mere formality. There was nowhere to go, no way the opposition could salvage the game. Having painstakingly positioned all of his pieces, he now sat back in his chair, rubbing his chin, ready for one last move.
Despite the lack of support for a state income tax, he knew it held the key to untold political fortune. Imagine the government he could grow if he could just unlock it. Never one to worry about what the people wanted, Rochelle relentlessly pursued his quarry. In his mind, he knew what was best for the state, and he would not be deterred. I'm sure he had thoroughly convinced himself that the end justified the means. He was absolutely persuaded that the government had the right-no, the obligation-to provide all these programs and services he and his colleagues had devised. The more people the government could take care of, the better. He didn't much care how he accomplished his goal. As long as he held the element of surprise, he was confident he could usher the income tax through before anyone was the wiser. What he didn't count on was an informer deep inside his political machine.
Unbeknownst to Rochelle, I had been alerted the day prior, in the waning moments of my afternoon radio talk show, that a plan had been hatched to push through a state income tax on Saturday, the following day. Johnny B, my producer and sidekick, had passed the information along to me from a well-placed source we'll just call "Hawkeye." I questioned whether my source was accurate. I was positive that either the information was faulty or Johnny had simply misunderstood what Hawkeye had told him. After all, we were sure that the tax had been killed with no chance of being resurrected this legislative session. Weren't we? The word inside the General Assembly was there just wasn't enough support for the measure. We had been fighting this tax for a year. Despite the complicit media, despite all the pleas that it was "for the children" and the predictions that the state would fall into the sea if we didn't adopt an income tax, the people were unmoved. Even the cooked polling numbers didn't convince them because, in reality, legislators could find but a few constituents who expressed a desire for a tax, and an avalanche of opposition.
Still, the leadership pressed forward only to find that, even in the face of their pleading and browbeating, few legislators were willing to risk their political lives in order to pass it. It was considered political suicide, and Rochelle had given up on ever passing it. Little did we know that numerous closed-door meetings were taking place, in direct violation of the state's sunshine laws, where pro-tax forces were hatching their plans far away from the glare of the media. In public, these same people were conceding that support for the income tax was not there, and they were looking at alternatives. We were led to believe that we had defeated attempts to pass the tax. This was disinformation, as it turned out, planted by pro-income-tax forces to keep the opposition off-guard. Behind the scenes, Rochelle on the Senate side teamed up with Speaker Jimmy Naifeh in the House. Rochelle and Naifeh, together with Governor Don Sundquist, became the "Axis of Upheaval" against the citizens of Tennessee. They had been feverishly cobbling together just enough support to pass the income tax measure. The foregone conclusion was if the Senate gave them cover, the much more skittish House would follow suit. Once the two houses passed the measure, the skids were greased for it to become law, since Governor Sundquist had made his dramatic transformation from staunch income tax opponent to rabid income tax advocate.
The Morphing of a Governor
A no more unlikely turncoat ever graced the Tennessee political landscape. No betrayal has ever shocked me more than that of Don Sundquist. That needs to be understood on the front end. His dyed-in-the-wool conservative credentials were beyond reproach. An Illinois transplant, Sundquist moved into the Memphis area at age thirty-six. Having been chairman of the National Young Republicans, Sundquist quickly ingratiated himself with the local Republican establishment, so much so that they elected him Shelby County Republican chairman within three years of his move into the area. Within five years of leaving that post, he ran for Congress against native son Bob Clement, whose father had been a three-term governor of the state. Despite his famous name, Clement was defeated, and Sundquist went to Washington to help fulfill the Reagan agenda. He built a reputation as one of the most conservative members of Congress. He scored high marks with the American Conservative Union each year, usually scoring in the eighties and nineties out of a possible one hundred, even reaching a hundred one year. The only anomaly was in 1984, when he scored a dismal nineteen. Perhaps it was a harbinger of things to come. With his overall conservative credentials and his congressional experience, he had the perfect résumé to be the next governor of Tennessee-or so I thought.
I remember very well the night I first met Don Sundquist. I was the master of ceremonies for a Republican candidates forum. Before I introduced all of the candidates on stage, I introduced myself to him. Looking back, he was unusually pleasant and chatty. I don't recall ever seeing him like that again, even before our falling out. Of course, he was in full campaign mode, which might explain his atypical cheerfulness. That night, I wrote in my journal:
Sundquist, in particular, went out of his way to be nice. I'll have no problem supporting him in his race for governor.
In addition to his conservative background, I genuinely liked the man. Subsequently, I campaigned for candidate Sundquist, even making speeches on his behalf. This was prior to my permanent venture into talk radio. I was still in music radio, and I did this in spite of my policy not to get publicly involved in political campaigns. Ordinarily I thought it bad business for a host of a music morning show to lay his political beliefs on the table, but I believed very strongly in the man and his message. I believed in his conservative track record and his campaign promise never to support an income tax. I knew we had something special in our state, a relatively small government with low taxes. I felt strongly about protecting that. I knew the prior administration had made a major push for the income tax, and I was relieved to, at last, find a candidate strong enough to stand up and make a no-state-income-tax pledge. Not only was it a pledge, it was the lead plank in his campaign platform. His opponent would not promise to oppose a state income tax, and Sundquist made hay with that fact. Interestingly enough, that same opponent, Phil Bredesen, would find himself in the governor's mansion eight years later, after learning his lesson from the first run and making his own promise not to support an income tax-at least in the first four years.
Steve Gill, my good friend and colleague in the tax fight, knew Sundquist from a different angle. Having run for Congress in 1994, Gill, a 6-foot-4-inch former basketball player for the University of Tennessee, saw Sundquist on the campaign trail. They were like-minded politicians with the same determination to see Republicans in charge on the state and national level. Steve came very close to winning that congressional seat in '94 and decided to try again two years later. In 1996, Governor Sundquist went so far as to hold a fundraiser for him at the governor's residence. Even then, Steve had no inkling that Sundquist would transform himself into the darling of the special interests and labor unions. Nobody did.
Having campaigned for Steve, including helping him with a fundraiser, I had always found him to be an engaging speaker. In 1998, he took a position at WLAC in Nashville as their morning host. Ironically, I would return to Nashville from a stint in Philadelphia as afternoon host that very same day, April 16, 1998. It was also the same day a pair of tornadoes tore through downtown Nashville, some calling it an omen of things to come.
Sundquist started his first term as governor doing just what one would expect from a conservative. He helped lead the nation in welfare reform with his Families First program. At least the idea was right: get able-bodied people off welfare by insisting they go back to work. It would be years later that I would discover the more people we got off welfare in Tennessee the bigger and more bloated the Families First program became.
It's important to note my affection for Don Sundquist prior to his election as governor and during his first term. I must confess, however, to feeling a bit sorry for him at times. Although certainly capable, I didn't think he was the sharpest knife in the drawer, but he didn't have to be. He just had to hold his own against the Democrats who ran the General Assembly and he could count his time in office a success. As it turned out, he was much shrewder than I imagined.
In 1998, upon my return to Nashville from Philadelphia, I was invited to the media Christmas party at the governor's mansion. My wife, Susan, and I had our picture taken with Governor and Mrs. Sundquist. As we shook hands, he had that deer in the headlights look on his face. We made idle chat before the flash, and I got the distinct impression that, despite my involvement in his campaign and my years of support on the radio, this man had no idea who I was. Susan agreed but would comment some months later in the heat of the tax fight, "He sure knows who you are now." Needless to say, the invitations to the governor's mansion stopped coming.
Making Sense of the Budget
I had only been gone from Nashville for eighteen months when I started my talk show at WLAC radio in April of 1998. Although I returned to a different station than the one I left, I fell back into the rhythm of the city without missing a beat. Governor Sundquist welcomed me back and became a regular listener to the show. It was an election year. Sundquist was seeking his second and, by state constitution, final term as governor. He had token opposition from perennial political candidate John J. Hooker. With his white straw hat, tacky suits, odd behavior, and frivolous lawsuits, Hooker had become a caricature of himself. Once a political powerhouse and king maker, nobody took him seriously any longer. Much to the embarrassment of the Democrats, he won their nomination for governor. His victory in the Democrat primary merely underscored how inept the party had become. While the Democrat hierarchy covered its eyes, Hooker ran a high-profile campaign and was blistered by Sundquist in one of the worst political thumpings in the state's history.
Once again, Don Sundquist had run on a no-state-income-tax platform. He made speeches recounting his four years of governmental bliss, hawking a strong state economy and a fiscally sound government that was responsive to the people but lived within its means. Time after time he made the case of why the state did not need a state income tax to meet its obligations. Although Sundquist would later run from it, this "no new tax" stand was a large part of the Sundquist appeal. The very fact that the Democrats failed to run a serious candidate was because of Sundquist's immense popularity, largely because he had promised never to support a state income tax and kept that promise in his first term.
On February 8, 1999, Sundquist reiterated his opposition to a state income tax in his State of the State speech. "You will hear from those who say we ought to preserve special breaks for some businesses and impose an income tax on working Tennesseans," he announced. "That's not tax relief; it's not tax reform; it's not tax simplification; and it's not tax fairness. All an income tax does is raise the tax burden on Tennesseans and create a way to finance the easy and endless expansion of government. Tennessee does not need a state income tax." Even as he uttered those words, Sundquist had already devised his own tax plan. As he outlined in his speech, he planned to eliminate what he saw as "special breaks for some businesses" by enacting a special business tax. Although Sundquist didn't see it this way, his proposal was tantamount to an income tax. Under the Sundquist plan, the state would assess a 6 percent "excise tax" on profits to corporations, partnerships, limited liability companies, and sole proprietorships. In addition to this excise tax, any compensation above $72,000 per employee would be subject to the tax. A tax on compensation is an income tax! The fact that organized labor had come out in favor of the measure was a sure sign that Sundquist had turned a corner. After all the years I had supported him, I was reluctant to throw him from the train. I thought there must be a logical explanation.
Excerpted from Tax Revolt by Phil Valentine Copyright © 2007 by Phil Valentine. Excerpted by permission.
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