Rising prices and less consumer spending could have an effect on local government services in Tennessee, according to a new report from the Sycamore Institute.

The research showed rural communities are already hurting for bus drivers, sanitation workers and teachers, but when inflation increases the cost of running a town or a city, local budgets cannot keep up.

Brian Straessle, director of external affairs for the Sycamore Institute, explained the state gets about two-thirds of its tax revenue from sales tax. So, as prices go up, the amount of money in the state's coffers also goes up. But it is not the case for local governments, which depend mostly on property taxes.

"Local government revenues, since they are so heavily reliant on property tax, are not going to be as responsive to inflation," Straessle pointed out. "And going into a recession you could see, potentially, some of these governments have more demand for services and less ability to pay for those."

He pointed out little data is collected and reported about the financial readiness of local governments for times of economic uncertainty. But he expects the gap between public workers' wages and inflation will be mean higher job vacancies. According to state data, jobs in Tennessee's government sector declined by 1.2% between 2015 and 2020.

Straessle thinks policymakers should be cautious about big budget decisions over the next few years.

"We've been in a time of tremendous economic uncertainty for the last couple of years with the pandemic," Straessle observed. "And that is just about to get a little bit more complicated, with inflation and a potential recession."

According to the report, the Federal Reserve's decision to hike interest rates in order to combat inflation is also likely to shrink local economic activity and further dampen household and consumer spending, which could set the stage for a recession.

Support for this reporting was provided by The Carnegie Corporation of New York.

This week's debt ceiling deal saw federal policymakers compromise on budget-related matters, but a new awareness campaign from a Wisconsin grassroots group calls into question the voting patterns of two members of the state's Congressional delegation.

Opportunity Wisconsin contends Rep. Bryan Steil, R-Wis., and Rep. Derrick Van Orden, R-Wis., are not putting the needs of their constituents first.

Meghan Roh, program director for Opportunity Wisconsin, said many Wisconsin families are still struggling with financial pressures, such as higher consumer costs. She feels their elected representatives need to be held accountable if their votes are seen as creating more barriers for household budgets.

"And their actions beg the question: Are they fighting for everyday working people they represent, or are they prioritizing corporations?" Roh asked.

The bipartisan debt ceiling deal was touted as a way to avoid an economic disaster amid steep budget cut demands from House Republicans. Both Steil and Van Orden supported the compromise plan, but the campaign noted they endorsed an earlier House version opponents said was full of harmful cuts.

In a response, Steil's campaign pointed to a recent op-ed where he stated he wants to balance helping consumers while limiting large spending bills.

He was directly responding to ads calling out the lawmakers for opposing the Inflation Reduction Act, which caps the price of insulin for those receiving Medicare. Roh hopes the campaign creates a pathway where voters can stay focused on important matters and not have to wade through a lot of the political rhetoric emanating from Washington.

"Our mission is to make sure they're aware of how their elected representatives are voting and how that will impact their daily lives," Roh explained.

For his part, Van Orden laid out why he supported the compromise debt-ceiling deal in a recent news conference.

"It protects the people that defended this nation, those are our veterans, and it defends the people that feed this nation, those are our farmers," Van Orden said. "It also protects the people who are most in need - the folks that get SNAP benefits."

The debt ceiling deal expands work requirements for some recipients of the Supplemental Nutrition Assistance Program, but added exemptions for others who rely on the support.

A coalition of Wisconsin groups is asking Gov. Tony Evers to reject bills it contends would make it harder for people struggling to get by to bounce back with the help of certain public assistance programs.

More than two dozen organizations from around the state want the governor to veto a bill requiring BadgerCare recipients to renew their health coverage twice as often. They also want to see him veto a measure limiting unemployment benefits.

William Parke-Sutherland, senior health policy analyst for the group Kids Forward, argued the plans unfairly target people who need some type of public assistance. He added seven of 10 Medicaid recipients are already employed.

"And so, if state policymakers want to support workers, they need to address the real factors that make it difficult and sometimes impossible for workers to take more hours, and to get and keep better jobs," Parke-Sutherland urged.

For example, he noted expanding child care access would be a big help. Business groups supporting some of the bills said they would be more effective in addressing worker shortages. And GOP legislators point to a nonbinding referendum from the April election showing Wisconsin voters agree with the idea of work requirements for certain public benefits.

But skeptics like Parke-Sutherland pointed out there are already checks and balances built into many public assistance programs. He feels it is an attempt to avoid empowering low-income workers who are not getting the necessary benefits from their employers.

"They don't want to pay their workers fair wages, and offer lifesaving benefits like health insurance," Parke-Sutherland contended.

He added most people enrolled in Wisconsin's public assistance programs are white, but restrictions disproportionately affect people of color. In the last legislative session, similar bills were advanced by the Republican-led Legislature and were subsequently vetoed by Evers.


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Groups working to fight poverty in Alabama are urging state senators to approve a bill aimed at lowering food costs for families.

House Bill 479 proposes a gradual reduction in the state sales-and-use tax on grocery items from 4% to 2%, starting Sept. 1.

Carol Gundlach, senior policy analyst for the group Alabama Arise, emphasized the way Alabama taxes food products puts a disproportionate burden on lower- and middle-income working families.

She pointed out recent months of high inflation have made it an even more urgent issue.

"We estimate that people, just on the state sales tax alone, could buy an extra two weeks' worth of groceries if they were not paying the state sales tax for the groceries they do buy.," Gundlach reported.

Alabama, Mississippi and South Dakota are the only states still charging their full state sales tax rate on groceries, according to the Center on Budget and Policy Priorities.

Rep. Danny Garrett, R-Trussville, sponsored the bill, which has passed in the House and awaits a Senate vote.

Gundlach stressed although the measure would not entirely eliminate taxes on groceries, lowering them would be a positive step.

She acknowledged the challenge of completely eliminating taxes on food, since they're currently used to cover state education expenses. However, Gundlach's group thinks the bill presents an opportunity for Alabama lawmakers to responsibly reduce food taxes and explore alternative options for funding schools.

"So, we would like to either get rid of or reduce the federal income-tax deduction in such a way that if anybody gets that tax break, it's going to be the people who are kind-of middle income and need it the most," Gundlach explained.

Alabama is the only state allowing a full deduction for federal income taxes, which reduces taxes for the state's wealthiest population. Gundlach suggested eliminating the deduction could raise millions of dollars for public schools and replace the revenue from the current food tax, without imposing any additional tax burden on low- or middle-income residents.