The alternative to raising taxes to cover the cost of maintaining current services is to cut services to correspond to what current taxes will raise. This is not quite as horrible as the word “cut” implies because the projections have spending increases built into them that Tennessee doesn’t have to make. For example, increasing enrollments could be handled by increasing class sizes and increasing compensation costs for state and local workers could be held to inflation alone, denying these workers the real (inflation-adjusted) increases in living standards that private sector workers will enjoy. The state could attempt a similar squeeze on compensation of workers the state pays indirectly, such as workers in hospitals, nursing homes, and child care agencies.

Obviously, state policy could combine tax increases and spending cuts. For example, maintaining a moratorium on tax cuts and expanded programs, raising taxes about 1% a year, and squeezing current service budgets by about 1% a year would work — mathematically at least.