ATLANTA -- In a surprise announcement, Gov. Ned McWherter of Tennessee on Monday announced a special January session of the state legislature to approve his education reform plan and consider increasing taxes to fund it.

"I believe we must put education first," Gov. McWherter said at a press conference on Monday. "Before the regular session of the General Assembly, before reapportionment, before the manly other important issues facing our state, we should give the education of our children first consideration."

The governor provided no specifics on what new levies he would back to pay for the $565 million yearly cost of his plan to give more money to urban schools, fund school capital expenses, and raise the state's overall share of education costs to 75%.

But the session will consider the taxation question, and the governor did not rule out reconsideration of a state personal income tax that he pushed earlier this year and the legislature rejected.

Gov. McWherter also asked that the special session, which he set for Jan. 14, approve a constitutional convention to consider comprehensive tax reform and the creation of a state lottery. If backed by lawmakers, the convention would then have to be endorsed by voter referendum, probably in November 1992. The voters would then have to approve any constitutional revisions put forth by the convention.

According to one lawmaker, who declined to be identified, the call for a constitutional convention could allow the governor to back off pushing for a politically unpopular income tax to fund his program. "He may be angling to get an increase in some other tax, like sales taxes, to pay for educational reform and then replace that with an income tax arrived at through a constitutional amendment," the lawmaker said.

Said he reached the decision to call the special session after recent meetings with lawmakers who are concerned that state schools could face a court takeover.

This summer, Chancellor C. Allen High of Davidson County ruled that the state's system of funding public schools is unconstitutional because it does not provide equitable funding. Mr. High threatened to implement changes if those inequities are not resolved. His ruling has been challenged by state Attorney General Charles Burson and could be heard by the state's high court as early as next month.

On Tuesday, the governor unveiled a funding formula for schools that detailed precisely how the proposed $565 million would be distributed statewide, his spokesman Ken Renner said Wednesday. Mr. Renner said the formula attempted to address both court and legislative concerns about inequity in school funding, particularly for rural districts.

Mr. Renner said one highlight of the governor's formula is major funding for capital projects. He said Gov. mcWherter is asking for $135 million for this purpose, which would pay for one-half of local districts' capital needs. Under the plan, Mr. Renner added, school districts could use these funds to help pay debt service on borrowings previously issued for capital projects.

The governor's spokesman said Mr. McWherter would announce during the first week in January the details of his plan to fund the school perform program. Mr. Renner declined comment on the inclusion of a personal income tax in the plan.

Speaking of the constitutional convention proposed this week, Mr. Renner said, "The intention is to open up all options in the tax code, including a lottery. If somebody wants to tax sunshine that could be considered."

When Gov. McWherter proposed revamping the state tax system to pay for educational reform in February 1991, he made a 4% flat-rate tax on Tennessee wage earners the centerpiece of that plan. But to sweeten the imposition of an income tax, he also called for a reduction of the state's 5.5% sales tax to a maximum 4% and a cap on local sales taxes at 2%, compared to the current 2.75% limit.

Lawmakers rejected the plan, citing widespread opposition among voters.

In his press conference on Monday, Gov. McWherter said he would ask that all funds raised for education be put in a dedicated trust fund similar to the state's Highway Trust Fund.

"This fund will receive all revenues we earmark for education and make certain the money is spent on nothing but education," he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.