NASHVILLE — Gov. Phil Bredesen said Wednesday he may cut another $400 million to $500 million from his proposed 2008/2009 budget as revenue projections continue to fall.

“You don’t do that without some pain,” the governor said. “I’m going to have to just do some sail trimming and maybe tossing some baggage overboard here to keep the ship afloat.”

Citing current year shortfalls, University of Tennessee economist William Fox recently “removed another $130 million from next year for us to look at — so I got some challenges, there’s no question about it,” Gov. Bredesen said.

Like many states, Tennessee is grappling with revenue shortfalls resulting from a national economy battered by the subprime mortgage collapse, rising fuel prices and an economic slowdown. Current-year general fund revenues for the state are about $275.8 million below estimates.

In outlining his budget, the governor accounted for up to $180 million in losses, Finance Commissioner Dave Goetz said. But now the state is looking at making another $385 million in cuts to the governor’s proposed 2008/2009 budget, Commissioner Goetz said.

Administration officials already have said they are looking at trimming or eliminating proposed pay increases for state employees, higher-education staff and teachers.

And Gov. Bredesen acknowledged Wednesday that he is faced with paring down his proposed $25 million to expand pre-kindergarten programs.

“Given the depth of some of the other cuts we’re going to have to make, to keep $25 million in there would just be asking for the Legislature to take some of it and put it somewhere else,” the governor said.

But when it comes to k-12 and pre-k overall, the governor said he intends to fight to “keep everybody focused on the fact that education is the thing we cannot afford to cut. We’ve got to keep on growing it. We’ve got to keep investing money in it.”

Sen. Bo Watson, R-Hixson, a Senate Finance Committee member, called the latest economic news “disturbing.”

“It just means it makes our financial job a little more challenging,” said Sen. Watson, noting “my first priority remains k-12.”

The Hamilton County Schools system now has 44 pre-kindergarten classrooms, and the district has applied for 11 more classrooms for the 2008-2009 school year, officials said.

Sen. Watson said he is concerned the budget cuts could cause problems with implementing ambitious new initiatives such as Gov. Bredesen’s push for community-based alternatives to nursing home care.

“My concern is that we may not fund it adequately right off the bat, and then we’ll get in the habit (of not funding it) as we have with so many other great ideas,” he said.

The State Funding Board meets next week to set the latest revenue-growth estimates. Commissioner Goetz predicted that by May 2 the administration will have a “summary of how we would propose to keep the budget in balance.”

“We are looking at every single improvement that we had proposed for this next year to see what absolutely has to be done,” the commissioner said. “And then also we’ll be asking agencies to make adjustments to their budgets.”

The state will be “looking at several existing programs, different places where we can go to trim recurring dollars and hopefully have the least impact on delivery of services, but we’ll have to make cuts in existing programs,” Commissioner Goetz said.

While the state will be looking at eliminating positions, “I don’t think we’re necessarily looking at layoffs at this point, but we also don’t know how deep this hole is going to go,” he said.

The administration also is grappling with a separate issue regarding a Bush administration rule change expected to cost the state $73 million in federal funding for the Tennessee Department of Children’s Services. That could spur cuts of as many as 160 workers, officials said.

Gov. Bredesen’s comments about “tossing some baggage” drew fire from Tennessee Republican Party spokeswoman Robin Smith, who sought to link cuts to an underground entertainment complex at the governor’s residence.

“Cuts that will impact average Tennesseans are deemed ‘baggage,’ while a ballroom for the elite is obviously prioritized as precious cargo,” Mrs. Smith said in a statement.

Administration spokeswoman Lola Potter said the phrase “was an analogy. He (Bredesen) wasn’t calling anything in state government ‘baggage.’”

Ms. Potter said the complex itself is privately funded. A parking roundabout and entry from the existing residence to the new facility will be publicly funded.

Staff writer Kelli Gauthier contributed to this story.

Comments