NASHVILLE — Tennessee is among at least 16 states attacking revenue shortfalls through cost-cutting steps that include voluntary worker buyouts, layoffs, pay freezes or other measures affecting state employees, according to experts.
In some respects, Gov. Phil Bredesen appears to be moving more aggressively than many of his counterparts in trimming employee costs. For instance, he implemented a voluntary employee buyout program that he has warned likely will be followed by layoffs early next year.
But the number of states utilizing measures such as employee layoffs probably will grow in coming months if the nation’s economy and state revenues continue stumbling, experts said.
WHAT STATES HAVE DONE
Tennessee — offered voluntary buyouts to about 2,220 state employees
Georgia — cut 6 percent from state agency budgets
Florida — eliminated 2,290 positions
California — cut 22,000 contracted, temporary and part-time workers
New Jersey — offered early retirement packages to 3,860 state employees
“Layoffs are sort of your last resort,” said Nick Johnson, director of the State Fiscal Program at the Center on Budget and Policy Priorities, a liberal Washington, D.C., research institution. “It does look like fiscal conditions in states are going to get worse before they get better. And if that’s the case, I would think that, increasingly, the state agencies would turn to layoffs as a way of staying within their budgets.”
Mr. Johnson also noted that a number of states have increased taxes.
Arturo Perez, a fiscal expert with the National Conference of State Legislatures, said more than 30 states face revenue shortfalls of about $40 billion as a result of problems associated with the housing bubble, fuel prices and economic slowdown. States are taking a variety of measures to deal with the problem, including some aimed at state employees, he said.
In a recently released National Conference of State Legislatures report in which states were surveyed in May and June, 15 states, including Tennessee, were taking actions affecting employees in areas ranging from layoffs to pay freezes.
Mr. Perez said at the time that Tennessee was among only four states that had “indicated they have targeted employee layoffs for purposes of balancing the budget.” Mr. Perez said he included Tennessee’s buyout program in the layoff category because it was so novel.
Since the survey, other states are beginning to move. Just last week, for example, California Gov. Arnold Schwarzenegger ordered the elimination of 10,300 part time, seasonal and occasional employees due to a $15 billion budget gap, according to the Los Angeles Times.
In Florida, the state eliminated about 2,290 positions on July 1 for a savings of about $125.9 million. Some 200 of those were layoffs, said Linda McDonald, deputy communications director for Florida’s Department of Management Services.
Georgia officials announced the state will begin cutting agencies’ budgets by 6 percent starting immediately. Moreover, Bert Brantley, a spokesman for Gov. Sonny Perdue, said state employee pay raises planned for January are being suspended.
Mr. Brantley said department heads could recommend employee layoffs, but all recommendations would be forwarded to the governor. A decision would have to be made about what would be included in Gov. Perdue’s amended 2009 budget recommendations to lawmakers next year, he said.
Tennessee’s employee buyout program ended Tuesday with 2,130 applicants — short of the estimated 2,200 to 2,300 that officials hoped would apply out of 12,000 workers targeted with offers. Employees were offered cash and education incentives.
More applications are expected to come by mail, but officials said some job categories have more applicants than the state wants, while others are undersubscribed. Officials won’t be releasing totals of those accepted for buyouts until Aug. 11.
Speaking to reporters earlier this week, Gov. Bredesen said that, despite not meeting the target, he thought the voluntary buyout offer was worthwhile.
“I think it was a very good way to address a difficult issue in a way that was respectful of the employees,” he said. “It has not gone as well as I’d hoped originally, but we’re treading new ground here.”
But he warned that layoffs remain the “most likely alternative” to help reach the $64 million goal for employee staffing cuts.
Employee reductions are among some $468 million in cuts the state was forced to make to the governor’s original budget. The budget also cuts areas such as higher education and scaled backed the size of anticipated increases in areas such as k-12 education.
Tennessee State Employees Association officials, who often have criticized aspects of the voluntary buyout proposal, struck a more conciliatory tone Wednesday. But association President Zoyle Jones said in a statement the group “still believes that layoffs are not necessary.” He called on the governor to target buyout offers to employees with 30 years or more of service, a move Gov. Bredesen previously rejected.
Only two other states in the National Conference of State Legislatures survey — New Jersey and Maine — took as many employee-related steps as Tennessee at the time of the survey. New Jersey offered an early retirement package that, like Tennessee’s voluntary buyouts, has fallen short of expectations.
Other steps taken by Tennessee include the elimination of a proposed $30 million pay raise for state employees. Employees saw their health insurance co-payments and out-of-pocket expenses go up, although they were given a $400 one-time stipend. The state also implemented a hiring freeze.
Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...