Gerlad McCormick

The “painful action” that Tennessee Gov. Phil Bredesen said state officials may have to take to stem a possible $800 million budget shortfall shouldn’t include a tax increase, Chattanooga-area lawmakers said.

“A tax increase, at this point, is off the table,” said state Sen. Andy Berke, D-Chattanooga. “These are dire times for the people.”

State Rep. Gerald McCormick, R-Chattanooga, and state Sen. Bo Watson, R-Hixson, agreed that a tax increase wouldn’t be a workable solution to the state’s budget troubles.

Gov. Bredesen and the General Assembly must take a close look to identify priorities and find places to cut spending, Sen. Berke said.

“The painful action is not going to just be in one place,” he said.

One of the places that lawmakers may have to look is in school funding, Rep. McCormick said. For the second year in a row, lawmakers may not be able to fund fully the state’s Basic Education program, he said.

“We’re going to have to back off on some commitments as far as the BEP funding,” he said. “I know we were hoping this year to increase the funding to our school systems.”

The 2007 BEP 2.0 reform, expected to be phased in over three years, was estimated to cost $517 million and partially was funded in its first year with about $290 million. Gov. Bredesen had said he hoped to add another $86.5 million this year, but the budget crisis wrecked that plan.

Rep. McCormick also said the state’s financial woes may reach a point at which the state will have to lay off employees.

Earlier this year, the state offered buyouts to about 12,000 state employees. About 1,500 employees ended up taking the buyouts, though Gov. Bredesen was hoping for more.

Rep. McCormick also said, as Gov. Bredesen has, that lawmakers must dip into the state’s $750 million rainy day fund to pay for one-time needs.

Sen. Watson said he would prefer not to dip into state-shared sales tax funds reserved for local governments, however.

“The legislators will work very hard to protect that for local governments,” he said.

In 2003, lawmakers reduced state-shared tax distributions to cities and counties, but they restored that funding in 2005 and 2006.