Bredesen: Budget cuts get ‘bloody’

NASHVILLE — Gov. Phil Bredesen on Wednesday began ordering department heads to cut their operating budgets by as much as 15 percent, and he conceded services will suffer as he grapples with a budget shortfall expected to hit $800 million.

“As I’ve told everybody else that’s here, it will be bloody,” Gov. Bredesen said as he conducted a third day of budget hearings. “You can’t do this by trimming over here and taking a little from there.”

Faced with a deteriorating national economy and state slumping revenues, Gov. Bredesen this summer directed departments cut their budgets by 3 percent. But as the situation continued to grow worse, he recently increased the cuts first to 10 percent and now to as much as 15 percent, although he said he hopes to spare state funding for local schools.

Most agency chiefs came in to the budget hearings prepared to cut 3 percent.

The governor was quick to jump on Mental Health and Developmental Disabilities Commissioner Virginia Trotter Betts as she came before him and sought funding for a $27.8 million safety net to protect some 900 to 1,200 mentally ill Tennesseans who will be bounced off TennCare beginning next week.

“I don’t have $27.8 million to give,” the governor said. “You can just forget about that. When you get through with this, you’re probably going to have 15 percent less.”

Gov. Bredesen told Commissioner Betts she needs to cut $20 million from the estimated $168 million in unrestricted state funding she now gets. When she raised concerns about losing matching federal funds, the governor showed little sympathy.

“If I got a good federal match to buy a new Ferrari or something like that, I still might not buy a new Ferrari because I don’t want to put my part into it,” the governor said.

Asked later where she will cut $20 million, Commissioner Betts pointed to reducing community services and slashing the number of beds in the state’s five mental hospitals, such as Moccasin Bend Mental Health Institute.

“Those are the only two ways we have to cut,” she said.

Gov. Bredesen told Mental Retardation Services Commissioner Steve Norris to look at more ways to cut reimbursements to community providers who already are complaining about 1.8 percent cuts.

He said cutting the Department of Children’s Services is difficult, but he told Commissioner Viola Miller that the state should consider making counties whose judges indiscriminately order children into state custody to begin sharing in the costs.

Commissioner Miller said the department, which may have to cut some $33 million to $40 million from its budget, is helped by having planned earlier this year for $12 million in Bush administration cuts that Congress later restored.

Labor & Workforce Development Commissioner James Neeley warned that rising unemployment rates are putting a strain on the state’s unemployment trust fund, increasing the likelihood that the state will have to adjust tax rates for employers.

“I really want to get on top of those,” Gov. Bredesen said, citing concerns about a fund for previously injured workers as well.

Commissioner Neeley later said the unemployment fund has some $400 million to $500 million but is spending up to $34 million monthly as the economy barrels toward an expected deep recession. The state is hoping Tennessee could see as much as $150 million if the federal government provides new funding.

Earlier in the day, Gov. Bredesen told Economic and Community Development Commissioner Matt Kisber that he wants a “breather” soon on Tennessee’s efforts to lure mega-businesses comparable to the $1 billion Volkswagen plant in Chattanooga.

“We’ve got a couple of other major projects out there,” Gov. Bredesen said. “If we can bring those home, it will have been a wonderful year and time to start absorbing and paying for what we’ve been able to do and getting the jobs on line.”

He said the state will meet its commitments to Volkswagen, attempt to lure VW suppliers and also deal with the two unnamed major projects, at least one of which is in Middle Tennessee.