Ramsey: Worsening shortfalls will deepen budget cuts

NASHVILLE — Warning that Tennessee government’s revenue collections have entered “scary times,” Lt. Gov. Ron Ramsey said Thursday the state’s $1 billion shortfall has increased by another $200 million in the current budget year ending June 30.

The Blountville Republican said that, as a result, more cuts will be needed in the proposed 2009-10 budget, despite the help of federal stimulus dollars.

“We thought it was bad when we came into session,” said Lt. Gov. Ramsey, the Senate speaker, citing conversations with Gov. Phil Bredesen, the state comptroller, treasurer and secretary of state. “We ain’t seen nothing yet.”

State legislators agreed.

“This could be the worst month we’ve had,” said House Speaker Kent Williams, R-Elizabethton. “We may end up another $200 million short in revenue. ... We’re going to have to make more cuts.”

Gov. Bredesen has been hoping federal stimulus dollars will allow Tennessee agencies, especially higher education, to offset the need to make huge cuts in 2009-2010. Officials previously said the administration wants to phase in 12 percent spending cuts over a three-year period.

Lt. Gov. Ramsey questioned that, saying it is “not going to offset it because, if we use the stimulus money, you're using one-time money for recurring expenses. We’ll have to figure out some kind of bridge to get there.”

Because of the deepening revenue shortfalls, “I think some of the cuts are going to have to be accelerated,” he said.

In an e-mail, state Finance Department spokeswoman Lola Potter said, “We don’t have any solid numbers on April yet. That said, we continue to be concerned about the rapid decline in state revenues.”

Administration officials have “emphasized repeatedly the need for departments and agencies to find ways to reduce recurring spending — regardless of the Recovery Act money,” Ms. Potter said.

The State Funding Board will meet today to listen to the latest range of revenue estimates from economists. Members are expected to return next week and adopt revenue estimates for the remainder of the 2009 fiscal year and the 2009-10 budget year.

While other states are using stimulus funds to “just kind of plug holes,” Lt. Gov. Ramsey said, “that is the wrong fiscal thing to do. We need to make sure we are using one-time money for one-time expenses.”

House Finance Committee Chairman Craig Fitzhugh, D-Ripley, agreed that things look bleak. He said the Bredesen 2009-2010 budget already provides for some $200 million to $250 million in “real cuts.” He estimated that another $850 million would be needed in the 2010-2011 fiscal year.

He said he had not heard that state revenues are expected to fall the additional $200 million in the current 2009 budget.

“I don’t disagree with him (Ramsey) that, in the next three or four weeks, we may have to ratchet it (the current budget) down a little more,” Chairman Fitzhugh said.

Rep. Tommie Brown, D-Chattanooga and a Finance Committee member, said she plans to “hold my judgment until I have opportunity to review the funding and their (economists’) predictions.”