State Finance Commissioner Mark Emkes speaks at a forum sponsored by The Associated Press and the Tennessee Press Association on Thursday, Feb. 10, 2011, in Nashville, Tenn. Emkes said Tennessee experienced its best Christmas sales tax season since 2007.

NASHVILLE - State departments and agencies have been ordered to draw up plans to cut their budgets by 5 percent next year and hold off on proposing new spending unless they reduce a like amount in another area.

"The uncertainty of the economy is a concern and suggests that base reductions greater than indicated earlier likely will be necessary in 2012-2013," Finance Commissioner Mark Emkes explained to agency heads in his Aug. 22 letter.

He said that assuming 3 percent growth, a base reduction of 5 percent, or $270 million, could be required to balance the budget next year.

But the Haslam administration is continuing to try to spare areas in education like the state's Basic Education Program funding formula as well as prekindergarten programs, according to the letter, which states these programs are being "held harmless" from reductions in discretionary base spending.

In his letter, Emkes pointed out that departments are already losing $160 million in one-time funding for "core services" and that the 5 percent cuts would come on top of that.

Emkes said he was "kindly requesting" agencies eliminate all positions that have been vacant for longer than a year and cut budgeted recurring grant and professional contract funding scheduled to revert for more than a year.

The move comes on top of another recent request in which state agencies submitted plans detailing how they would cope with up to a 30 percent reduction in federal spending. Gov. Bill Haslam has said he doubts federal spending, which amounts to about 40 percent in the current $30.8 billion budget, would be reduced that much but the state needs to be prepared.

Sen. Eric Stewart, D-Belvidere, said making additional state cuts on top of other reductions "are going to be really tough. I'll tell you got a lot of confidence in Mark Emkes. He's very level-headed. I commend him for jumping out and trying to look at the situation before it arrives."

But Stewart said he worries about the impact of additional state cuts. He noted the Taft Youth Center, a secure facility in Bledsoe County for violent, criminal youths, was slated to lose all of its $11.5 million in state funding under contingency plans submitted by the Department of Children's Services detailing how officials would react to 30 percent federal cuts.

While Gov. Bill Haslam has said he doesn't think federal deficit-reduction plans will result in 30 percent cuts, Stewart sees it as a worrisome indicator of of where the state may look to cut at some point.

"I certainly think as we go through this process and make these tough decisions, we need to be looking long and hard about what the ramifications are and not just look for big pots of money," the senator said.