published Friday, November 16th, 2012

Tennessee, Georgia face steep fiscal fall

NASHVILLE — If the federal government falls off the "fiscal cliff," Tennessee and Georgia will be hard hit because of mandatory spending cuts, according to a study released Tuesday.

The nonpartisan Pew Center on the States says the expiration of federal tax cuts and the automatic spending cuts set to occur in January if President Barack Obama and Congress don't reach agreement will have major consequences for states.

"While states would be affected in different ways, the one clear thing is that almost all states will be affected in some way by the different elements of the fiscal cliff," said Anne Stauffer, project director at Pew Center on the States.

"Fiscal cliff" is the name used for about $400 billion of expiring federal tax cuts and $100 billion of automatic spending cuts that will come absent an agreement.

In a statement, U.S. Sen. Lamar Alexander, R-Tenn., said he is looking forward to "presidential leadership on fixing the debt and to working with the president and congressional leaders to get a result."

He said he and Sen. Michael Bennet, D-Colo., "have given our ideas to the Republican and Democratic Senate leaders and we will work with them and with the president to achieve a result that reduces the debt, reforms taxes, and avoids the fiscal cliff."

According to the Pew Center, the cuts would cost Georgia about 8.5 percent of its revenue, based on 2010 figures. That's the third-highest percentage in the United States. Tennessee would be at No. 5, losing 7.7 percent of revenue.

Some states, however, could see state tax revenue increase as a result of the expiring tax cuts, according to Pew. It was not immediately clear how that would play out in Tennessee and Georgia.

According to Pew, about 18 percent of federal grant dollars flowing to states would be subject to across-the-board cuts. That's the case in Tennessee.

Using calculations from the Federal Funds Information for States, Pew said federal spending on education, nutrition for low-income women and children, public housing and other programs like special education would be impacted.

Tennessee Finance Commissioner Mark Emkes said the state's own calculations show a loss of $85 million in calendar year 2013 in federal grant money. Among the hits is about $20 million for Title I, which helps low-income students. Another $20 million would come out of special education.

"Of course it would be easier for us if it did not occur," Emkes said.

But he noted that the state required agencies last year to sketch out "hypothetical" cuts of 15 to 30 percent, depending on what actions the federal government takes to slash spending.

"We would of course prefer not to lose federal money," Emkes said. "But we are mentally prepared if it goes away. .... We've proven we have what it takes to balance the budget."

He said Tennessee is still trying to get further clarification on the impacts of cuts and tax increases.

In addition to state government, Tennessee would be hit by anticipated cuts to the Oak Ridge National Laboratory and other areas. Pew estimates federal spending on procurement, salaries and wages accounted for 4.9 percent of Tennessee's gross domestic product in 2010.

about Andy Sher...

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, ...

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