Southeast Tennessee lawmakers say most state spending programs will be on the chopping block as Gov. Phil Bredesen and the General Assembly begin making "hard decisions" on how to slash up to $900 million in state spending.
With Gov. Bredesen scheduled to present his budget to lawmakers on Feb. 9, lawmakers are bracing for what Sen. Dewayne Bunch, R-Cleveland, predicted will "be a difficult, painful budget process."
His comments came Monday during a roundtable discussion by Chattanooga area lawmakers with Times Free Press reporters and editors on issues and challenges in the 106th General Assembly.
Faced with the worst national recession in years and plummeting state revenues, Gov. Bredesen has warned he will present a "very painful" budget with cuts of up to 15 percent in most areas, as well as up to 2,000 employee layoffs.
The governor said he hopes to avoid cuts in the Basic Education Program funding formula for K-12 education.
Local lawmakers said they hope to avoid as much pain as possible as the budget ax swings.
"Naturally, whenever you cut, somebody's going to be hurt," said Rep. Vince Dean, R-East Ridge. "But it's my hope that we cut where it hurts the least and we continue to provide what we're charged with providing."
Lawmakers said the dire budget situation provides an opportunity to rethink priorities and how the state conducts business.
"It's going to be an opportunity to look at what we're doing in those areas and say, 'Is this really what we need to be doing? Is there a better way to do this?'" said Sen. Bo Watson, R-Hixson, who sits on the Senate Finance Committee, where many cuts will be determined.
Sen. Andy Berke, D-Chattanooga, likewise sought a silver lining amid the state's dark budget clouds, noting "there is opportunity in crisis, and we are in crisis right now."
"We need to make sure that we cut where we need to cut," he said. "We also need to make sure we get the most out of government and get the most out of our dollars. If we don't do that, we are wasting our opportunity."
Rep. Kevin Brooks, R-Cleveland, said lawmakers have their work before them in balancing competing needs. Lawmakers have a responsibility to take an "equitable look across the board" and be fair, he said.
While legislators said they hope to take a bipartisan approach, some potential clashes loom ahead based on discussions by lawmakers.
Sen. Bunch, for example, agreed K-12 funding should be protected because it is constitutionally mandated. But he suggested general fund appropriations for non-required programs such as Democrat Bredesen's cherished prekindergarten program could be cut. Between federal Title I dollars for at-risk children and lottery funding for pre-k, "you already have more than enough money," Sen. Bunch said.
Republicans generally have opposed Gov. Bredesen's pre-k expansions, but the governor has said he has no intentions of cutting pre-k. The state spends about $80 million to provide pre-k to more than 18,000 children in 934 classrooms.
Rep. JoAnne Favors, D-Chattanooga, who did not attend the Times Free Press roundtable because of commitments in Nashville, later said pre-k should not be cut. "That's going to further erode those children's ability to receive a quality education," she said.
She also said the governor's plans to cut up to 2,000 state workers worries her. Some cuts are "unavoidable," Rep. Favors said, but she said lawmakers need to be "looking at other ways to reduce government spending" such as reduced work hours.
Negotiating differences such as pre-k spending could prove challenging in a General Assembly where Republicans control the Senate by a 19-14 margin and have a 50-49 margin in the House, where a Republican speaker was elected in an upset by his vote and those of the 49 Democrats.
"The House is going to have a challenging time," observed Sen. Watson.
Another bone of contention is Gov. Bredesen's proposal to shut what he calls a "fairly outrageous" tax loophole for family-owned noncorporate entities. Senate Republicans blocked the measure last year and then-House Majority Leader Gary Odom, D-Nashville, refused to push it.
Rep. Mike Bell, R-Riceville, said the governor last year "attempted to stampede" it through the legislature.
"This year it's on our radars from the start, and I don't think there'll be any stampeding," he said, noting that the governor's proposal would generate a $25 million to $40 million "flat-out tax increase."
Rep. Gerald McCormick, R-Chattanooga, cited the case of a Chattanooga family with a business set up as a family entity. The family intends to renovate an aging downtown building it recently bought, he said.
If the law were changed, "their taxes would go up drastically and it would make it less likely they would follow through with the project," Rep. McCormick said.
Sen. Berke, however, said, "It's certainly something we'll have to look at ... I've heard lots of ideas about how you decrease expenditures. Everything's on the table."
On another front, Rep. McCormick said stagnant revenues may force the state to "slow down on some infrastructure programs, on roads." However, he pointedly excluded "any new Volkswagen things we need to get done - of course."
Volkswagen last summer announced plans to build a $1 billion auto assembly plant employing about 2,000 workers at the Enterprise South industrial park in Chattanooga. The state has committed to provide about $229 million for added infrastructure, training and marketing.