Tennessee: Bredesen calls stimulus 'very rich package'

Tennessee: Bredesen calls stimulus 'very rich package'

January 30th, 2009 by Andy Sher in Local Regional News

NASHVILLE - The $819 billion federal stimulus package now winding its way through Congress would "substantially" mitigate but not eliminate Tennessee government's need to slash state spending, Gov. Phil Bredesen said Thursday.

Gov. Bredesen called the House-passed bill, which estimates say would provide $3.8 billion to Tennessee over a two-year period, a "very rich package" that far exceeds the $200 million to $400 million he thought the state might see.

"There's no question that this is going to help substantially with the budget issues that we have in the state," Gov. Bredesen told reporters but quickly warned "it's not going to bring us all of the way home" and tough state budget decisions remain.

Gov. Bredesen has been proposing cutting state spending in the 2009-10 state budget by $900 million, a move that could result in as many as 2,000 state employee layoffs.

The governor said the House stimulus package, now being considered by the Senate, could reduce envisioned cuts from nearly 15 percent to some 9 percent - or about $400 million.

His comments came to reporters after he addressed a joint meeting of the Tennessee Higher Education Commission and State Board of Education.

While Gov. Bredesen has proposed largely sparing K-12, higher education would take one of the biggest budget hits - $181.7 million - under the governor's two-tier system of cuts.

But the stimulus could change many cuts: The House bill contains some $613 million for Tennessee highway construction, another $244.6 million in K-12 construction, $265.8 billion for special education and $701 million for Medicaid, according to an estimates by national legislative and governors' organizations.

One category known as "fiscal stabilization," would provide $1.24 billion to Tennessee. According to the National Conference of State Legislatures' Web site, it would let the governor use 39 percent for public safety and other government services including assistance for elementary and secondary education and higher education institutions.

That alone, evidently, could give the governor some $400 million to use, although the governor was vague about how much it would help higher education.

"There is clearly money there for education," Gov. Bredesen said. "There is clearly money for higher education. These cuts to higher education were very severe cuts and certainly it would be a high priority for me to restore a portion of those, all of them if I can."

But the governor maintained that for long-term reasons, higher education must still tighten its belt and eliminate underutilized or duplicative programs and push for more private funding as well as other steps.

Tennessee government cannot continue to fund annual increases and there are limits on what should be done with tuition increases, the governor said.

He later told reporters that lawmakers and state officials shouldn't think the state's budget woes are going away because of the stimulus.

"It would be really crazy of us to take this money and then forget about any other savings because we could find ourselves in two years with the same problem all over again and the federal government isn't there to help us," he warned.

Shelby County Mayor A C Wharton, a Tennessee Higher Education Commission member, agreed and said there is good and bad in the fiscal stimulus package.

"It's good in the sense that it gives us some relief immediately, but it may lull us into a false sense of security," he warned.

Earlier, University of Tennessee at Chattanooga Vice Chancellor Richard Brown backed away from his plan to lobby THEC members Thursday to allow UTC to exceed THEC's proposed 7 percent cap on tuition increases.

"I'm going to end up working through our own (University of Tennessee system) board process on that," Dr. Brown said. "I'll be working with the UT board of trustees, asking for some differentiation if we can for UTC."

Dr. Brown is hoping to offset some of the nearly $13 million in cuts UTC would see under current scenarios.

Going to the UT board is probably the better course, Executive Richard Rhoda said.

"I'm not sure how sympathetic an ear he would have gotten" at the meeting, Dr. Rhoda said.