Tennessee: Governor hopes stimulus holds tuition down

Tennessee: Governor hopes stimulus holds tuition down

March 10th, 2009 by Andy Sher in Local Regional News

NASHVILLE - Gov. Phil Bredesen said Monday that some of the $4.5 billion in federal stimulus funds heading to Tennessee should eliminate the immediate need for double-digit tuition hikes in state higher education.

But on another front, the governor's decision last week to accept $141 million in federal stimulus money to expand unemployment benefits already is sparking a fight with some Republican lawmakers.

While higher education and other departments must make substantial reductions in spending over the next two to three years, Gov. Bredesen said, the stimulus will "buy us some time to do it intelligently."

The state could use close to $500 million of the stimulus to help higher education over the next two years, the administration says.

Some trustees on the University of Tennessee system board say that, given the economic recession and state budget cuts, UT campuses can no longer afford being a national "best value" in education and should consider double-digit tuition increases.

"I have no idea what they have in mind, but I'd be very unhappy if, with all this stuff happening, somebody put double-digit tuition increases in place," the governor told reporters. "Higher education has definitely dodged a bullet over the short term on this one.

"You can make cuts a lot more painlessly and a lot smarter if you've got two and a half years to do it than you can if you've got 90 days," he said.

The state has been looking at cutting at least $900 million in spending due to recession-hammered tax collections. But the stimulus funds temporarily will alleviate many of the most dire cuts for now.

With regard to federal unemployment funds, Gov. Bredesen said the state decided to accept the $141 million in stimulus funds to improve unemployment benefits because "we've been able to determine that we can comfortably pay for that with that money for at least six years at the current unemployment rate."

The $141 million could last as long as nine years with unemployment rates certain to come down, he said. Unemployment in Tennessee hit 8.6 percent in January and was up to 7.4 percent in Hamilton County.

He said the state is looking at having to make adjustments of about $30 million a year to qualify for the additional federal funds but emphasized no additional money would be needed until the stimulus funds ran out.

The $141 million is a separate issue from the state's immediate need to hike taxes on businesses to keep the state's unemployment insurance trust fund from going bust in coming months, Gov. Bredesen said.

The state has raced through about $300 million in the trust's reserve funds in recent months and is expected to go through the remaining $300 million before year's end.

The decision to accept the $141 million will require changes in unemployment benefits requiring legislative approval. It is already drawing fire from some Republican lawmakers.

"This decision will surely lead to a tax increase in Tennessee," said Rep. Brian Kelsey, R-Germantown, in a statement.

He charged that "our state will blow through the $141 million from the federal government in one month, and Tennesseans will be stuck paying for increased benefits for years."

Rep. Richard Floyd, R-Chattanooga, agreed, saying, the new funds are "one-time money" and the state would be required to increase some benefits.

"After two years, you've got to continue that at the same level, which would mean, at some point, you raise taxes," he said.

House Speaker Kent Williams, R-Elizabethton, said he is open to accepting the funds.

"All I know is we've got people out there who've lost their jobs and are hurting," he said.