Gov. Bill Haslam: Next year's budget will be toughest yet

Gov. Bill Haslam: Next year's budget will be toughest yet

November 12th, 2013 by Andy Sher in Local - Breaking News

Bill Haslam

Bill Haslam

Photo by Associated Press /Times Free Press.

NASHVILLE - Gov. Bill Haslam says he expects next year's state budget will be his toughest yet given increased demands in K-12 education and TennCare coupled with revenues coming in below estimates.

"I think this will actually be our hardest budget," the Republican governor told reporters after he kicked off a morning of open budget hearings with presentations with the Departments of Education and Health.

Haslam said his first budget three years ago "was hard because we had some federal [stimulus] dollars coming out, but we sort of knew what the path looked like.

"This will be the first time we don't have our revenues exceeding our forecasts," the governor added. "The reason that's an issue is you not only lose it for the existing year but your base is smaller going into the next year so there's kind of a recurring efffect to that."

His administration has told state agencies to prepare for up to 5 percent cuts, although he said that won't be across the board.

Today, Haslam heard from Education Commissioner Kevin Huffman who outlined a $57.4 million state-funded increase, most of which would go to required boosts in the state's Basic Education Program funding formula for public K-12 schools.

At the same time, Haslam has pledged to make Tennessee teachers' salaries the fastest-growing in the nation in the next five years. Huffman put no figure on that.

Overall, education under the 5 percent cut scenario would see its estimated current budget of $5.71 billion fall to $5.45 billion, much of it in the form of federal dollars due to the end of a $501 million federal Race to the Top education grant, which by July 1 will largely have run its course.

Meanwhile, Health Commissioner John Dreyzehner outlined $3.27 million in potential cuts to his department with reductions or eliminations of contracts with federally qualified health centers and faith-based centers accounting for a recurring amount of $2.19 million.

But Dreyzehner said available one-time money should be able to carry the contracts forward for two years as officials assess the impact of the federal Affordable Care Act on indigent health care.

The department is requesting $574 million in funding, down from an estimated 593 million this year.

Meanwhile, Haslam is keeping his eye on the impacts of the Affordable Care Act on TennCare, the state's Medicaid program. Haslam is still struggling over whether to pursue the Medicaid expansion to adults making up to 138 percent of the federal poverty level, which the federal law envisions.

But Haslam noted that even without the expansion, TennCare will grow due to increases in rolls from already eligible but not enrolled Tennesseans.

TennCare Bureau figures project 53,200 people will come on to the program next year at a cost of $137.5 million.

Haslam said he expects up to 70 percent of next year's budget increases will be driven by TennCare.

The governor has so far not agreed to the Medicaid expansion, blaming the issue on trying to find a balance between fellow Republicans in the Legislature and the Obama administration.

But he struck a new note today, saying, "I know there's a lot of questions about why are you so hesitant to expand. Well, one of the reasons is that Tennessee has both a history of Medicaid getting over-expanded and right now we can look at a real issue and say how much of our budget is driven by Medicaid. It has and will continue to crowd out the opportunity to do so many other things."

The federal government is paying the full load of the expansion for new categories of eligible people for the first three years, decreasing that gradually to 90 percent support in 2019.