NASHVILLE - Gov. Phil Bredesen called on state lawmakers Wednesday to lay off 717 state employees and abolish 656 vacant positions.
The cuts would come in the 2009-2010 fiscal year that begins July 1.
State Finance Commissioner Dave Goetz told Senate Finance Committee members the layoffs could save $30 million of the estimated $241 million outlined in the latest spending reductions for the FY 2010 budget lawmakers are trying to complete.
"We've kind of done everything else we know how to do," Mr. Goetz told reporters. "We wouldn't be doing this if we had any other alternatives. So ... it leaves us in a pretty tough spot."
The 1,373 employees and positions slated for cuts amount to almost 3.2 percent of the state's 43,000 employees.
Some lawmakers were taken aback by the magnitude of cuts in services.
"It's a sad day; it's a tough day in Tennessee," said Rep. Kevin Brooks, R-Cleveland. "I don't like what I see on the first rounds of cuts. I don't like to cut kids (services). I don't like to cut mental health."
Rep. Tommie Brown, D-Chattanooga, said the issue boils down to "how do we protect the most vulnerable citizens we have in this environment?"
Details of cuts were presented in a Bredesen administration budget amendment that accounts for additional revenue shortfalls that have arisen since the fiscal year 2010 budget was presented in March. An earlier draft amendment said as many as 1,051 employees might be cut.
The state's Mental Retardation Services Division and the Department of Mental Health and Developmental Disabilities are the hardest-hit agencies, with a combined 552 existing positions slated for elimination over the course of fiscal year 2010.
"What we're proposing to do really is transfer more services to the community level from the institution level," Mr. Goetz said. "This is the same kind of system other states operate. We believe we can also do that and do it more effectively."
In response to previously stated concerns, the governor is restoring $17.6 million, amounting to 361 employees, in the Department of Children's Services.
Another $10 million would go toward maintaining a "safety net" for poorer, seriously mentally ill Tennesseans who otherwise might fall through the cracks.
But major employee layoffs and/or bed reductions still are scheduled at the state's five mental institutes.
For example, Moccasin Bend Mental Health Institute in Chattanooga would see 41 layoffs and the abolishment of 15 vacant positions, or 5.7 percent of the 717 filled positions being eliminated statewide.
Under the plan, the state's Rainy Day Fund would decrease by $180 million to help close fiscal year 2008-2009, which ends June 30. It would decrease by another $50 million next year, bringing the fund down to $520 million.
TennCare reserves, now at $474 million, would dip to $347 million in the current fiscal year and $341 million in fiscal year 2010.
The administration amendment calls for offsetting the additional spending in children's services and mental health with $38 million in new funds, the bulk of which - $21 million - would come by allowing the state instead of county clerks to collect business gross receipts taxes.
Another $2 million comes from applying sales taxes to cable boxes, and another provision would boost the tax that businesses pay for long distance lines from 7.25 percent to 9.25 percent - the same level as residential users.
House Democratic Caucus Chairman Mike Turner of Nashville said it will be "tough" to go beyond what the governor has recommended.
"The Democrats don't want to hurt anybody just by nature, but we understand it's a tough time," he said. "Republicans don't want to vote for any revenues, so we're in kind of a jam."
Lt. Gov. Ron Ramsey, R-Blountville, the Senate speaker, said he wants to see what Democrats propose. He said the state "can't be like the federal government. We have to balance this budget and, when you squeeze somewhere, it pops out somewhere else."