Debt-deal cutbacks could force 5,000 more layoffs in Tennessee

Debt-deal cutbacks could force 5,000 more layoffs in Tennessee

August 31st, 2011 by Andy Sher in News

Tennessee Finance Commissioner Mark Emkes

Tennessee Finance Commissioner Mark Emkes

NASHVILLE - The Haslam administration has released worst-case scenario figures showing how federal budget reductions of up to 30 percent would force Tennessee government to slash another 5,132 state jobs.

The figures, released Tuesday, also say such cuts would slice as much as $4.5 billion out of the state's $30.8 billion budget.

The impact of such losses would be cuts to TennCare programs and health care provider payments, reductions in school nutrition programs for poorer students, less aid for disabled children and longer lines for unemployed workers seeking state help, the administration said.

Departments were ordered to prepare outlines for federal cuts of 15 percent and 30 percent after executives from national bond rating agencies raised questions about how Tennessee, which is heavily dependent on federal dollars, would react to U.S. budget cuts.

The recently signed federal Budget Control Act raised the debt ceiling but cuts federal spending by about $2.5 trillion over the next decade.

Earlier this month, state Finance Commissioner Mark Emkes said state officials don't "expect reductions to be this drastic, but believe it is responsible to prepare."

"We expect reductions in federal funding will be targeted to specific programs, but this exercise helps departments prepare to make reductions," said Lola Potter, a spokeswoman for Emkes.

While the state may not see federal reductions of even 15 percent across the board, the figures released Tuesday show special impacts on programs heavily dependent on federal funding.

TennCare, which receives about 65 percent of its funding from the federal government, would suffer most under reductions, according to a department-by-department breakdown.

The state and federally funded health insurance program for low-income and disabled people would see $2.25 billion in total cuts under the worst-case scenario, resulting in slashed provider reimbursements and such measures as ending some optional benefits and limiting others.

Public K-12 education would see $276 million in cuts under worst-case scenarios. School nutrition programs designed to provide food for poor children would be cut $91.8 million, and a program that provides supplemental support and services to children with disabilities would see a $60.4 million reduction.

The State Labor and Workforce Development Department's Division of Employment Security would suffer major cuts and an ensuing loss of services. A 30 percent cut would take $12.59 million, forcing the Workforce Employer Outreach Committee to shutter services including 36 career centers, "dramatically affecting levels of services provided to job seekers and employers," budget documents warn.

Workers who lose their jobs due to increased imports or shifts in production to foreign countries would no longer receive job-retraining services under the cuts.

"Unemployment rate information will take more time to deliver," the summary says. "The amount of services delivered to veterans and employers will be reduced. Individuals' ability to become independent of public assistance through the Food Stamp program will be greatly inhibited."

The state Department of Transportation, which is responsible for building and maintaining state roads, would lose nearly $274 million. Higher education, which already has seen substantial cuts, would experience another $60 million cut under a 30 percent scenario.

Speaking to reporters last week, Haslam cautioned that the figures released this week are "in the unlikely event that the federal government cuts that much. We don't think they will, but we think it's smart of us to say what happens if they do."