Haslam warns 'easy money' for budget woes gone

Haslam warns 'easy money' for budget woes gone

February 7th, 2011 by Andy Sher in News

Gov. Bill Haslam listens to a question during his first news conference on Wednesday in Nashville. (AP Photo/Mark Humphrey)

NASHVILLE -- Tennessee Gov. Bill Haslam says the "easy money" answers to budget problems have been used up and that dealing with the recession's aftermath and a loss of federal stimulus funds is going to hurt.

"We have to now go back and make those hard decisions, and I think they're even harder than I thought they would be," the Republican governor said last week as he finished four days of public hearings on the state's 2011-12 budget.

The state has "made a lot of cuts and decreased services in a lot of areas already," Haslam said, noting that "when you go cut something, the easy money is first."

Last week, heads of 26 agencies trooped before Haslam, outlining their best efforts to identify additional cuts of 1 percent to 3 percent to plug a $185 million deficit and create room for other needs.

Proposals ranged from laying off state troopers and releasing felons from prison more quickly to slashing community services for the mentally ill and ending spiritual and social counseling for dying Medicaid patients and their families.

The state already has cut $1.5 billion from the budget over three years, and some agencies have lost close to 25 percent of their funding. But about $900 million of those cuts were staved off through use of state reserves or federal stimulus funds, which largely will disappear July 1.

BY THE NUMBERS

Here are some of the proposals to cut state spending up to 3 percent:

TennCare

* $26 million: Cut provider reimbursements another 1.5 percent

* $14.9 million: Cut payments for C-section births

* $ 14.5 million: Stop paying for end-of-life emotional, social and spiritual counseling for patients and families

* $8.4 million: Cut payments to emergency room doctors for non-emergency services

Safety

* $6.5 million: Shut down privately operated Whiteville Correctional Facility

* $6 million: Slash state contracts.

* $5.7 million: Release some felons 60 days earlier if they complete re-entry programs

* $3.3 million: Pay less to local jails that house state prisoners

* $2.4 million: Cut 35 positions in Tennessee Highway Patrol

* $2 million: Cut staff at youth development centers

* $900,000: Eliminate 26 positions at driver license centers

Health

* $1.39 million: Abolish 14 positions, reduce payroll equity

* $1.18 million: Cut out hemophilia program and shutter two primary care clinics

Education

* $375,000: Contract for early intervention visits for disabled children through age 2

* $300,000: Reduce funding to connect schools to the Internet

* $250,000: Cut recurring funding for seven public television programs

Source: State agencies

Haslam must present his budget proposal in March.

Jim White, executive director of the General Assembly's Fiscal Review Committee, said the governor and lawmakers must figure out how much money they will have and what essential services it will buy.

"The result of that process may be government is no longer able to do some things it has done in the past that people have come to assume that government will do," White said.

The state's overall current budget is estimated at $31.3 billion. White's office in December estimated the state general fund, which bankrolls most state services except for transportation, will collect about $8.4 billion in this fiscal year.

Haslam's predecessor, Democrat Phil Bredesen, avoided large cuts to the Basic Education Program funding formula for K-12 schools. Haslam said last week he intends to do the same, which would take about $70 million in additional spending.

But that ups the squeeze on other areas of government.

The mental health department, for example, already has been cut by about 23 percent. Stimulus funds delayed $11.54 million in cuts, but that money is ending. Another 3 percent cut would total $4.6 million, mostly for community mental health and alcohol and drug abuse programs.

Haslam said he has pushed for a "top to bottom review" of what the state does, but acknowledges that can't happen in time for the upcoming budget.

"But I think it is the way [to address problems]. ... It's not just about the dollars. It's about how and what we're doing."

Higher education also has taken hits.

Rich Rhoda, executive director of the Tennessee Higher Education Commission, told Haslam last week that state colleges and universities cut $286.7 million, or 23 percent, since fiscal 2008-09.

Stimulus funds and state efforts that temporarily offset those cuts are going away, he said, and long-term funding trends don't look good.

For example, over 10 years, enrollment at four-year institutions rose 22 percent while state appropriations dropped 33 percent, Rhoda said. Fees and tuition went up 74 percent.

And then there's TennCare, an $8 billion-plus state and federally funded program that provides health care for the poor.

Starting July 1, roughly $1.17 billion in cuts is scheduled to kick in unless hospitals agree to keep and enlarge a hospital assessment fee that draws down matching federal dollars for the program. TennCare officials say that will bring caps on hospital stays and other restrictions on care.

Tennessee Hospital Association President Craig Becker said hospitals will accept raising the present 3.52 percent assessment to about 4 percent. That would raise about $400 million, Becker said, and eliminate previously slated 7 percent cuts in provider reimbursements.

But the TennCare Bureau has proposed another 1.5 percent rate cut and called for an end to funding for counseling for terminally ill TennCare recipients.

Haslam said he's not counting on money from a larger assessment fee.

"If that [assessment fee] doesn't come through, we would either have to cut that much service or come up with some other revenue source which I don't have," Haslam said. "We're not going to have a tax increase this year."

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550.