Tennessee budget balancing battle ahead, governor Haslam warns

Tennessee budget balancing battle ahead, governor Haslam warns

November 2nd, 2011 by Andy Sher in News

Gov. Haslam

NASHVILLE - Gov. Bill Haslam today kicks off the first in a series of public hearings on the upcoming 2012-13 state budget, which is expected to provide "tough" challenges to the administration, state lawmakers and some Tennesseans.

Appearing in a recent online preview of hearings with state Finance Commissioner Mark Emkes, Haslam discussed some of the issues state government faces as it continues to struggle with the aftermath of the Great Recession.

Tax revenues continue to rebound, with Haslam saying the state will have $300 million in new money. But the governor said the state faces an estimated $500 million "in new costs that we know, whether it be additional TennCare costs or pension fund, etc."

Emkes estimated inflationary growth in TennCare alone is expected to be about $100 million. In addition, $160 million in one-time money for essential core services in areas such as health is disappearing.

Then there's $82 million the federal government owes the state for TennCare but cannot repay unless Congress authorizes it -- and that doesn't include what will happen if Congress approves additional federal budget cuts.

"It'll be a tough budget year, and this [public budget hearings] is part of the process in making the necessary preparations," Haslam spokesman David Smith said.

Efforts to determine price tags on areas the state intends to fund were unsuccessful Tuesday.

"It's a little too soon to break the numbers down any further," Emkes spokeswoman Lola Potter said.

"We're heading into the holiday retail season, and a lot could happen between now and when the governor delivers his budget to the Legislature ... making it even harder to lay out more specific numbers," she said.

In August, Emkes ordered state departments and agencies to be ready to draw up plans to cut their budgets by up to 5 percent next year and hold off on new spending unless they reduce the same amount in another area.

One area that will demand more money is the state's Basic Education Program funding formula for K-12 education. Haslam -- like his predecessor Phil Bredesen -- has sought to shield the state's K-12 and pre-kindergarten spending from the worst of the recession.

According to the General Assembly's Fiscal Review Committee, the $30.8 billion lawmakers approved last spring was a $1.2 billion decrease, or 3.8 percent, from fiscal year 2011, which ended June 30. The drop came from the loss of federal stimulus funds while the state's portion of the budget actually increased.

The first public hearing -- a process initiated by Bredesen -- is set for today in Memphis, the first time such hearings have been held outside Nashville. The hearing will be streamed over the Internet beginning at 2:30 p.m. EDT at www.tennessee.gov.

Another hearing is planned in Knoxville while others are set for the state Capitol.

"I think it's incumbent upon us to take the process to them this way but also explain as much as possible," Haslam said.