The James P. Mapp Building houses state offices on M.L. King. Boulevard.NASHVILLE -- Gov. Bill Haslam's proposed $32.7 billion budget for 2014 calls for a 500-bed prison expansion in Bledsoe County, tax relief pegged at $41.8 million, money for schools and universities and continued reductions in Tennessee government's work force.
At the same time, Haslam, a Republican, wants to spend $577 million on capital construction, repair and maintenance for dozens of state-owned buildings across Tennessee.
But none of the money will be spent on two major state-owned buildings in Chattanooga.
That's because Haslam is going along with recommendations to close and sell the seven-story Chattanooga State Office Building on McCallie Avenue and the nearby James R. Mapp Building.
Calling the buildings too inefficient and costly to maintain or rehabilitate, administration officials say they plan to relocate hundreds of employees to new, leased private space in or near downtown if possible.
"We will move out of the buildings and sell those," General Services Commissioner Steve Cates said. "We'll start to see advertisements for space in Chattanooga ... pretty soon. We've been working on that for the past month."
Haslam's overall spending plan is built on $14.9 billion, a 5.5 percent increase over last year. Federal and other funds make up the remainder.
The annual spending plan, which state lawmakers will spend next month poring over, includes the hiring of 286 employees. Sixty-two will be in the Department of Children's Services, rocked by revelations of the deaths of children in its custody, including the discovery of nine more deaths just last week.
But at the same time, Haslam proposes cutting 588 positions, many of them filled. The Department of Intellectual Disabilities and the Agriculture Department are among agencies in store for reductions.
State employees, teachers and higher education employees will see a 1.5 percent pay increase.
Haslam's spending plan increases spending for the state's K-12 Basic Education Program funding formula for local school operations by $43.2 million as well as another $33.7 million for maintenance and construction.
The governor is also investing $51 million in one-time money for local schools to help them pay for technology upgrades.
Citing progress in K-12, Haslam said the "time is right to include post-secondary education in our focus." He noted public colleges and universities have suffered over the last 30 years as a result of Medicaid's needs. The jointly funded, federal-state health insurance program provides health care to low-income and needy people.
His budget provides $35.5 million, the amount sought by higher education officials.
For TennCare, the state's version of Medicaid, the governor's budget provides $277.7 million in new money, some of it going to fund impacts of the federal Affordable Care Act. Those increases, administration officials said, will occur regardless of whether Tennessee goes along with a Medicaid expansion envisioned in the law.
As expected, Haslam is cutting the state's sales tax on groceries by another quarter penny, bringing it down to 5 percent. At the same time he's continuing to phase out the state's inheritance tax, raising the exemption on estates subject to the levy from $1.5 million to $2 million with a resulting $18.7 million in revenue.
Moreover, Haslam is chipping away at the Hall Income Tax on interest and dividends at a cost of $1.5 million to the state.
But while taxes are going down for some, they will be going up for Tennesseans purchasing books, music and other goods from Internet retail giant Amazon. Under an agreement with the company struck last year, Amazon beginning Jan. 1, 2014, will be collecting sales taxes on items it sells to state residents.
The state anticipates new revenues of $17.6 million in the second half of the fiscal year from company sales in Tennessee, where Amazon has three massive warehouses, including one each in Hamilton and Bradley counties.
Haslam also is calling on boosting the state's Rainy Day fund by another $100 million, raising the emergency fund's level, raising its level to some $457 million.
Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550.