NASHVILLE - Gov. Phil Bredesen on Monday proposed a "very difficult" 2010-11 budget he said slashes state spending by nearly $400 million, cuts hundreds of state jobs but makes "judicious" use of reserves to stave off even harsher actions.
"I believe it is a commonsense family budget in a very difficult time, and I hope you will consider and enact it promptly," the Democrat said as he presented the $28.41 billion spending plan during his eighth and last State of the State address to the General Assembly.
The plan continues state efforts to address lagging revenue and other recession-related problems. Overall Tennessee spending, which includes federal funds, would decrease 5.1 percent. The state-funded portion of the budget would rise from $12.2 billion to $12.44 billion, a 1.9 percent increase.
The governor is proposing making $394 million in state spending reductions accompanied by federal spending cuts of $154.1 million, state officials said. TennCare bears the brunt of much of the cuts - $201 million.
But Gov. Bredesen also wants to hike fees for driver's licenses, cable taxes and several other taxes by a total of $71.7 million to offset the need to cut even more. Moreover, he wants to take $202 million from an estimated $875 million in Rainy Day and TennCare reserves or from other areas to preserve some jobs and programs if lawmakers go along.
In his speech, Gov. Bredesen said his plan requires additional layoffs of 1,363 people in addition to the elimination of 456 unfilled positions. But he proposed using $51 million from the $202 million reserve fund to "soften" the impact and maintain 314 of the filled positions along with 80 others slated for elimination in the current budget for another two years.
"At the end of the two years, the economy may have made the layoffs unnecessary, and further it has been our experience that people in those positions are likely to have found other jobs making any involuntary action unnecessary," he said.
Other money from the $202 million would be used to delay proposed cuts in areas such as coordinated school health programs, the mental health safety net and several other areas over a two-year period.
Both Senate Speaker Ron Ramsey, R-Blountville, and House Speaker Kent Williams, R-Elizabethton, have said they can support the $200 million figure. Rep. Williams said he is willing to dip into reserves even further if necessary.
House Budget Subcommittee Chairman Harry Tindell, D-Knoxville, said lawmakers remain concerned about TennCare cuts. One of the governor's proposals limits in-patient hospital care for nonpregnant adults to $10,000 a year.
Gov. Bredesen told lawmakers that during his tenure he has "clearly pursued a strategy of constraining the growth of TennCare so that we can fund education at acceptable levels."
But the TennCare cuts drew fire from Gordon Bonnyman, executive director of the Tennessee Justice Center, which advocates for TennCare enrollees.
"The governor continues to run TennCare the way he ran his private HMO, by focusing on how much surplus it can generate," Mr. Bonnyman said of the governor, who made millions in the health care industry before moving into politics.
"He continues to divert hundreds of millions of dollars in TennCare reserves, refusing to spend funds that were appropriated to help desperately ill Tennesseans and the hospitals that serve them," Mr. Bonnyman said.
Under the governor's proposal, Tennessee driver's license fees would increase by $21.9 million a year. Fees for individual drivers would rise from $19.50 every five years to $46 every eight years, state budget director Bill Bradley said.
Gov. Bredesen told lawmakers the money would go toward saving an additional 85 currently filled state trooper positions as well as 56 additional jobs in state driver's license stations.
Money also would fund improvements in Tennessee Highway Patrol radio communications and the driver's license issuance system.
Gov. Bredesen also wants to raise another $49.8 million a year through taxes on cable services and boxes, interstate and international telecommunications sold to businesses as well as other items including real estate investment dividend paid deductions.
That money would be used to offset the elimination of 199 filled positions with prosecutors, pubic defenders, foresters and the Board of Probation and Paroles.
The budget proposal maintains the state's Basic Education Program funding formula for K-12 education. It provides an additional $43 million for some BEP growth. But it does omit an additional $27.7 million for growth in K-12 capital outlay.
The University of Tennessee and State Board of Regents systems face cuts respectively of $24.3 million and $39 million. However, federal stimulus funds will delay most of the effect for another year.
Since 2008, the University of Tennessee at Chattanooga has lost 13.9 percent of its state appropriations, a total of $8 million. In 2012, the school will lose millions of dollars of federal stimulus aid. The cuts come as UTC will be required to raise significantly its graduation rate of 42 percent, the lowest in the UT system.
UTC Chancellor Roger Brown said more cuts to higher education will mean slowing UTC's enrollment growth and watching every penny.
"We are going to be very careful about how we look to grow at the university," he said. "I think that way to keep quality is to keep the numbers no larger than they are for the time being. We have been growing 3 to 4 percent per year. That will not be sustainable."
Reporter Joan Garrett contributed to this report.