Bonuses eyed to plug budget

Bonuses eyed to plug budget

Republicans' plan alternative to Bredesen's

May 10th, 2010 by Andy Sher in Politics State

NASHVILLE -- Senate Republicans want to eliminate $113 million in one-time bonuses for state employees and teachers as part of their alternative to Gov. Phil Bredesen's plan to increase taxes and fees to plug holes in the 2010-11 state budget, lawmakers said.

But the plan already is generating concerns from Democratic legislative leaders as lawmakers from both parties and Gov. Bredesen seek to finish work on the $28 billion state spending plan amid election-year politics and a devastating flood that could hurt state revenues.

The Senate Republicans' plan is intended as an alternative to Gov. Bredesen's proposal to raise an estimated $85 million by lifting the state sales tax cap on single items costing more than $3,200. The governor also has proposed raising another $22 million or so by increasing driver's license fees. Other Bredesen proposals would raise $49.8 million through measures such as eliminating a sales tax exemption on the first $15 worth of cable television services. That would raise about $21 million.

In a recent interview, Lt. Gov. Ron Ramsey, who is running to succeed Gov. Bredesen, said, "We're going to find a way to get through this without any tax increases. ... There may be somewhat deeper (drawdowns from) reserves or shifting things around in the fact that we have the employee bonus. That had $113 million."

The lieutenant governor said he believes "anyone would realize that when you're laying off people, you don't give bonuses to others. I think that's pretty much consensus on both sides of the aisle."

Lt. Gov. Ramsey's remarks came prior to last Wednesday's agreement by Senate Republican Caucus members, who have a 19-14 majority, to offer the plan.

Final details of the GOP plan, which included a number of other ideas besides the employee bonus money, were reported Friday by The Tennessee Journal, a subscription-only, nonpartisan political newsletter.

Contacted over the weekend, two top House and Senate Democratic leaders voiced concerns about eliminating the one-time bonus, which would affect higher education employees as well as state workers and teachers.

"From what I've seen, it's problematic," said House Democratic Caucus Chairman Mike Turner, of Nashville, noting he missed a briefing on the entire GOP plan late last week and had told Republicans he would not immediately declare their effort "dead in the water."

But Rep. Turner said "the fact of the matter is our state employees over the years have fallen way behind their counterparts in the private sector. We're not going to be able to give them a permanent raise this year."

If Lt. Gov. Ramsey and GOP colleagues "really think they have the votes to do what they want to do, then send it to us," Rep. Turner said. "And then we'll look at it and see. ... The Republicans are in charge."

Republicans have a slender 50-member majority in the 99-member House.

Efforts to reach Senate Majority Leader Mark Norris, R-Collierville, Sunday were unsuccessful.

Senate Minority Leader Jim Kyle, D-Memphis, likewise voiced concerns about the bonus, saying he had seen a summary of the plan and "been talked to about it in general terms."

"It seems to me they're doing two things," Sen. Kyle said. "It appears to me that instead of cutting the budget, they're moving the employees' money to prop things up for another year or two."

He said he finds that "very problematic" in light of state employees having received no pay raises over the past three years.

Gov. Bredesen's plan would provide permanent funding through tax or fee increases. For example, the increase in driver's license fees -- about $2 a year -- would pay to keep 85 state troopers and 56 driver's license station workers from being laid off as well as provide debt service to fund bonds for a new Highway Patrol communications system and driver's license issuance system.

The Tennessee Journal reported instead of issuing bonds, Senate Republicans hope to use enhanced federal matching funds for Medicaid to pay for the communications system -- provided Congress passes a six-month extension of the enhanced match. That would save about $12 million annually in debt service.

Other facts of the GOP plan call for canceling $50 million in previously authorized but unissued bonds in an effort to save another $5 million in annual debt service.

Growth in the state's Basic Education Program funding formula for schools is running about $26 million less than expected, and Republicans hope to reprogram those funds. The Journal also reported the GOP hopes to use a $10 million surplus in a fund that helps fast-growing school districts.

There are other wrinkles in the budget situation given this month's flooding in Nashville and other parts of the state, which took 21 lives and resulted in at least $1.5 billion in damages to Nashville alone.

Tennessee is expected to help cities and counties with some aid for damaged local government infrastructure such as roads.

Rep. Turner, meanwhile, voiced additional concerns about the flood's impact on local and state revenues, noting the Opry Mills mall has been put out of commission and the Opryland Hotel complex has as well, throwing thousands out of work.

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