Governor proposes special fund to shield core services from cuts

Governor proposes special fund to shield core services from cuts

February 10th, 2011 by Andy Sher in Politics State

NASHVILLE -- Gov. Bill Haslam said Wednesday he likely will use a special $186.2 million "core services" reserve set up by his predecessor and the General Assembly to delay some of the state's worst budget cuts for another year.

"Our plans are we probably will use that this year," Haslam said, but he pointed out it in no way offsets $1.5 billion in federal stimulus, reserve and other funds that are going away July 1.

The reserve fund itself will end next year, he said, "and we want to use it judiciously."

Last year, Gov. Phil Bredesen and lawmakers set up the reserve to continue important programs through this fiscal year. That includes $1.5 million to provide emergency services to seriously mentally ill people; $11.9 million for health programs including cervical and renal disease initiatives; $15.28 million for certain school health programs and $15 million for extended contracts for K-12 teachers.

"Those are the programs it was intended to fund," said Rep. Kent Williams, I-Elizabethton, who was House speaker last year when the fund was established.

It allows Haslam to preserve 394 jobs until July 1, 2012, although officials have said many of those are currently vacant.

Haslam, a Republican who took office Jan. 15, said little during public hearings last week about how he might deal with the reserve.

A budget presentation during the Senate Finance Committee meeting Tuesday also made little mention of the fund until Sen. Doug Overbey, R-Maryville, brought it up.

"I'm not saying it's a fix," Overbey said, but he noted it was part of Bredesen's proposal to provide a "glide path" and "soft landing" as the state recovers from the recession and the loss of stimulus and other one-time funding.

Haslam repeatedly has said the state faces a $1.5 billion loss on July 1 as these funds largely go away.

Williams, however, said there is one-time money to build space for community colleges and a $290 million hospital assessment fee that will draw down federal matching funds for TennCare.

Hospitals have agreed to continue and expand the fee, although details remain to be worked out.

Earlier on Wednesday, the State Funding Board approved revenue estimates that could be much as $162 million more than originally anticipated in the current budget and as much as $350 million in new revenue for the 2011-12 budget.

The Associated Press reported that depending on actual tax collections this year, the state's general fund, which provides money for education and most other services, could grow between $247 million and $353 million in the upcoming budget year.

Contact staff writer Andy Sher at or 615-255-0550.