Tennessee: Grim budget cuts lie ahead

Tennessee: Grim budget cuts lie ahead

June 7th, 2009 by Andy Sher in Politics State

NASHVILLE - As state revenues continue their downward slide, the General Assembly begins wrestling this week with a recession-ravaged budget for 2009-10 that offers up little but program cuts and employee layoffs.

Gov. Phil Bredesen's budget, estimated at $29.3 billion when presented in late March, now includes plans to lay off up to 717 workers and eliminate 653 vacant job slots. The 717 job cuts are expected to saved $30 million.

Deep cuts are proposed in areas such as the number of beds and staffers at the state's five mental health institutes, including Moccasin Bend Mental Health Institute in Chattanooga.

"It just makes me want to cry," said Rep. JoAnne Favors, D-Chattanooga, as she voiced concerns about the impact on Tennessee's most vulnerable people.

Republican and Democratic leaders plan to discuss options with their members on Monday. But leaders emphasized there are few good choices as they look at Gov. Bredesen's latest revisions, finalized details of which the administration only presented to lawmakers late last week.

Gov. Bredesen said he would like flexibility to deal with changing conditions, noting, it is "hard to know where the bottom is on this, and I don't want to do something stupid and lay somebody off or cut some program that we really could have kept going."

Up until now, lawmakers have busied themselves on issues ranging from guns to abortion.

"Overall, I think it (budget) will pass pretty much intact," predicted Lt. Gov. Ron Ramsey, R-Blountville, the Senate speaker.

Senate Minority Leader Jim Kyle, D-Memphis, said "we're down to the last pieces of the puzzle."

But he and others said sharp disagreements remain in about five or six areas, including Senate Republicans' call to cancel or delay an estimated $130 million of capital projects.

The list includes a new $47.5 million library at the University of Tennessee at Chattanooga and a $16.3 million education and behavioral science building at Middle Tennessee State University in Murfreesboro. That could generate annual savings of about $14 million from bonds Gov. Bredesen has proposed issuing.

Other disagreements include GOP opposition to bonding out $350 million worth of bridge replacement or repair projects using federal funds. Republicans are also balking at the governor's proposed $2 million tax on cable boxes and increasing taxes paid by businesses on phone lines by $6 million.

Finance Commissioner Dave Goetz warned the money, part of $38 million expected to be generated through a "technical corrections" amendment, is being used to restore some cuts in public safety and children's services.

"If legislature chooses not to do it, they either don't fund those things or they find another revenue source," he said.

House Democratic Chairman Mike Turner of Nashville said lawmakers are "real close" on the budget. But Democrats, he said, remain worried about plans by fellow Democrat Bredesen to lay off employees.

"We don't want to do anything to employees unless we have to," Rep. Turner said. "However, this is unprecedented times, and ... we don't want to totally raid the Rainy Day funds to do something this year that would hurt us the next two or three years."

Rep. Turner said he also wants at least 30 of the 50 House Republicans to back the budget before Democrats go on record supporting it.

Gov. Bredesen urged lawmakers to provide him as much flexibility as possible with news that the state's current $1.2 billion shortfall could grow another $100 million by the end of the fiscal year on June 30 if preliminary May tax collections are an indication.

The administration already is proposing taking the $750 million Rainy Day Fund and $474 million TennCare reserve down to $586 million and $347 million, respectively, to close out the fiscal year 2009 which ends June 30.

If the additional $100 million shortfall materializes, the administration would use Rainy Day funds to plug the new hole in the current fiscal year.

"Now that then compounds into the next fiscal year because every dollar we lose in the current fiscal year will lower the base for the next year (FY2010) and increases the level of reduction we have to work way through in FY 10/11," Mr. Goetz said.

Cuts for 2010-11 are already estimated to be at some $200 million to $250 million.

The state is cutting about $750 million in recurring funds in fiscal year 2010, which begins July 1. Many of the cuts are being temporarily offset by federal stimulus and state reserves, but reductions will begin before fiscal year 2010 ends on June 30, 2010.

The 2010 calls for revenue growth of 0.2 percent.

While the governor is cutting back in many areas, the administration's budget calls for continuing the success it had with attracting a Volkswagen auto assembly plant to Chattanooga and a Wacker Chemical Corp.'s polysilicon production facility to Cleveland.

Budget provisions call for improvements in tax credits.

Meanwhile, the Tennessee State Employees Association is trying to pressure lawmakers and the governor to avoid cutting more employees.

"How much more can you ask the citizens of our state to do without? Every state job cut equals services to Tennesseans that will no longer be available," TSEA President Phil Morson said. "Layoffs are not the answer."

Talking to reporters last week, Gov. Bredesen said, "Right now, I think it's vitally important we preserve Rainy Day funds wherever we can."

He said he has no plans to "substantially change the budget," noting otherwise, "we could just be chasing this thing (shortfalls) forever."