Phil Bredesen

XLS: 2008 03 Tables

DOC: 2008 03 March Revenues

NASHVILLE – State employees’ pay raises are on the line as Tennessee’s revenue collections continued to plummet in March, Gov. Phil Bredesen acknowledged Tuesday.

“They certainly are in danger,” the governor told reporters. “I’m not committing to any individual thing, but with the kind of dollars we’re talking about taking out of the budget, that would have to be one of the places we would have to do some trimming almost beyond any question.”

The state’s total general-fund shortfall hit $275.8 million as general-fund revenues fell another $64.3 million below projections in March. The total shortfall now is some $35 million higher than the worst-case scenario envisioned by the State Funding Board in December 2007.

Tennessee State Employees Association officials were aghast Tuesday that the governor would consider trimming pay increases.

“TSEA is very disappointed with the governor’s comment that state employee pay increases are in jeopardy,” spokesman Chuck Rainey said in a statement. “Tennessee state employees make their jobs priority 1, and they deserve the same respect in return for their service.”

Mr. Rainey said “inflation will not wait until next year, nor will the price of gas and food. The final 1/3 of the compression adjustment must be funded before the state can move forward with a Comprehensive Pay Plan, and an across-the-board salary increase to keep up with inflation is not too much for anyone to ask.”

Revenue declines this year will have an impact on the governor’s proposed 2008-09 budget as well, because the base level of revenues will start off at a lower-than-anticipated point, state finance Commissioner Dave Goetz said.

The governor’s spending plan for next fiscal year included $30.6 million to provide state employees with a 2 percent pay increase.

Noting the nation’s economic outlook is bleak, Gov. Bredesen warned that “the revenue picture is tough and certainly the cuts are going to be substantial.”

The state’s “rainy day” reserve fund is expected to grow to $750 million this year, but officials historically are loathe to dip into it, especially to pay recurring needs with one-time money.