published Friday, October 16th, 2009

State eyes $1.1 billion in budget cuts in ’10

Audio clip

Jimmy Naifeh

NASHVILLE — Tennessee may have to slash as much as $350 million more from its budget next year on top of $753 million in already planned reductions.

“I really think you need to expect and can treat these $1 billion to $1.1 billion in base reductions ... as permanent,” said Jim White, executive director of the legislature’s Fiscal Review Committee, told House leaders on Thursday. “State government is going to be smaller and different after we complete this budget year.”

House Speaker Kent Williams, R-Elizabethton, called the special hearing for top leaders, committee chairs and Budget Subcommittee members to help lawmakers hit the ground running when the General Assembly reconvenes in January.

Tennessee revenues have been taking a beating in the nation’s worst economic downturn since the Great Depression.

Faced with a $1.2 billion shortfall, Tennessee lawmakers last spring approved $750 million in recurring cuts to state services and set plans over the next two years to eliminate about 1,400 positions. About one in 10 state positions are currently going unfilled.

Federal stimulus funds have provided one-time money that is allowing the state to delay most actions until the 2010-11 fiscal year. But some actions must be taken in the current 2009-10 budget year, including slashing TennCare reimbursement rates for nursing homes, hospitals and doctors by about $219 million in January, state Finance Commissioner Dave Goetz said.

The administration’s five-year projections assume a $432 million deficit in the current fiscal year and a $209 million deficit in 2010-11. Those figures are based on assumptions that state revenues will increase 0.96 percent this budget year and have 4.4 percent growth in 2010-11.

Right now, the state is having trouble meeting its meager 0.96 percent growth projection.

Mr. Goetz told lawmakers that revenues in the current 2009-10 fiscal year that began July 1 are already running about $70 million below estimates on a month-to-month basis. If the trend continues, it could result in having to cut an additional $350 million in 2010-11, Mr. Goetz said.

Mr. White’s estimates that state revenues are about $20 million below projections and thinks the cuts would be about $290 million. If that’s the case, he said, total percentage cuts in some agencies could hit 21.6 percent next year.

After more than two hours of grim assessments Thursday, House Speaker Emeritus Jimmy Naifeh, D-Covington, had enough. He predicted the state’s Rainy Day Fund, once at $750 million and projected to fall to $323 million in 2010-11, “is probably going to go down to zero.”

He called the removal of some TennCare recipients “heartbreaking” and said lawmakers are to blame. He also urged colleagues to look at a tax increase.

“No one has got the backbone or the guts to talk about revenue enhancement,” Rep. Naifeh complained. “That’s what we need to at least explore.”

House Budget Subcommittee Chairman Harry Tindell, D-Knoxville, said the meeting’s purpose “is not to pave the way for such action. It is to educate and inform members.”

Rep. Williams said “our whole country is in a deep recession. I don't feel this is the time to try to increase our revenues with any type of higher taxes.”

Mr. Goetz later said the administration has no plans to offer a general tax increase although it may offer a traditional bill that seeks to close tax loopholes.

about Andy Sher...

Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...

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Nashvillen said...

Why they just don't go to 4 days work and cut more money from big people who are making a lot, I mean a lot ,

October 16, 2009 at 10:17 a.m.
Salsa said...

Naifeh wants to raise taxes during a recession. What a moron. Maybe we should start the cuts by eliminating his pay.

October 16, 2009 at 11 a.m.
DinaDog said...

I know many people see the four-day work week for government as a good part of a solution. I also know many states have adopted that plan.

However, I gotta say, that concerns me. First of all, just to be clear, I am not a state employee.

But I do know well that state employees make only a fraction of what their jobs would be in the public market. The state tries to balance that by providing good benefits and ample holidays. Still, you can't buy groceries with good benefits and holidays. And I know, I know – state employees are lucky to have jobs in a world where jobs are hard to come by. I get that. And, those jobs are usually quite secure. I get that, too.

The thing is, I've gotta wonder if it is right asking government workers to carry the burden of the entire state's economy problems? I mean, these people are struggling to make a living, too. If we go to a four-day work week, I assume you mean to cut their pay so as to not have to pay them for five days of work. Is that right?

These people are paid low wages as it is. Of course, there are the few obvious exceptions. But the average rank-and-file state employee is quite low-paid. Why should they carry the burden for all of us?

I think we forget that when we want to cut government - and as a conservative I always want to do that - but when we just want to cut government or shut it down for a day a week, it isn't just "big government" we are closing. Those are real people who depend on that paycheck to pay the mortgage or buy groceries, just like you and me. No one asked me to cut to a four-day work week. Is it right to ask state employees to carry the load?

I don't know. I am asking the question. Maybe it is. And, other businesses have had to cut back, so why not government, too? I don't know. I just think we need to step very carefully and think through it carefully before we ask state employees to cut their paychecks. It really impacts people who already don't make much.

October 16, 2009 at 4 p.m.
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