Comparing state finances to a “family budget,” Gov. Phil Bredesen Monday presented a $28.4 billion spending plan for fiscal year 2011.
The governor’s proposed budget represents a 5.1 percent decrease from the current year’s $29.6 billion state government spending package, which ends June 30.
Bredesen said his latest budget is based on the “commonsense idea that we’re going to adjust our expenses to match our income.”
“We’re going to be very careful about using money from our savings account,” he added.
“It’s the way sensible families have to manage through these times, and while the numbers for state government are much larger than for any family, the principle is the same.”
About $12.4 billion of the budget Bredesen is proposing will come from state appropriations. Another $11.2 billion will come from federal funds, and the remainder from departmental revenues, tuition and fees, and bonds for road projects.
Bredesen declared that the state’s financial position is “very strong.”
“We have over $900 million in the bank, in uncommitted reserves in our rainy day and TennCare reserve funds,” he said.
Nevertheless, Bredesen is proposing to eliminate what he called “a variety of programs that are of real value,” lay off 1,363 state employees and eliminate 456 unfilled positions.
But he is also proposing to use about $200 million of the state’s reserves “to soften the worst of the cuts.”
Bredesen said he’s willing to gamble on “the prospects for a return to growth in the months ahead.”
“In this environment, should we go all the way with these cuts, or should we make some judicious use of our reserves to soften their effect?” he said. “We decided to present a plan that used reserves to fund the continuation of a number of programs for a two-year period. The reason for funding for two years instead of one was to give a new governor some breathing room at the beginning of his or her term, and to give additional time for the economy to recover and perhaps make the cuts a moot point.”
Most of the reaction from Republicans, who hold a majority in both General Assembly chambers, was congenial and deferential toward the governor.
House Republican Leader Jason Mumpower and Lt. Governor Ron Ramsey, a GOP candidate for governor, both declared that Bredesen has done a generally good job of steering Tennessee’s fiscal ship over the past eight years, and will likely leave the next governor with a house in good order.
Both also were hesitant to jump on board with a plan to tap reserves based on forecasts of an improving economy.
“I want to look at the amount of reserves we are going to use and make sure that it is a responsible amount,” said Mumpower. “It is extraordinarily important to maintain as healthy a reserve level as possible.”
Ramsey said any perceived lights at the end of the recessionary tunnel are merely “a glimmer” from his vantage point.
“It is a concern that we are using $200 million in onetime money to push the cuts down the road. By the same token I’m not sure I have a better idea,” said the Senate speaker from Blountville. “There will be a temptation to use even more of the reserve funds to avoid some cuts, but I think that would be a major mistake.”
Ramsey added that he expects very little partisan bickering over the budget in the weeks ahead — at least between Republicans and the governor.
“The ironic part is that, just as in the special session, the governor may have agreed more with Republicans on the education issues. That may be the case with this budget process as well,” he said.
If Democrats were unhappy with the governor’s budget, they were keeping it quiet for the most part, at least for tonight.
Jim Kyle, the Senate Democratic minority leader, said Bredesen’s budget “will help us get through these tough economic times.”
Also a candidate for governor, Kyle said that by the end of Bredesen’s term in office next year, Tennessee “will be back to recurring expenditures and recurring dollars so that we will not be borrowing.”
Rep. Craig Fitzhugh, D-Ripley, chairman of the House Finance, Ways and Means Committee, actually anticipates some pushback from fiscal conservatives who don’t like proposed driver’s license fee increase. “There’s always going be people who have difficulty with raising revenues of any type at any time,” he said. “So, we’ve got a long way to go.”
“There will be some that are ready to vote for this budget as it comes out of the blocks, and there will be some that want to reduce it even more,” said Fitzhugh.
Rep. Kent Williams, a Republican from Elizabethton who became House Speaker last year with unanimous support from Democrats and against universal GOP opposition in the chamber, said he doesn’t see much of a problem with Bredesen’s budget either.
As far as the layoffs are concerned, most positions are empty positions anyway, he said. “Right now I think it is going to affect maybe only 80 employees,” he said. “Even though it’s something like 1,300 layoffs, those jobs just haven’t been filled.”