Tennessee’s finances may not be perfect, but they’re in “good, sound fiscal condition,” according to the state’s top auditor.
“Let’s not mess it up,” Comptroller Justin Wilson told members of the House Finance, Ways and Means Committee this week.
“To keep in really good shape, the state needs to continue to reduce expenses, and the administration needs to continue to increase the efficiency of operations,” he said.
Wilson said the state needs to focus on rebuilding the rainy day fund, brace for the costs of implementing national health care reforms, maintain the state’s high credit ratings and improve financial reporting.
The comptroller offered committee members a snapshot of the state’s finances as the group prepares for Gov. Bill Haslam’s annual State of the State address later this month where he’ll release an estimated $32 billion budget proposal.
Wilson said state government will have to keep an eye on growing expenses such as Tenn Care, K-12 education and pensions. If that doesn’t happen, the state will have a hard time justifying tax cuts or funding capital projects, an area where the state has “fairly severe needs,” he said.
Gov. Bill Haslam has proposed reducing the sales tax on food, as well as lifting the estate tax exemption from $1 million to $1.25 million.
But even though the economic picture is beginning to look better, tax reductions are not a good idea, said Sen. Doug Henry, D-Nashville.
“That is a temptation since collections are up. That’s a temptation that I really think we need to try to avoid if we can,” said Henry. “A day or two of prosperity could be easily offset over the long haul by the carelessness in this area of thinking.”
Wilson said he still expects the state’s finances will return to pre-recession levels by 2014.
State Treasurer David Lillard is expected to make his own presentation to the committee next week that will likely review college savings plans and state pension costs.