Gov. Bill Haslam is proposing a budget he says will make the state more efficient, but it is actually bigger than the one he proposed last year.
But his budget plan — complete with a 2.5 percent pay boost for teachers and state employees and more than a quarter billion dollars for higher education and capital improvements — is still 2.7 percent less than the current year’s spending plan.
“(Taxpayers) want a state government that is accountable and spends their tax dollars as carefully as they spend their own dollars. But that’s the problem, isn’t it?” Haslam asked a crowded joint assembly of state House and Senate members Monday night at his annual State of the State address.
“It is very hard for folks to spend other people’s money as carefully as they spend their own. Even worse, it is easy for those of us in government to begin to think that the tax dollars are ours. It is here that it is best for all of us to remember what Mark Twain said about the taxpayers’ dollars: “It’s tainted. ‘Taint yours and ‘taint mine.”
Haslam unveiled a $31.08 billion spending plan for the next state budget year. His proposal assumes a 4.03 percent growth in revenues in the budget year that runs from July 1, 2012 to June 30, 2013.
“So, what is the state of our state? Well, in many ways we are doing great,” Haslam said, lauding the state’s low taxes and debt, balanced budget and slowly falling unemployment rate.
“But yet, all of us realize that we have serious issues to deal with. Unemployment is still too high, and we are consistently only in the mid-40s when states are ranked for educational achievement. I don’t think any of us should be satisfied. So I stand here tonight and ask you: Is the current state of our state good enough? I think the answer is no. I think we can believe in better.”
The governor’s budget includes eliminating 1,166 state government jobs, through layoffs of 617 workers and nixing 549 vacant positions. The state employs about 45,000 people.
“We have been cut to the bone here in as far as state services,” said union leader Bob O’Connell, with the Tennessee State Employees Association, which opposes the governor’s call to reduce staff and change how the state hires government workers. ”There’s no more fat to offer and from here on out it’s all muscle so it’s going to hurt to cut those folks out. We hope that money can be found to restore all of those positions.”
Meanwhile, the administration wants to dole out 2.5 percent pay raises for state employees, teachers and higher education workers at a cost of $123.8 million. That would mean an extra $95 pre-taxes a month for the average Tennessee teacher, who makes $45,891 a year.
Haslam also wants to readjust salaries for some state employees to bring them up to comparable market rates, costing taxpayers about $30 million a year.
His proposal includes cutting the tax on food and raising the threshold for exemptions to the inheritance tax, which combined will mean a collective reduction of $33 million — or less than 1 percent of the state’s total revenues.
“I’m well satisfied with what he’s laying out here,” Lt. Gov. Ron Ramsey, R-Blountville, told TNReport after the 40-minute speech. “Not only are we going to be able to cut taxes in the state of Tennessee, with the death tax and the tax on food, but also we’re going to increase services, and I think the governor’s set the priority in the right place to make Tennessee an efficient and effective government that serves the people well.”
Democrats say they like some of what they heard from the governor, but are concerned with some of the issues he didn’t talk about, like his plan to give school districts the authority to adjust class sizes.
“Our teachers just went through a year with a different kind of ABCs,” said Sen. Lowe Finney, D-Jackson. “They were attacked, they were belittled and they were criticized. This year it seems to be new math: fewer teachers with bigger classrooms is supposed to equal better results. But that really does not add up.”
The budget comes after months of the governor speculating the state would be in tough shape come the next budget year amid growing yet unreliable tax revenues. He has asked state agencies to plan for cuts up to 5 percent, although departments average about 2 percent cuts in the governor’s plan.
Haslam’s budget for the current fiscal year was proposed at $30.2 billion and relied heavily on former Gov. Phil Bredesen’s spending strategy.
The Legislature ultimately endorsed his plan after making a handful of edits. But between increases in revenues and a stack of federal funds officials say couldn’t be spent right away, the budget ballooned to $31.93 billion, or 5.7 percent greater than proposed, according to the governor’s administration.
State funds make up 45 percent of the governor’s proposed budget while federal funds account for 39.5 percent of the state’s spending plan. The rest is made up of other funds including higher education tuition and bonds. The federal portion is down from making up 41.1 percent of last year’s state budget.
Steven Hale contributed to this report.