News Tax and Budget

Despite State Budget Woes, Gov’t. Employee Bonuses Still Likely

There’s a $105 million hole in next year’s budget. But state employee bonuses don’t appear to be in any danger.

Gov. Phil Bredesen’s proposed 3 percent bonus for state employees doesn’t appear to be in Senate Republicans’ crosshairs, even as other spending cuts and tax hikes are contemplated to close a $105 million hole in next year’s state budget.

Lawmakers will spend the next few weeks hammering out the final details of next fiscal year’s state budget. Bredesen proposed a $28.4 billion spending package back in February, but downward revenue forecast adjustments raised the specter of additional tax increases or spending reductions beyond what he originally planned are likely coming up for debate.

Nevertheless, the governor still stands firm behind his pledge to offer state employees — from Capitol Hill janitors, department administrators and educators at all levels — a 3 percent pay bonus, a spokeswoman for the administration said Friday.

It “remains in the governor’s budget proposal,” spokeswoman Lydia Lenker wrote in an email.

Bredesen also this week pitched the idea of raising the sales tax rate on items over $3,200 in order to rake in roughly $85 million more from the private sector. Those funds, he said, would help close a growing gap between available funds and what he wants to spend in the next budget cycle.

Lt. Gov. Ron Ramsey, a GOP candidate in a competitive race for governor, has said “everything’s on the table” in order to balance next year’s budget. He added, however, that he doesn’t see the logic in stripping away the state employee bonuses to put the money elsewhere. The state would just have a new hole to fill next year, he said.

“That bonus won’t help anything much, anyway. That’s one-time money being used for one-time expenses. We’re looking for recurring money,” Ramsey said.

He promised though that the Senate under his guidance will “push back” against Bredesen’s tax increase.

“We will not have that here in the state of Tennessee,” he said.

If the Legislature refuses to adopt the governor’s sales tax increase without offering up any other viable options, Bredesen said he’s got his own cuts in mind, including possibly lopping 5 percent off those same state employees’ salaries, excluding K-12 teachers.

The bonus would cost $164.7 million and is said to come from a fund that won’t necessarily be filled again next year. State employees have been on a pay freeze for the last three years. Their last bonus, $400, was handed out two years ago.

Leave a Reply

Your email address will not be published. Required fields are marked *