NewsTracker Tax and Budget

Governor Predicts Program-Specific Cuts from Feds

Gov. Bill Haslam said he expects the federal government to target programs instead of issuing across-the-board funding cuts to states as part of efforts to reduce the deficit this fall.

The governor made the prediction the day after his administration finalized contingency plans for 15 percent and 30 percent federal funding reductions in each state department.

“This is in the unlikely event that the federal government cuts that much. We don’t think they will, but we think it’s smart of us to say, ‘What happens if they do?’” the governor told reporters at the Blue Grass Country Club in Hendersonville after an economic development roundtable with local business owners.

“I actually think if the cuts come from the federal government, what they’ll cut is programs,” Haslam continued.

In light of the ongoing debate about the national budget, a Congressional deficit reduction committee expects to lay out a plan by Thanksgiving to reduce the budget by $1.2 trillion over 10 years. The reductions were part of a deal to raise the debt ceiling approved earlier this month.

The governor’s office plans to release details of its backup plans Friday or Monday, according to an administration spokeswoman. Roughly 40 percent of the state’s budget is made up of federal funds.

The budget work comes ahead of Haslam’s planned visit to bond rating agencies in September. Moody’s Investors Service announced in July that Tennessee could lose its AAA status because of the federal budget drama and the state’s dependence on federal funding.

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