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TN Legislature Forging Ahead with Plan to Finish by Week’s End

The final countdown to the end of Tennessee’s current legislative session appeared to have begun in earnest Wednesday. The Senate approving their version of the state budget and the House Republican Caucus voted to finish their business by Friday afternoon instead of continuing into next week.

The Senate budget, crafted by the Haslam administration and guided through the chamber by Majority Leader Mark Norris of Collierville, coasted through with the support of the GOP supermajority.

Democrats in the Senate were vocal in their opposition to some aspects of the roughly $32 million package, or, more accurately, to nearly $2 million that wasn’t being spent.

Memphis Democrat Jim Kyle expressed frustration with the fellow senators following the floor session, telling reporters “we’re leaving $1.9 million and we’re refusing to appropriate it, which means the money goes into a fund the governor will then spend next year, as opposed to…very worthwhile projects.”

“We’re not funding them for reasons that the majority would not ever explain,” Kyle continued. “We’re saying we’re not going to feed people we could be feeding… we’re not going to provide healthcare, we’re not going to provide social services for people who have been receiving it.”

Norris characterized the decision to hold back a portion of funds as “ the most prudent course of action to follow.”

The House passed the budget bill 82-14. Lower-chamber Democrats tried to amend it to leave open the possibility of snatching up federal Medicaid-expansion dollars under the Affordable Care Act, but Republicans shot that effort down.

A first-term House GOP lawmaker, James Van Huss of Jonesborough, tried to delay a vote on the budget until Thursday, saying he hadn’t had time to absorb all its details. But that request died as well on a 54-36 vote.

A member of Harwell’s staff estimated for TNReport that upwards of 50 items remain left to consider.

Senate Majority Leader Norris told reporters Wednesday that he is confident the upper chamber can finish its business by the end of the week as well.


Corn Prices Weigh on TN Livestock Farmers

While grain producers in Tennessee are having a bumper year, those same market forces are making feed more expensive for cattle and poultry farmers, the state’s top Agriculture official said.

“Various droughts around the world have reduced our inventories to the point that prices are extremely good for the grain farmers. We went through somewhat of a drought this year, but actually recovered with a decent crop in a lot of cases,” Agriculture Commissioner Julius Johnson said during a state budget hearing earlier this month.

“And then in a lot of cases, some farmers around Weakley County along the state line actually lost 100 percent of their corn crop, but came back with soybeans and so forth.”

Julius JohnsonJulius Johnson

Johnson continued: “If you’re feeding feed, this is where you get hit. And so the poultry industry in the state is being hit hard, livestock feeders and so forth, but a lot of the livestock prices have been strong to overcome some of that.”

Johnson is requesting $68.2 million in state funding for the Department of Agriculture for the next fiscal year, holding near steady with the amount the agency received this year and up about 5 percent from the $65 million state budget for fiscal year 2012.

The department’s purview includes food safety, agribusiness, conservation and wildfire prevention.

To view other state budget hearings, click here.

Education Featured

Huffman Expects More Schools In State’s Achievement District

The state expects to add 10 or 12 schools next year to its specialized district aimed at helping schools that have fallen behind academically, Education Commissioner Kevin Huffman said during his department’s state budget hearing this week.

That would bring up to 18 schools operating under the umbrella of the Achievement School District, a state entity that has the power to take over failing schools. Like the schools already in the district, many of those additional schools will be in Memphis. Ten Memphis City schools, all in the bottom 5 percent of Tennessee schools in terms of achievement, were notified this week that they will be taken over by the district, the Commercial Appeal reported Wednesday.

Huffman said schools in the Achievement district are operating with longer days, teaching until 4:30 p.m., and using data more aggressively to drive instruction. Huffman discussed the progress so far.

“I think they feel positive about the direction that they’re going, but it’s hard work,” Huffman said. “And I think everybody who works for the (achievement district) understands the very long path they have to go, because their goal is not to have these schools simply be less bad. They want these schools to be good schools where people want to send their children.”

The district was approved by the Legislature in 2010 as part of the state’s successful efforts to win Race to the Top funding for education reform.

The state won $501 million in that contest sponsored by the Obama administration, and Haslam asked Huffman if education officials are planning for what happens after that money is spent. The deadline is in about 18 months, Huffman said.

“We know that we will have to figure out, there will be some ongoing costs that we’ll need to absorb and make room for those costs because it’s the right thing to do,” Huffman said of planning at the state level. Local districts will have to decide whether to continue funding positions like math coaches created under the Race to the Top initiatives.

“When the money runs out they either need to figure out that this is an ongoing priority that’s worth the investment and therefore they need to spend the money on it and not spend someplace else, or they need to transition out of it,” Huffman said.

Huffman has proposed a 2 percent increase in the state share of his department’s funding, from $4.1 billion in the current year to $4.2 billion in 2013-14, the Tennessean reported.

One of the factors driving that increase is a projected $45 million bump to spending for local schools, Huffman said, based on the state law that proscribes state funding for local schools based on inflation and enrollment.

NewsTracker Tax and Budget

State Revenues Returning to ‘07 Levels, Haslam Lays Out Budget

Gov. Bill Haslam said the budget he’ll pitch to legislators Monday evening is one that reflects the state’s priorities “with strategic investments, painful but necessary cuts and some savings for the future.”

The governor will reveal his budget proposal for the coming year tonight in his second State of the State address before a joint session of the state’s General Assembly.

In a preview of his address Monday morning, Haslam told reporters that increased flexibility in the budget-planning process due to “stronger than anticipated revenue” was balanced by $160 million in one-time federal money leaving the budget. While the state had more revenue to work with than the administration had expected, Haslam said the amount of money coming in is just now beginning to return to where it was in 2007.

Among the budget priorities highlighted by the governor were the restoration of a number of core services that had been cut in the previous budget and a continued effort to build up the rainy day fund. He also called attention to tax cuts he has proposed to the state’s grocery and estate taxes and said he will propose a pay increase for state employees. However, he did reiterate his opposition to across-the-board raises.

“I want to emphasize, I don’t think giving nominal, across-the-board raises is the best way in the long run to recruit, retain and reward great employees,” he said.

The governor has often compared his vision of an ideal government to that of a successful business and forecast a similar message for tonight’s address.

“What you’re going to hear from me tonight is this: State government’s role is to provide the very best service we can at the very lowest price for our citizens,” he said.

Follow @TNReport and #TNSotS on Twitter for live updates during the governor’s State of the State address, beginning at 6 p.m. tonight.


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Haslam’s Budget Cuts Programs 2.5 Percent, Gives State Workers Raises

Gov. Bill Haslam delivered a $30.2 billion budget proposal to the Tennessee General Assembly on Monday, his first as governor and one that despite tough economic times managed to offer state employees a 1.6 percent salary increase.

The plan includes no new taxes, although it bakes in $449 million in a hospital assessment fee, meant to decrease TennCare expenses, a strategy first implemented last year and designed to draw down matching funds from the federal government. It would have to be approved by the Legislature as part of the budget plan.

The budget assumes 3.65 percent revenue growth in 2011-12 and follows seven consecutive months of positive revenue figures, which further signals an overall recovery from the deep recession that had gripped the nation. Haslam and budget officials warned, however, that even though there is growth in revenue those funds are quickly eaten up by mandatory expenses and inflation.

The administration is cutting state programs an average of 2.5 percent.

The Haslam budget proposes reductions of $39.9 million in TennCare; $20.2 million in higher education; $7.8 million in corrections; $3.3 million in pre-K-12 education; $2.3 million in children’s services; $1.9 million in health; $1.8 million in intellectual and developmental disabilities; $1.5 million in mental health; $1.1 million in the Department of Revenue and more than $53 million in other agencies.

The reductions in TennCare include cuts in reimbursement rates for non-hospital and professional providers, cuts in reimbursement to emergency room physicians for non-emergency services, placing dosage limits on opioid detox for adults and cuts in reimbursement rates for C-sections.

Cuts in higher education affect the four-year universities — including $3.4 million at the University of Tennessee-Knoxville — as well as reductions at the state’s community colleges and technology centers.

Reductions in the Department of Correction include more than $5 million in cuts for housing inmates in local jails by merging two existing inmate programs and extending inmate sentence credits to additional inmates, which will increase admissions to prisons.

The reductions in the Department of Education include $1.5 million by abolishing several administrative and specialist positions. Reductions in the Department of Children’s Services include cuts in community treatment facilities. Cuts in the Department of Mental Health include reducing the number of beds at the Western Mental Health Institute and reducing the number of people able to receive community mental health recovery services. Reductions in the Department of Health are applied to operational expenditures including travel, printing and communications.

“We have made a lot of hard decisions in this year’s budget, but there are still more to come,” Haslam said. “State government is still not nearly out of the woods yet, and there’s still work to be done.”

The budget fully funds the Basic Education Program, the funding formula for K-12 schools, which was widely anticipated, given the state’s emphasis on education reform. The base budget for higher education would be reduced by 2 percent, although aid for low-income college students would be sustained.

Haslam says his budget restores $69 million to the state’s rainy day fund.

The 3.65 percent anticipated revenue growth would be $473 million above earlier estimates.

While the 1.6 percent increase in salary for state employees meets Haslam’s stated desire to boost pay after four years of no raises, the budget still calls for 1,100 fewer positions in state government, a reduction budget officials said they hope to attain in part through attrition, including retirements and not filling vacant positions.

The $30.2 billion proposed budget includes $13.4 billion in state funds, $11.9 billion in federal dollars and $4.9 billion in other revenues and fees. The budget picture reflects efforts under the previous administration headed by Gov. Phil Bredesen to make for as soft a landing as possible, yet one-time funds were used for many recurring expenses.

Haslam attempted to put the state’s financial condition in perspective.

“When I talk to other governors, I like the position we’re in,” Haslam said. “That being said, we do still have a $1 billion-plus hole to climb out of. While ours might be a little better than some other people’s situation, that is a real number.”

Haslam said the budget hole, which he referred to often in his campaign for office, includes about $1.1 billion in federal stimulus funds and another $300 million taken from rainy day funds or TennCare reserves that covered the current year’s budget.

But Haslam made a special point to state his intent of restoring reserve funds.

“One of the big issues we have to work with is: How do we build the rainy day fund back up? It very much served its purpose over the last two or three years,” he said. “We were in very difficult times. The state did use that to draw on to make sure we didn’t have to make drastic cuts in services.

“But as things come back, obviously we have to be responsible for the next time, when that rainy day fund is needed and start building that fund back up. That’s a discussion we had a lot during this budget process, and I think we’ll continue to have that.”

The $30.2 billion budget reflects a decrease of $1.8 billion from the 2010-2011 budget, a 5.6 percent difference.

“We do have issues, but I’ll take our issues over a lot of other states,” said Mark Emkes, Haslam’s commissioner of finance and administration.

Tennessee’s revenue is based mostly on sales taxes and franchise and excise taxes. Of every tax dollar collected, 54 cents comes from the sales tax, 13 cents from franchise and excise taxes. The state expects increases in all tax streams in the coming fiscal year.

In Haslam’s proposed general fund of $26.7 billion, the biggest chunks include $8.7 billion for TennCare, $5.19 billion for pre-K-12 education, $3.6 billion for higher education and $2.9 billion for human services.

Addressing the budget in difficult economic times is one piece of a three-pronged agenda for Haslam, who has stated the goals of overall education reforms and creating jobs in the state, which Haslam has said is the No. 1 priority.

“I feel very good about the relative position we’re in,” Haslam said. “I feel good about the budget process. It’s obviously my first one, but I’ve been very impressed with the thoroughness of the (Finance and Administration) department and the seriousness with which all our new cabinet members took their tasks to look department by department.”

Haslam spoke to the budget picture he found compared to the one he described when running for office.

“People say, ‘Now that you’ve been here, you’ve spent two years campaigning, talking about the budget, answering questions, now that you’ve been here seven or eight weeks, is the budget what you expected?’ And the answer is it primarily is,” he said.