Tennessee budget gap could reach $1.5 billion next year
By: Health Insurance
Submitted: 2009-11-30 14:22:28 | Word Count: 731
In a "worst-case scenario" next year, the state could face a $1.5 billion budget gap between its spending needs and the revenue to pay for it, Gov. Phil Bredesen said Monday.
One of the cuts advanced on the first day of state budget hearings to close that gap would release up to 3,300 state inmates convicted of non-violent crimes.
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The Department of Correction said early release, and the attendant reduction in staffing and other costs, is about the only way it can handle the $53 million cut it was asked to propose, on top of $105 million in reductions since the prison system was freed from federal court oversight in 1996.
"If the state ultimately went this route, we would be looking at the prison population and local jails and essentially backing out those who would present the least risk to the community...," Correction Commissioner George Little told the governor.
But firm decisions on any cuts won't be proposed by the governor until late January, and the state legislature will have the final say in the spring. Monday was the opening round of the first stage in preparing the $25-billion-plus budget for the fiscal year starting next July 1.
The $1.5 billion in the "worst-case scenario" described by the governor and Finance Commissioner Dave Goetz includes $515 million in budget cuts already built into this year's and next year's budgets but delayed from going into affect by the use of federal economic stimulus money.
With state revenues battered by the recession -- there have been 17 consecutive months of declines in sales tax revenue compared to the same month in the previous year -- Bredesen said the upcoming budget "will be the toughest of my time as governor."
Agencies were told to arrive with plans to cut their budgets by 6 percent and then another 3 percent.
The five days of hearings opened with K-12 education. Education Commissioner Timothy Webb's budget request centered on an $82 million increase to fund only the annual inflationary and enrollment cost increases in the $3.9 billion Basic Education Program, the state's primary share of funding local schools.
It includes no pay raises for teachers nor further expansion of the voluntary pre-kindergarten program beyond its current 934 classes statewide
The $82 million increase itself may be in jeopardy, both Bredesen and Webb said.
"While I truly hope we never have to go to reducing the BEP, I need to understand what some of the implications are because it's going to be a very tough budget year. There's nothing that's off the table at this time," the governor said.
Bredesen and Goetz outlined what they see as the worst-case scenario for the next budget, which will still have some federal stimulus funds for K-12 and higher education but little or none for anything else.
The scenario envisions continued declines in tax revenue coupled with required funding increases for the employee pension plan, health insurance and the BEP that result in an $800 million to $1 billion gap that would have to be closed by budget cuts elsewhere or a tax increase.
"These are rough, rough numbers," Goetz said. About $230 million in cuts did go into effect this year.
Bredesen has no plans to seek a tax increase in the 14 months remaining in his tenure as governor.
Budget hearing highlights
If the state prison system has to cut the $53 million asked of it, it has proposed early release of up to 3,300 state inmates now housed in prisons and local jails.
K-12 education needs an $82 million increase for the Basic Education Program, which is the state's share of the costs of operating local schools, just to handle the inflationary and enrollment increases projected. It would not raise teacher pay.
Officials project a budget gap of $800 million to $1 billion that they will have to close, in addition to $515 million in cuts already built into next year's budget.
