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Bredesen adopts more urgent tone about shortfall

Bredesen adopts more urgent tone about shortfall

Posted: Monday, October 20, 2008 10:04 pm
By: AP

  

By ERIK SCHELZIG

Associated Press Writer

NASHVILLE (AP) — Gov. Phil Bredesen doesn’t want his measured approach to worsening economic conditions in Tennessee to be confused with nonchalance.

In speeches and meetings with newspaper editorial boards last week, the Democratic governor began taking on a more urgent tone about how the state will try to cope with tax projections falling short by as much as $600 million.

“I’d tried to exude confidence and keep a steady hand on the rudder in these times,” the Democratic governor said in a phone interview with The Associated Press. “But I was kind of discovering that maybe I had too steady a hand on the rudder — and was not communicating clearly that this was a very extraordinary situation.”

The governor said he expects the spending gap to widen to between $300 million and $600 million by the time the budget year ends in June. And even that range comes with a caveat: “It could be more, there’s no question about that,” Bredesen said.

As a response to worsening economic conditions this spring, lawmakers pared down the current state spending plan by nearly a half-billion dollars.

But general fund tax collections have sputtered even worse than expected in the first two months of the budget year that began in July, leaving the state $128 million in the hole.

“This is certainly the worst financial time of my adult life, and that has implications for the economy in the state,” Bredesen said.

The governor said the state has been saving money through a hard hiring freeze for government jobs over the last six months. With an annual turnover rate of about 10 percent, that has left the state with about a 5 percent decrease in state workers.

“That’s helping us get through this,” Bredesen said. “But I can’t sustain that forever, it’s just a little too blunt an instrument.”

The administration earlier this year gave voluntary buyout packages to about 1,500 state employees to help save money. But Bredesen reiterated his reluctance to pursue layoffs.

“I’m going to try to avoid layoffs unless they become absolutely necessary,” he said.

Instead, he said he will look toward more spending reductions from state agencies, and whether the state can save money from grant programs or contract services.

Bredesen said the state spends about $1.3 billion to $1.4 billion a year on contract services. While some are mandated by law, others could be trimmed to find additional savings, he said.

But spending cuts take a while to take hold.

“You never can do it quite as fast as revenues dip, just because it takes time to make these changes,” Bredesen said.

Bredesen said he can likely find ways to make the cuts necessary to fill up to a $300 million spending gap.

“But when you get much above $300 million you’re talking either about legislative action, or dipping into reserves somewhat,” Bredesen said.

The governor has previously expressed reluctance about tapping the state’s $750 million rainy day reserves until an end to the downturn was in sight.
Published in The Messenger 10.20.08

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