Bredesen: Budget shortfall could reach $800 million
Posted: Tuesday, November 11, 2008 8:45 pm
By ERIK SCHELZIG
Associated Press Writer
NASHVILLE (AP) — Foun-dering first quarter revenue collections indicate that Tennessee’s state budget shortfall could reach $800 million, Gov. Phil Bredesen warned Monday.
The governor said Tennessee’s general fund revenue collections came in $200 million below projections for July-September, the first three months of the state budget year.
“It’s bad,” Bredesen told reporters after a Veterans Day ceremony near the state Capitol.
Those projections will require immediate spending cuts and plans for further reductions in the upcoming budget year, he said.
Bredesen had previously projected the shortfall at between $300 million and $600 million. But that was before the most recent revenue numbers for September came in at about $80 million lower than expected.
Lawmakers had already made almost half a billion dollars worth of cuts out of the current year’s spending plan in May in anticipation of worsening economic conditions. Those cuts included reductions in higher education funding and buyouts for more than 1,500 state employees.
The governor expressed confidence in addressing the worsening budget picture.
“We’ll manage through this,” he said. “Lots of states are going through this at this point, and I’d like for us to be an example for the rest of the country about how you do sensible fiscal management.”
Bredesen, a Democrat, will have the added challenge of working with two Republican chambers in the General Assembly in January after the GOP built out its lead in the state Senate and took over the House in last week’s elections.
The governor is scheduled to hold public budget hearings later this month to prepare next year’s spending plan. He previously asked departments to plan for a 3 percent cut in spending, a figure that he now says will have to be raised.
The revenue picture also appears to make it inevitable that the state will spend some of the $750 million parked in its “rainy day” reserves, Bredesen said.
“I just don’t want to exhaust that fund and leave no money in there for emergencies and no money for unforeseen things,” he said.
The general fund pays for most of the state’s operations. It does not include money dedicated toward transportation — which is largely funded by the state tax on gasoline — debt service, capital projects and revenue shared with local governments.
“The highway fund, for example, takes care of itself,” Bredesen said. “If we have less money in the highway fund we build a few fewer highways.
“It’s the general fund that pays for corrections, and TennCare, and state employees and the like.”