Bredesen to offer grim State of the State

Monday, February 1, 2010 at 12:59am
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When Gov. Phil Bredesen gives his final State of the State address Monday night, his reputation for financial acuity will be put to its greatest test.

The worst economy since the Great Depression has caused an unprecedented decline in state tax receipts, and Bredesen must convince legislators of the wisdom of accepting the deep spending cuts that he will recommend.

For 19 straight months, state tax collections have come in less than the year before — a condition economists lament as negative growth. In all, the state suffered a $1 billion loss in year-over-year revenue. Even after legislators cut $230 million in last year’s session, a new shortfall of $170 million already has opened in the current $29 billion budget, and officials are struggling to keep it in balance.

Making matters worse, the state’s share of federal stimulus money is running out. Bredesen used $520 million of that money to delay some cuts last year, so those reductions will go into effect over the next year on top of whatever new cuts the legislature is forced to make.

The administration has kept the lid on details of Bredesen’s plan, leaving it to him to make his case Monday night. Up to $400 million in additional reductions may be necessary, according to some legislators. Bredesen warned the cuts in services will not go unnoticed by the public, and legislators are bracing for anguished constituencies.

“You can’t get from where we are to where we need to be without doing things that people are noticing,” he said. “And remember that we really have two years’ worth of cuts to deal with. Because of the stimulus funds, there were a number of cuts that were actually made, legally, last year, but which really haven’t come into effect yet. So there’s really kind of a double hit here in terms of the cuts.”

Bredesen has ruled out tax increases, ensuring that he will become the first Tennessee governor in modern times to complete two terms without raising the state sales tax.

Because state government always has operated conservatively, Tennessee is better off than many other states. In the past year, 48 states have faced shortfalls totaling a record $193 billion, according to the nonprofit Center on Budget and Policy Priorities.

Tennessee is among 28 states that have restricted health care programs for poor people. Among this state’s cuts, the Bredesen administration has frozen enrollment in CoverKids, Tennessee’s health care program for children.

At least 36 states have cut funding to public colleges and universities, forcing layoffs of faculty and staff in addition to tuition increases. Tennessee staved off higher education cuts last year with federal stimulus cash, but funding reductions and new tuition increases are almost certain this year.

At least 24 states, including Tennessee, have cut programs for the elderly and disabled. Tennessee has reduced community-based services for the mentally disabled and nursing services for some disabled adults.

At least 42 state governments have cut their work forces. Bredesen has dropped more than 2,000 state positions, about 5 percent of the state work force, and some 1,500 employees have accepted buy-outs for early retirement.

The governor confirmed last week that he will lay off more state workers this year, but he declined to say how many.
He said he will eliminate some jobs to create new efficiencies but other cuts will be “involuntary in the sense that these are layoffs that are painful right now, and you hope at some point in the future … [the jobs] could be retrieved, but we need to do things to get through the budget.”

In a Catch-22, economists say that by cutting services to balance their budgets, state governments actually could wind up delaying any recovery by reducing overall economic activity.

Bredesen, who cannot run for re-election because of term limits, said he wants to leave the state in sound financial condition for his successor. But with no recovery in sight, the state’s finances almost certainly will remain on life support long after he exits. Even after the economy rebounds, Tennessee may be one of the last governments to get back on its feet. That’s because the state relies on the sales tax, which grows slower than the economy.

“Gov. Bredesen is widely considered a skillful fiscal manager,” said Middle Tennessee State University political scientist Mark Byrnes. “[But] no matter how well Bredesen handles the budget this year, his successor will inherit a tough situation. It’s almost enough to make me wonder why some people are trying so hard to get elected to the office.”

In an election year, lawmakers will be loathe to upset voters by cutting popular services. So they will be tempted to raid the state’s $800 million in emergency reserves, most of which is in the “Rainy Day” fund. They reason that these financial conditions qualify as a torrential downpour.

House Speaker Kent Williams, R-Elizabethton, said last week he thinks the state should spend roughly half of its reserves to prevent what he called “vital social service agencies” from shutting down.

“My philosophy has always been, if your children are going to go hungry or your family is going to suffer medically, you don’t keep money in your savings account,” he said. “I look at it like we’re protecting our children, and we’re protecting those who can’t help themselves.”

But Senate speaker Ron Ramsey, R-Blountville, who is running for governor, insisted it’s fiscally irresponsible to spend that much out of the state’s reserves.

“We need to keep some money laid back because we haven’t seen the light at the end of the tunnel yet,” Ramsey said. “I’m sure this has sunk in with some of our members just how bad this is. We can’t be like Washington, D.C. We can’t print money. There are going to be some tough decisions.”

For coverage of Bredesen’s address, visit nashvillecitypaper.com

12 Comments on this post:

By: idgaf on 2/1/10 at 5:42

Didn't he see this coming when he started the pre K entitlement program?

The dems have a hard time not spending an extra buck in their pockets when they can buy votes with it. They/he damaged the scholarship program too by taking their money. (not to say I agreed with the earmarking of those funds (that was stupid too))

By: Kosh III on 2/1/10 at 7:06

"must convince legislators of the wisdom of accepting the deep spending cuts"

Any easy sell as Republicans are always squalling about cutcutcut! as long it doesn't cut military or corporate concerns.

By: sickofstupidity on 2/1/10 at 7:37

1) Legislators hire new secretaries with salaries from 26,000 to 60,000;

2) Gov. gives huge tax incentivies to companies that will create only 250 jobs;

3) Multiple goverment agencies that serve no vital purpose other than to foster political issues or lobbists needs or are outdated like Health Services and Development agency, Film Board, Tennessee Commission on Children and Youth, the legislature in its entirity, the bunker, a Deptuy Gov. position, and on and on ;

4) and finally TennCare...Hillary and Bill Clinton's failed Universal Healthcare Program.

Tennessee is a backwoods, 19th century joke!

By: frank brown on 2/1/10 at 7:45

I would suggest that the state quit spending. The people in this state and this country who are not at risk financially are those that match outgo to income.

By: Kosh III on 2/1/10 at 7:46

sickof

Had you been paying attention you would have know that your dream did come true. Bredesen did eliminate TennCare. Only a few thousand children are left on the rolls. Now all that is left is a bloated TennCare bureau that hadles administrative matters, and a a large number of people, mostly children, who are on Medicaid.

By: sickofstupidity on 2/1/10 at 8:36

Wrong Kosh..TennCare as of 8/31/09 has 1,144,537 enrollees with ricer bendfits than most private insurance reciepents. And for you information, TennCare is the state's Medicaid program. Typical Tennessean..no knowledge or facts but long on mouth!

By: sickofstupidity on 2/1/10 at 8:42

and Kosh, CoverTn is only one program aimed at Kids whose parents can't afford insurance for them..it was not eliminated but enrollment was capped..meaning no new participants. Information on TennCare, including what amd who it covers is on the state's web site. It might be helpful if you have someone read it to you.

By: real_frank_brown on 2/1/10 at 9:22

To "frank brown;"
Please go back to using your other posting name here "richgoose" and stop using "frank brown" ; a name you have admitted is not yours, and one that when you post with, some of your statements cause detriment to my name. Thank you.
Frank Brown

By: brandt on 2/1/10 at 11:29

Its one thing to say how bad things are, but as the leader of our state, I'm hopeful that he can put a more positive spin on things. Yes we are at a crossroads, but we must tighten our belts, focus on the necessities and move forward. Get rid of your overhead, and let the departments get to it. We will be out of this in a few years. Just hang tight.

Also! I don't like my state flag shredded. I know free speech, but this is what the Tennessean would do. Welcome to the bottom "City Paper".

By: Kosh III on 2/1/10 at 1:10

sickof

I am correct. TennCare Standard has only a few thousand (at most) children enrolled. All the rest of the people in TennCareStandard or TennCare Medically Needy categories were disenrolled by Bredesen in 05 with further disenrollments of the "Daniels" category and elderly and disabled in subsequent years.

I did say that people (mostly children) are still in TennCareMedicaid. When you say eliminate "TennCare" you should say you mean to disenroll all the children and pregant women in TennCareMedicaid.

By: Kosh III on 2/1/10 at 1:12

And CoverKids is NOT administered by the TennCare Bureau and cannot be said in any fashion to be "TennCare."

By: sickofstupidity on 2/1/10 at 2:01

Kosh you are wrong on almost every point. But trying to talk with you about these issues are futile. TennCare is the state's "enhanced" Medicaid progrm that is not limited to children and pregnant women. You are an idiot as evidenced by you inability to process information. CoverKids could not get people to enrollee..they never met their enrollment projections. I never said it was part of TennCare...what are you smoking ...TennCare is made up of 1.4 million people who qualify for the Tennessee Medicare waiver.program..ages 0 to infinity...read you own post. You said "Had you been paying attention you would have know that your dream did come true. Bredesen did eliminate TennCare. Only a few thousand children are left on the rolls. Now all that is left is a bloated TennCare bureau that hadles administrative matters, and a a large number of people, mostly children, who are on Medicaid". Go back to huffing paint thinner!