Gov. Bill Haslam unveiled his first state budget Monday and proposed abolishing 1,100 state employee jobs as part of cuts in spending across the government.
In his State of the State address to the legislature, the Republican governor called for lowered expectations and putting state government “on a rigorous diet.” He called it “the new normal.”
“Ten years from now, we will not — and cannot — be doing government the same way we did 20 years ago,” Haslam said. “The time is right to go on a rigorous diet that consumes less and exerts more energy.”
But the budget anticipated $475 million in growth from the recovering economy, and Haslam was able to avert many of the more Draconian reductions in services that had been possible.
Haslam said he wants to give a 1.6 percent pay raise to state employees, their first in four years, at a cost of $77 million. There also was enough new revenue to issue state bonds to fund a $97 million incentive for Electrolux to build a 1,200-worker kitchen appliance factory in Memphis. That deal with Electrolux was struck by Haslam’s Democratic predecessor, Phil Bredesen, who left office in January.
Of the 1,100 eliminated state employee positions, only 575 are filled, and Finance Commissioner Mark Emkes said the state would end those jobs over time through attrition.
“We are touching 575 people,” Emkes told reporters. “We are going to do that in the kindest and gentlest way possible.”
The Haslam budget came in at $30 billion, nearly $2 billion less than last year’s. That reflects the amount of federal economic stimulus money that has propped up state government since the recession began. That cash is vanishing in the coming year and forcing Haslam to implement cuts already approved by the legislature.
Haslam himself is proposing another $133 million in spending reductions. Average cuts across state government were 2.5 percent in his budget.
Included on the hit list is funding for public TV stations, health care centers, a family support program that helps the mentally disabled remain with their families, grants to fight Internet crimes against children, prison inmate work crews and the state’s groundwater inspection program.
Among new limitations in the state’s version of Medicaid, Haslam proposed tightening TennCare coverage for Caesarean sections. But he fended off more drastic cuts by continuing to impose a year-old fee on hospitals. That raises $450 million. The state’s hospitals have agreed to pay the fee because it draws three times that amount in federal matching money and saves them from having to absorb the cost of caring for the indigent.
“State government does a lot of good things,” Haslam told state lawmakers. “We have worked hard to try and continue funding many of those things. The reality is that there are a lot of things I would like to do, that each member of the legislature would like to do, but that we simply cannot afford.
“There is only one way to get our fiscal accounts in order: put another hole in the belt [and] pull it even tighter this year as we smooth out the remaining rough budget edges.”
The recession battered state government. State tax revenue fell 9.85 percent, or $1 billion, since 2008. Haslam still is using $160 million in one-time money to prevent more spending cuts, and he warned more hard decisions lie ahead.
“State government is still not nearly out of the woods yet,” Haslam told reporters. “There’s still work to be done.”
In his speech, Haslam also made sales pitches for his first legislative initiatives — capping jury awards in business and health care negligence cases, making it harder for teachers to earn and keep tenure, and opening charter schools to more students. In a new proposal, he called for cutting paperwork that he said now consumes too much time for teachers.
“There is one underlying principle — learning begins with great teachers who are encouraged to teach and to spend more time in the classroom instead of filling out reams of paperwork. Tonight I am calling on the commissioner of education, his staff and the state Board of Education to reduce teacher paperwork. Let’s keep our teachers in the classroom with students and stop carving out instruction time with bureaucratic red tape.”