More money, more demands for dollars in state budget

Sunday, December 9, 2012 at 9:14pm

Standing at a podium before a few dozen people at a downtown insurance conference last week, Gov. Bill Haslam couldn’t help but crack a joke about why people are so interested in talking to him.

“Most people knocking on our door want more money,” he quipped.

But the state’s money situation is serious business. The governor was meeting last week with high-ranking officials trying to craft next year’s roughly $31 billion budget proposal at a time when tax dollars are rolling in, along with higher estimates for government costs.

Although the state expects to cash in on hundreds of millions of extra tax dollars, it’s not going to be enough to completely avoid budget cuts next year if the governor wants to move on some of his priorities, according to top officials.  

Haslam, who is charged with pitching his budget plan early next month, has already hinted at his list of budget desires for 2013: covering costs for the growing number of inmates housed in local prisons, adding funds to the Department of Child Services to hire and improve pay for case workers, and following through on promises to focus on higher education to better train people for in-demand jobs.

Last month, commissioners from each state agency presented the governor with plans to cut as much as 5 percent from their bottom line — reductions he maintains are highly unlikely across the board. Knowing that, many agencies leaders in their next breath asked for more money to fix up programs that could use more resources.

At first blush, it appears the state would have some extra money to play around with to fund those ideas. Since July, the state has already sucked up almost $70 million more that it planned on for everything from taxes on food, tobacco and alcohol to those on investments and businesses.

The state’s funding board is expecting Tennessee to take in $369 million more revenue in the budget cycle that begins July 2013, according to the governor’s office. The catch is almost all that money will get eaten up by increased costs in TennCare, the state’s Medicaid program, contends Haslam. 

Organic cost increases to TennCare and expenses associated with plugging in the Affordable Care Act will amount to about $350 million alone, he said.

“It’s literally sucking up all the money in state government,” said Haslam about the program that covers 1.2 million Tennesseans, largely low-income children, pregnant women, elderly and the disabled and takes up almost a third of the state budget.

House Speaker Beth Harwell said she too wants to tread carefully around TennCare funding.

“We have to be conservative, and because we don’t know exactly what increases in our health care costs are going to entail, we have to set that money aside,” she said.

That’s not the only budget challenge on the horizon. Add to that the pending threat from Washington, D.C., that the country may go over a so-called fiscal cliff if officials don’t strike a compromise to avoid automatic cuts in federal funding. If those cuts stick, it could mean pulling $100 million federal dollars out of Tennessee for programs like special education and unemployment insurance, according to the state’s budget officials.

Some of the toughest budget decisions will be about where, if anywhere, the state can spend any of remaining dollars it has left.

“When people feel that you have choices, that’s where the argument starts,” said Haslam, who expects this year’s spending plan to be very challenging. “We will have some more choice as we had in our first year, but not as much as people think because of what TennCare is going to do to the budget.”

Democrats suggest drama over higher TennCare costs are overblown and doubt the budget situation will result in much in the way of cuts.

“There’s just no question that our revenues have rebounded,” said House Minority Leader Craig Fitzhugh, D-Ripley. “I believe, certainly, that we would have the ability to have at least a status quo budget where we don’t have to have any more reductions.”

Meanwhile, lawmakers are poised to consider reducing the amount of money the state collects every year. Lt. Gov. Ron Ramsey wants to raise exemptions for those who have to pay tax on income from stocks and dividends, known as the Hall income tax. Meanwhile, lawmakers will have the option to follow through this year on the governor’s pledge to eventually reduce the tax on food to 5 percent from 5.25 percent.

4 Comments on this post:

By: RustyACE on 12/10/12 at 9:47

Dear Andrea,

Well written article.

You point out correctly that the New Obama Health Care Tax goes into effect 1/1/2013 and will suck very important funding directly from the hands of Tennesseans into a Federal Bureaucratic system that has shown that it has no end to it's appetite for dollars.

I wonder why the Nashville City Paper is just now getting around to blaming this for future TN budget shortfalls?

Seems like it was clearly spelled out all along what the current administration has in mind. Obama, et al, wants total, complete control of every dollar spent throughout the entire system (including every State's budget).

It is the Role of State Government to live with the confines of it's budget. In fact, we should live at 90% of our budget with 10% always being put aside for future unknown expenses. Every year when a budget is made, only 90% should ever make it into the hands of that budget line item.

Instead what really happens, is that all departments spend at 100% of their yearly budgets and count on a 5-10% raise each year. If they don't spend 100% or more, they "get less next year".

All departments, across the board should be cut 25% minimum. I've lived in TN long enough to remember when we could live on 18 Billion dollars just fine, now we blow through 25 Billion dollars like it's pocket change and demand the tax payers fork over even more.

The only thing missing from your articles, are a sense of history to go along with what otherwise is a well written article.

Facts and figures assist the reader in seeing the real picture of what's going on.

Relative statistics don't. Lines like "TN is 44th out of 50th in some perceived category" is not useful.

I appreciate all that you do Andrea and look forward to additional articles from you.

Sincerely,

RustyACE
Madison, TN

By: FormerState Employee on 12/10/12 at 11:20

I have to laugh at the new medias coverage of Governor Haslam. He and all his fellow Republicans talk about smaller government. While there are fewer state employees since Gov. Haslam has taken office, many do not realize that he and his cronies have created soo many new layers of management that it is RIDICULOUS. There state budget is supposedly tight yet several hundred stat employees just spent a few days at a conference that had to have cost a couple hundred thousand dollar to be told of all these new initiatives but yet there is no money to pay for them.

On top of that he has given his cabinet staff and directors huge pay raises since he took office and the common state employee has been given virtually nothing. He has eliminated position of the people who actually do the work and as I noted earlier has created several new layers of management as well as new offices (one headed by his former deputy mayor from Knoxville).

It's funny how selective and biased the media is anymore.

By: CrimesDown on 12/10/12 at 7:47

Something is up with our governor. When Gail Kerr starts writting good things about a Republican, something is wrong.

By: pswindle on 12/11/12 at 10:23

This is what happens when a Govenor comes in and starts to cut taxes for his family and rich friends. The poor Tennesseans have to pony up to make up the difference. Wait and see what happens when the inheritance tax is gone. Gov. Bredesen left this state in good shape with growth in the future. But Haslam comes in and changes the pattern until we are going in the wrong direction. Because he is in a red state, he has pulled off policies that will pull TN backward, but the Governors of Michigan and Ohio had enough people to stand up to the policies that stopped the destruction of the average Americans. When TN wakes up to the damage that this governor and his Legislative has done to the people of this geat state, maybe , they will fight for their rights.