Gov. Bill Haslam on Monday released his proposed state budget for the coming financial year, ending more than a thousand jobs across the government but also cutting taxes modestly and paying for major construction projects on college campuses.
Tennessee’s citizens are projected to send $9.4 billion to the government to pay for state services, returning the treasury to its pre-recession level for the first time in six years. The budget, including federal funds, comes to $31 billion with $365 million more state revenue than the current operating year.
In his State of the State speech that accompanied his spending blueprint, Haslam asked Tennesseans to “believe in better” when it comes to the economy and their children’s education.
“I promise to be relentless when it comes to providing the very best service to our taxpayers for the very lowest price,” Haslam told a joint assembly of the state House and Senate. “And on issue or policy, our administration will always work to get to the right answer, not just our own answer. Working together, we are going to achieve better for Tennessee.”
State officials said ending 1,166 positions in the government — roughly half of which currently are filled — is necessary to create new efficiencies. That cuts the workforce by 2.6 percent. Once these latest layoffs occur, the state will employ 43,000 people — 7,000 fewer than when the recession hit in 2008.
For the workforce that remains, Haslam set aside $123 million to give 2.5 percent across-the-board pay raises.
“Our role in state government is to provide services that Tennesseans aren’t able to get on their own — we build roads, offer higher education options, house prisoners, help families adopt children, care for the mentally ill, patrol highways, serve veterans and perform hundreds of other services,” the governor said. “My job as governor is to make sure we are providing those services in a customer-focused and effective way.”
Haslam proposed spending nearly $264 million to pay for long-deferred higher education construction projects, including a new science building at Middle Tennessee State University and a science lab at the University of Tennessee.
He would add $50 million to the state’s so-called Rainy Day fund for emergencies. That would bring the fund to $356 million.
Included in the budget is money to pay for the governor’s previously announced 2012 legislative agenda. He wants to cut the state grocery and inheritance taxes as well as enact an array of anti-crime laws cracking down on domestic violence, street gangs and meth cookers.
Haslam would raise the inheritance tax exemption from $1 million to $1.25 million. He called it the first step toward ending the tax on estates worth up to $5 million, the level of the federal exemption. The first year will cost the state treasury $14 million. Annually, only about 200 estates pay this tax.
The governor proposed decreasing the state sales tax on food from 5.5 percent to 5.3 percent this year, and he said he wants to drop it to 5 percent in the next three years. That would cost the state treasury $18 million in the coming year.