Gov. Bill Haslam said the state can weather large cuts that could come down from the federal government early next year but said “we shouldn’t kid ourselves” to believe reductions would be painless.
As the governor’s staff begins to build a roughly $31 billion state spending and budget proposal, he said state government coffers won’t make up for large federal cuts included in a threatened sequester, an automatic funding cut for a series of federal programs that will go into effect Jan. 2 unless Congress agrees on an alternative plan.
The result, Haslam said, will mean losing some programs funded in large part by the federal government.
“We think that we’re prepared as well as we can be, but depending on how much money’s lost, to say that we won’t notice that, I don’t think is fair,” Haslam told reporters Monday.
Federal officials are now looking to broker a deal before the new year to reduce the federal deficit, a plan that could include automatically cutting billions of dollars next year in defense spending and domestic programs.
In Tennessee, that could mean up to $85 million in cuts to federally funded portions of the state budget that kicks in July 1, 2013, according to a spokesman for the Tennessee Department of Finance and Administration. Medicaid and the Temporary Assistance for Needy Families programs are exempt from sequestration, according to the agency.
“In most of those cases when the federal money is taken away, the program that it’s funding will go away as well because we just literally, don’t have the state dollars to come in and replace all those federal dollars,” Haslam said.
Cuts could come at a variety of agencies and programs, including Title I funding for schools that serve large numbers of low-income students, special education programs, and people on certain unemployment benefits supported by federal funds.