State seeks $900 million in cuts

Departments submit multiple contingency plans By Theo Emery • THE TENNESSEAN • January 18, 2009 After the bitter acrimony surrounding last week's surprise election of Republican Speaker Kent Williams, the General Assembly's real work has yet to begin: passing the state budget that Gov. Phil Bredesen will propose in his State of the State address on Feb. 9. The 2009-10 budget, which is in the final stages of preparation, anticipates a shortfall of about $712 million in revenues next year, and would require about $900 million in cuts across most departments. The cuts that departments submitted to Bredesen late last month include more than 2,000 jobs, although the governor said he would be "astonished" if that many people were laid off, calling it a worst-case scenario if little federal aid comes from Washington and the deepest cuts were needed. But he said it would be almost impossible to avoid layoffs altogether, given the severity of the downturn and the state's declining revenues, which he said were "right up there" with other states hit hard by the economic downturn. "A part of my challenge here is not only to balance the budget but also to understand that this is certainly the worst financial situation in the state since the second World War," he said. "It's not going to be a pretty budget when you look at it." The Tennessee State Employees Association said the governor is not looking hard enough for other ways to save money and accused him of bad faith in his budget setting. The association is particularly angry about plans to ask lawmakers for legislation that would relax civil service rules and make it easier to lay off employees. "We have balanced the state's budget through difficult times in our past and under numerous administrations and never before has a governor requested such power to accomplish the task," the association's executive director, Jim Tucker, said in a statement. The governor asked his department heads to establish multiple stages of cuts. The first tier averages just over 8 percent cuts, which departments will adopt under almost any scenario. Then, departments were asked to prepare another plan to cut an additional 6 percent, which would be necessary should the federal stimulus package not provide adequate aid for the state. The two tiers would total about 14.5 percent. Finally, the administration asked for contingency plans for 5 percent more in cuts, in case the economic situation gets worse, which the governor said is possible in the difficult-to-predict economic environment. "This year, you make projections and they can be off by $500 million in either direction in terms of the tax revenues of the state," he said. A few departments and areas of spending were able to avoid major cuts. Bredesen said he plans to keep the state's Basic Education Program school funding intact, and allowed the Department of Corrections to avoid cuts in what would be the first round of cuts, though not in the second. TennCare hit hardest In many cases, the cuts required of departments total millions, and even tens of millions of dollars. In December, the administration's reduction guidelines asked the Department of Children's Services, for example, to find $23.6 million in the first round of cuts and $26 million in the second, totaling almost $50 million. The Department of Safety was asked to cut about $8.5 million in the first tier and $7.7 million in the second, for a total of about $16 million. The Department of Health was asked to find about $11 million in the first tier and about $10 million in the second. By far, the biggest cuts requested were from TennCare, the state's expanded Medicaid program. In the first round, TennCare was asked to find $205 million in cuts, and $181 million in the second round. The $386 million total represents more than a third of the total cuts across the state budget, according to the guidelines. The state recently won a court ruling that eventually could allow the state to save money by dropping some TennCare recipients who are no longer eligible but have remained in the rolls because of a court decision from the 1980s. The federal stimulus package under discussion in Washington likely would boost the federal contribution toward TennCare, the governor said. Gordon Bonnyman, founder of the Tennessee Justice Center and an advocate on behalf of TennCare recipients, said he hopes the stimulus package would prevent any TennCare cuts. "That should be more than enough to offset whatever the state thought it would have to cut in TennCare," he said. Lawmakers appear resigned to the grim task ahead. Lt. Gov. Ron Ramsey, the Republican Senate speaker, said he agrees with Bredesen "that we live within our means, that we balance the budget without a tax increase, that we make the tough cuts because we have to. "The only piece of business we have to conduct between now and the time we adjourn is to pass a balanced budget," Ramsey said, "and I feel confident that we'll do that with the basic philosophy the governor has laid out."