Gov. Haslam is in the midst of departmental hearings as he prepares to draft the 2011-12 state budget while facing a $1 billion deficit. So far, proposed cuts have fallen on college students, people with disabilities, and people of color. Tuition and fees at four-year universities have already risen 74 percent since 2001, and tuition and fees at two-year colleges have risen 126% in the same time period. The Minority Health Initiative that addresses health issues that disproportionately affect people of color is facing elimination. Operating costs for schools for the deaf and blind are threatened. Almost every department testifying in the hearings included layoffs and job elimination in their proposals.
The sad thing is that none of these proposed budget cuts are necessary. The proposals advocated by TFT could raise more than $1 billion in revenue for the state AND give 2/3 of Tennesseans a tax cut.
Video: Tennessee Budget Hearings
From the Chattanooga Times Free Press:
NASHVILLE — Gov. Bill Haslam warned Monday of "hard" choices ahead in Tennessee's upcoming 2011-12 budget as the state's new chief executive held his first hearings on state spending.
"I think what you're seeing is a lot of those things that were cut last year on paper but haven't been implemented yet," Haslam told reporters. "There's some painful things there."
Cuts have been masked until now with some $1.5 billion in one-time federal stimulus funds. But the money largely disappears beginning July 1, Haslam noted. While revenues have been coming back, Haslam said they cannot offset much of the previously made cuts, so the state must "prioritize."
In the meantime, Haslam is trying to create elbow room in the budget for his priorities such as fully funding inflationary and student enrollment growth in the state's Basic Education Program formula for K-12 education. That comes to about $68 million.
"We made a commitment to fully fund the BEP, and I've said all along that would be one of our priorities," Haslam said. "We're committed to doing that."
Departments across state government have been asked to provide for additional cuts of 1 percent to 3 percent. Those come on top of major cuts in previous years, including those that were offset by federal stimulus funds.
Among those making budget presentations Monday was interim Health Commissioner Susan Cooper, a holdover from the Bredesen administration.
In her plans for additional cuts, Cooper outlined additional reductions of up to $3.59 million that include shuttering two health clinics providing services for the poor.
But she sought to make the case to Haslam and Finance Commissioner Mark Emkes to continue some of the $32.9 million in programs cut last year but continued through July 1 with federal funds.
Among programs Cooper urged the governor to support was a $7 million diabetes initiative. It has helped pull the state's diabetes rate down from 11.9 percent to 10 percent, she said.
Emkes, a former Bridgestone CEO, agreed with Cooper that such programs can offset future health care costs. He said he wished officials could "double your budget" on such initiatives.
Observed Haslam, a former Knoxville mayor who touted his budgetary experience during his campaign: "Let me know what you're going to cut in half" to achieve that wish.
Cooper suggested some aspects of the diabetes program could be cut. She also suggested the state cut funding for a $30,600 shaken baby syndrome program and $860,100 now spent on a minority health initiative, among other programs.
Interim Education Commissioner Patrick Smith noted the proposed K-12 budget includes restoring about $57 million in programs extended through federal stimulus funds and another $12.2 million in programs saved through state budget reserve funds. The federal programs he advocated saving included $15 million in extended contracts for Career Ladder teachers.
He recommended $500,000 in public television system grants be restored.
"We've identified many of those same things that were funded with one-time money this year as being worthy of consideration to continue funding with one-time money in the ensuing fiscal year," Smith said.
The administration also heard from higher education officials.
At this point, the Haslam administration is missing an important piece in the budget puzzle — budget projections for the 2011-12 budget year that begins July 1.
In the meantime, the state is dealing with a bigger total budget than the $29.9 billion 2010-11 spending plan that Bredesen administration officials last spring estimated was passed by state lawmakers.
The final budget, which includes federal spending, actually totals about $31.3 billion, more than $1 billion higher than previously estimated, state Finance and Administration Department officials recently said.
Reasons for the increase included higher education tuition increases and Congress' eventual extension of more generous Medicaid match rates, which benefit TennCare.
From the TN Report:
Gov. Bill Haslam kicked off a four-day stretch of departmental hearings Monday as a warm-up to drafting his first state budget.
The new governor digested spending-plan projections from some heavy fiscal hitters right off the bat, including the Departments of Health, Education and Higher Education, which all had to present budget scenarios with reductions of 1 percent and 2 percent.
“We have 23 departments, if you add up all the requests, it will be a number obviously that we can’t fund,” Haslam said during a short break between hearings. “It’s their job to request that and to prioritize that … and then we have to wade through that at the end of the day.”
Haslam said he’s confident there’ll be fewer employees on the state payroll under his budget plan. But he said reductions need to be made “surgically” instead of by slashing staff with massive layoffs.
Haslam also heard from the Departments of Tourist Development and Financial Institutions Monday. On Tuesday, he is scheduled to hear from the Education Lottery Corporation and the Departments of Environment and Conservation, Transportation, Labor and Workforce Development, Corrections, Veterans Affairs, General Services, Commerce and Insurance, and Economic and Community Development. Hearings are expected to continue through Thursday morning.
Here are some highlights from Monday’s hearings:
Education
Education officials proposed an increase of $423 million in the state-funded portion of its budget, bringing the overall budget to $5.1 billion. Acting Education Commissioner Patrick Smith said the increase is composed of pay increases and increased state funding to schools mandated by inflation and the state’s school funding formula.
Haslam told reporters that he’s committed to fully funding schools as called for under the formula, known as the Basic Education Program.
“If you look at new dollars that are available in the state, at the end of the day, about half of them will be end up taken up in (Basic Education Program) formula and TennCare increases, just by formula, not by doing anything different,” he said.
Smith outlined about $3.5 million in possible cuts, which would eliminate positions and supply costs. The proposal would also reduce operating costs for the state’s schools for the blind and deaf, cut grants that support public television stations operated by schools and reduce other programs.
The total education budget is estimated to decrease this year by about $510 million because of a $1 billion reduction in federal funds.
Tourist Development
State tourism officials say they want to build two new “Welcome Centers,” even though all departments have been asked to propose reductions to their annual budget as one-time federal stimulus dollars run out this year. According to the department, the state currently operates 14 Welcome Centers across the state.
They described plans to build a center as part of a solar farm in Haywood County, and another visitor center along I-26 in Sullivan County.
Haslam questioned the expansion plans: “I’m just wondering why, in tight times, we’re adding them.”
The centers had “been on the books for 10 years,” and the planning and funding had been approved for several years as well, Department Commissioner Susan Whitaker said.
Health
Haslam opened his first budget hearing with Commissioner of Health Susan Cooper, who emphasized the department’s role in instilling good health into all environments and not specifically focused on individual clinical care. She addressed disease prevention and outbreak investigations, immunizations, licensing facilities and emergency preparedness.
The department employs roughly 3,000 people.
She noted that in 2005 the state ranked 48th in the nation in health status but is now 42nd, crediting decreased use of tobacco and returns on investment in community efforts to fight diabetes.
Haslam set the tone early that he would ask many questions along the way, frequently interjecting and asking if stimulus funds had been involved in expenditures.
Cooper noted that good health factors can be attractive to new businesses. She outlined a base budget of $539 million.
The department offered several potential budget reduction areas such as travel, cutting communications costs, abolishing a few positions and eliminating a hemophilia program, which she quickly added would require a change in statute.
Higher Education
Joe DiPietro, president of the University of Tennessee, and John Morgan, chancellor of the Tennessee Board of Regents made their first budget appearances since taking their new positions. The message they gave Haslam was that while there are great financial challenges facing the system, the state has high value in its higher education institutions.
Richard G. Rhoda, executive director of the Tennessee Higher Education Commission led off the presentation and underscored the financial crunch by telling Haslam that in the last 10 years enrollment at the state’s four-year schools has gone up 22 percent but that they have seen appropriations fall 33 percent. At the same time, tuition and fees have risen 74 percent.
Meanwhile, Rhoda said, enrollment at two-year schools is up 38 percent during that period while appropriations are down 26 percent. But in that time, tuition and fees for those schools have risen 126 percent.
Morgan said space constraints are a serious problem at many of the state’s technology centers. DiPietro said one issue facing UT is that some buildings are over 40 years old and in need of repairs. When Haslam asked the higher ed panel if they had any creative ideas to address the financial stress on the system, one possibility Morgan raised was to apply means-testing to the HOPE scholarships derived from the state’s lottery. Haslam said after the hearing he is not ready to take such a step.
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