State budget shortfall means painful cuts
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‘This is basically going to curtail any of our growth,’ said state Rep. Judd Matheny. ‘And the governor has said he thinks we need to trim $80 million in payroll from the state. He wants to spare education, but the rest of the cuts will be spread out equally among other state departments.’
So far, Gov. Phil Bredesen has been reluctant to reveal how many of the state’s more than 45,000 employees could lose their jobs. Matheny said the state would like to achieve the payroll cuts through hiring freezes and attrition, but with an estimated 1,600 to 2,000 jobs needing to be eliminated, that’s going to be difficult.
‘It’s going to require some cuts,’ said state Sen. Steve Roller, who indicated state employee layoffs will be a last resort. ‘I know members of the Legislature are going to have a say in this before it’s over and it’s nothing we should panic about right now.’
The state has a sizable amount ‘ $750 million ‘ in its rainy day fund. However, with such staggering budget shortfalls projected for this fiscal year and the next, it could exceed what’s in the rainy day fund.
There are cries to use the rainy day money to avoid layoffs this year, but Matheny said that money will likely be used heavily next year.
The problem is consumer spending has dried up. And Tennessee gets a chunk of its state funding through the sales tax.
‘We’re all hanging onto our money and not spending much,’ said Matheny.
Roller and Matheny both pointed to sluggish new car sales as one culprit. ‘There’s a lot of tax on a new automobile,’ said Roller. Matheny added that new home construction is at its lowest point since 1959 when records first began to be kept on that statistic.
The governor was expected to present his budget to the General Assembly tomorrow. But due to the extreme budget cuts in the works, Bredesen will take a week longer and present his budget next Monday.
‘That’s when we’ll know what has to be done for sure,’ said Matheny.