State budget shortfall to require layoffs

University of Tennessee economist Bill Fox, the General Assembly’s Fiscal Review Committee and the Department of Revenue presented their projections to the panel earlier this week.

Gov. Phil Bredesen said Wednesday that the state’s deteriorating budget situation will require an unspecified number of state employees to be laid off.

Bredesen declined to say how many of the state’s more than 45,000 employees could be affected. But he said the cuts would be in addition to the 160 positions he may have to eliminate at the Department of Children’s Services because of a $73 million reduction in federal program funding.

State Finance Commissioner Dave Goetz said Thursday that it’s still uncertain how many employees would be cut.

‘This requires you to go back and kind of examine first a whole lot of things that you may not have really put on the table previously before you have to come to that kind of last resort,’ Goetz said.

The board went with a projection of $314 million to $384 million this year. That’s on top of the $180 million drop Bredesen had projected in February.

For the budget year beginning July 1, the board projected $468 million to $585 million less than Bredesen’s budget proposal.

Before making a final decision, the board sought clarification of sales tax estimates for this year. The difference between the lowest projection and the highest was more than $100 million.

Board officials said they just wanted to get the best estimate following April’s sales tax drop of 5.5 percent, the biggest decline since 1961.

‘Everybody wants as precise the number we can get,’ said state Comptroller John Morgan.

Jim Tucker, executive director of the Tennessee State Employees Association, criticized Bredesen’s decision on the layoffs and said the state’s $750 million ‘rainy day’ reserves should be tapped to keep the layoffs from happening.

But Goetz doesn’t see that as an option.

‘I understand their concern, but we also know we have to make sure the state is able to operate effectively in two or three years and not have spent all of its savings and then not have any alternatives,’ he said.

Bredesen has asked to address a joint assembly of the Legislature the week of May 12 to lay out details of his proposal for spending cuts.

The governor previously considered layoffs when he came into office in 2003 but did not implement them. His Republican predecessor, Gov. Don Sundquist, was forced to furlough about 22,000 state workers for five days in 2002 amid a contentious debate over a state income tax.