Bredesen warns against overly optimistic spending
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Bredesen said he “had been hearing” that the Funding Board meeting “was getting a little politicized” to “make room for some projects that specific legislators wanted to do or change.”
The governor said he had heard that legislators “were looking at increasing the ranges or adopting a budget figure way up at the high end of the range, and I had a lot of concerns about that because I’m trying so hard to get us into the fiscally conservative middle of the road on these things.”
The “range” he spoke of is the range of percentage growth in tax collections the Funding Board will recommend for next year. This year, for instance, the range calls for growth in state tax revenues of between 5.75 percent and 6.25 percent.
The Funding Board range is not binding. The Legislature can choose to exceed it, but has done so only once in the more than a decade the funding ranges have been used.
Bredesen said he spoke about his concerns during the regular Wednesday morning leadership meeting, which includes all four members of the Funding Board as well as legislative leaders.
“I spoke … about the importance of being conservative in these projects and being conservative about where we are in the ranges, and I very much hope that’s where we’ll end up,” Bredesen said.
A likely target for increased spending by the Legislature would be construction projects for higher education, which Bredesen proposes for the first time to split between taxpayer dollars and private donations. The governor put two-thirds of the funding for the approved projects into his budget for next year; the remaining third amounts to about $46 million.
But lawmakers say there is a big difference in the fund-raising abilities of the University of Tennessee at Knoxville and the 14 two-year community colleges. UT has a larger community and alumni base to draw from than the others, and there is significant support in the Legislature for changing the governor’s proposal.
The Funding Board consists of the three constitutional officers — Comptroller John Morgan, who is chairman; Treasurer Dale Sims; and Secretary of State Riley Darnell — plus the governor’s finance commissioner, Dave Goetz.
It will meet on Thursday to hear from several economists and then estimate how much the state’s revenue is likely to grow in the upcoming fiscal year beginning July 1. It also can revise estimates for the current year.
“My personal feeling is it is very unlikely we’ll raise the estimates,” Morgan said. “But I won’t know until we’ve heard from the economists. Based on what I’ve seen from the revenue collections so far this year, it would suggest we’re on track to achieve the estimate we adopted back in December.”
Through March, the eighth month of the state’s fiscal year, revenues are $133 million above collections. However, the administration already programmed $163 million of nonrecurring revenue above those estimates into this year’s budget.
That comes not just from a projected over-collection of tax revenues but also from a one-time federal windfall received last fall.
Goetz noted the over-collections through March are not yet enough to cover what is already budgeted, much less to provide new money.
“We’re on track to meet the $163 million,” he said.