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Pettus Read

by Pete Edwards

The Tennessee General Assembly wrapped up its session on May 29 by approving the largest budget increase in state history. The $21.5 billion

budget was $1.3 billion more than last year's emergency compromise of $20.2 billion that was reported as using one time tobacco settlement money and state reserve funds.

Last year's reported shortfall divided house and senate members over the need for an income tax. Don Sundquist said state finances were in such a mess that state government was about to close down if tax reform wasn't adopted. While shutdowns and shortfalls were daily news last year, budget cuts and layoffs were the headline this year.  Although much has been made of axing state spending, the new record budget tells a story much less publicized. $1.3 billion was found this year that could not be found last, despite the national

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recession. The original talk of massive state layoffs and merged departments didn't materialize, even decreased state funds to local governments were trimmed to a token of those first projected.

Senator Jeff Miller (R-Cleveland) stated, "I was quite happy to see that the impact of cuts in state-shared taxes was reduced to about half of what was originally proposed in the budget.  In addition, many of the mandates on local governments, particularly on our counties, were lifted."

According to committee testimony by the state Comptroller, We are in much better shape than most states. Revenue projections are coming in quite close to anticipated collections and the real problem has been overspending in TennCare.

The increase in the state appropriation to TennCare is over $327 million, the largest planned dollar increase in the history of the program which has required additional unplanned funding from state reserves every year.

Miller said  "I am particularly pleased to see that we have a promise that TennCare will finally become accountable to the General Assembly.  In an unprecedented move, the Commissioner of Finance and Administration came into the well of the Senate and pledged to do an accurate verification of the rolls of those on the TennCare Program and to address the audit issues that have gone unheeded for a decade.  These items should be done by January 1 before we return for the next year of session."

The federal government will provide some $20 billion in additional aid to states this year with Tennessee receiving between $400 million and $500 million that is not currently accounted for yet in the state's new budget.  Many members hope that the administration wisely sets aside those dollars in reserves until the General Assembly reconvenes in January.
Governor Bredesen's first budget seems to have been a success, with stable taxes but no readily identifiable state cuts. 

Gov, Bredesen has been riding on a wave of popularity for his handling of state finances but questions are being asked as to what was last years crisis and this year's original projected budget shortfall all about and  where did the funds came from to balance a record state budget without cuts?

April 2003

May 2003