Federal ‘Fiscal Cliff’ Would Mean a Fall for TN, Too

Tennessee state government would face a substantial revenue reduction if the federal government goes off the “fiscal cliff,” according to an Andy Sher report.
According to Pew, about 18 percent of federal grant dollars flowing to states would be subject to across-the-board cuts. That’s the case in Tennessee.
Using calculations from the Federal Funds Information for States, Pew said federal spending on education, nutrition for low-income women and children, public housing and other programs like special education would be impacted.
Tennessee Finance Commissioner Mark Emkes said the state’s own calculations show a loss of $85 million in calendar year 2013 in federal grant money. Among the hits is about $20 million for Title I, which helps low-income students. Another $20 million would come out of special education.
“Of course it would be easier for us if it did not occur,” Emkes said.
But he noted that the state required agencies last year to sketch out “hypothetical” cuts of 15 to 30 percent, depending on what actions the federal government takes to slash spending.
“We would of course prefer not to lose federal money,” Emkes said. “But we are mentally prepared if it goes away. …. We’ve proven we have what it takes to balance the budget.”
He said Tennessee is still trying to get further clarification on the impacts of cuts and tax increases.
In addition to state government, Tennessee would be hit by anticipated cuts to the Oak Ridge National Laboratory and other areas. Pew estimates federal spending on procurement, salaries and wages accounted for 4.9 percent of Tennessee’s gross domestic product in 2010.

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