Haslam to state departments: Plan for 7% budget cut

Gov. Bill Haslam has ordered state agencies to slash discretionary spending by up to 7 percent as his administration builds the new budget it will present to legislators early next year, reports the Chattanooga TFP.

The move comes with the state’s general fund, which pays for most functions of government including education, showing a $302.4 million revenue shortfall for the fiscal year 2013-2014 budget that ended June 30.

Administration officials on Friday confirmed the directive given to departments. Agencies’ plans are due Monday. How much actually winds up getting cut and where in Haslam’s fiscal year 2015-2016 budget will depend on a variety of factors.

But after years of reductions, Tennessee may be on the verge of having to make tough choices next year, possibly abolishing entire programs, said one top lawmaker.

“I think that could be the case,” said Senate Finance Chairman Randy McNally, R-Oak Ridge. “In the past they’ve done some of that trimming through things like over appropriations [automatic holdbacks of funds] and positions unfilled for years.”

McNally added, “I think all of that’s gone now.”

He said the major problem with the state revenue picture is business franchise and excise tax collections.

In his Aug. 15 directive to departments, Finance Commissioner Larry Martin explained that “funding the services of state government within available revenues continues to be [a] challenge. As a result, it is expected that reductions will again be required in order to balance.”

Departments and other agencies are submitting plans in two parts. The first is to show how they would cut 7 percent. This is beyond the money the state customarily expects won’t be spent over the course of a year, known as the “over appropriation.”

The second part of the directive asks departments to provide a list of base reductions they would use to offset any proposed increase requests in areas officials consider vital.