Haslam budget plan has $170M for pay raises, $200M in cuts and grows a bit overall

Gov. Bill Haslam’s $33.3 billion state budget proposal for the next coming year includes about $170 million in new spending on pay raises for teachers and state employees – though some will get more than others – along with about $200 million in cuts to existing programs.

For public school teachers, the $97.6 million allocated for raises would amount to a 4 percent pay raise across the board. But the actual increases will vary from school district to school district. Haslam also proposed to provide liability insurance to teachers at no cost to them.

For state employees, the $47.7 million allocated for raises amounts to about 3 percent if it were across the board. But it’s not. Instead, it will be “performance-based” under a system set up through legislation enacted a three years ago at Haslam’s urging and now being implemented.

Also, longevity pay – annual bonuses based on seniority that can amount to as much as $3,000 per person – is abolished. Half of each employee’s longevity pay will be added to his or her base salary. The rest goes into the general pool to provide the $47.7 million for performance-based raises. The upshot: some employees could receive a cut in pay rather than an increase.

Higher education will receive $19.5 million for salary increases, which would amount to 1.5 percent across the board. The actual raises will be up to administrators. Higher education also gets $25.7 million to cover funding formula needs – officials say that may reduce the need for tuition increases — and $216 million for capital improvements (part of almost $600 million in statewide capitol projects).

In a rounded-off overview, the budget projects $300 million in new revenue for the coming year but $500 million in cost increases, requiring $200 million in cuts.

Here are excerpts from some reporting on the budget presentation:

From the Commercial Appeal:

The budget proposal for new construction and major maintenance calls for spending the largest amount on a single project on a private enterprise — $165.8 million on the previously announced expansion of Volkswagen’s Chattanooga auto manufacturing plant. It contains another $35 million for a separate undisclosed economic development project that won’t become public until the project is announced and the money request goes to the State Funding Board.

The second biggest project is $99.5 million for a new science lab at the University of Tennessee’s Knoxville campus.

…The governor’s proposal would increase the total state budget by $349.7 million from the current year’s estimated total of $32.99 billion.

The spending blueprint also contains major changes in how state employees are compensated, although that plan will require separate legislative approval and is certain to generate opposition by state workers. Haslam wants to scrap a “longevity pay” system created decades ago that gives state employees after three years of state employment an annual bonus of $100 for each year of service, capped at $3,000.

From the Times-Free Press:
The governor’s budget cuts call for eliminating 559 employee positions — 501 of which are currently filled. The bulk — 305 people — work at the Charles B. Bass Correctional Complex in Nashville, which the state plans to close.

Also on the chopping block are 131 positions at Nashville’s Woodland Hills juvenile detention facility, the site of three major incidents last fall including the escape of dozens of teens and a riot in the yard. The state is moving toward putting teens in privately run settings.

…The governor has several recommendations to get more revenue. One is an increase from 5.5 percent to 6 percent in the state’s Health Maintenance Organization tax. That would bring in another $33.5 million for the state’s TennCare health insurance program for low-income Tennesseans.

He also announced proposed changes to business taxes, which fell sharply last year. Aside from “natural” volatility in the taxes along with other issues, the governor said part of the problem is out-of-state firms “aren’t always required to pay the same taxes that our in-state and homegrown companies do.” He intends to address that.

All in all, the governor is counting on $330.5 million in new recurring revenues either through natural growth of existing taxes or closing off corporate tax “loopholes.”