NASHVILLE, Tenn. (AP) — Former Tennessee Gov. Phil Bredesen says citizens need to insist on a reduction in the federal deficit.
Bredesen, who served two terms as governor as a Democrat, met with reporters and editors of The Tennessean (http://tnne.ws/TFJzGj ) Monday on behalf of Fix the Debt. The national bipartisan campaign aims to reduce the federal debt by $4 trillion over 10 years. The method would be a combination of higher taxes and changes in entitlement programs.
Bredesen said the group has avoided taking sides in the “fiscal cliff” discussions now going on and cautions against reading too much into statements politicians are making.
He said the more substantive arguments about the size of the deficit will come in the spring.
Many Tennessee counties have been spending more money than they take in as revenue, according to a new report from the state comptroller’s office.
An excerpt from the report (full text HERE):
Total revenues for all Tennessee county governments totaled approximately $11.65 billion for the fiscal year ending June 30, 2011. In contrast, total expenditures for the same period were approximately $12.14 billion. Therefore, counties spent approximately $490 million more than they received in general and operating revenues.
County governments have seen sluggish growth in revenues over the last five years, as expenditures have exceeded revenues in each year over this time period. The slow growth includes years in which counties received federal money from the 2009 American Recovery and Reinvestment Act. This trend indicates that either debt was increasing during the
same time period, or fund balances were decreasing, or both.
Total county-related debt in Tennessee increased almost $1.41 billion from 2007 to 2011. This indicates that many county governments are deferring debt prinicipal payments and other obligations to future years. Audits conducted or reveiwed for the fi scal year ended June 30, 2011, disclosed fund defi cits totaling $110.29 million in governmental funds in 14 counties. Audits also refl ected net asset defi cits totaling $83.24 million in enterprise and internal service funds in 14 counties.
Tennessee counties have avoided the bankruptcy crisis seen elsewhere around the nation as a result of the economic
downturn. Although bankruptcies have been avoided to date, concerns remain. Along with the substantial increase in long-term debt, liabilities continue to grow for other post-employment benefi ts, such as health insurance premiums, awarded to government employees after those employees leave public service. In addition, new accounting standards will require the recognition of signifi cant long-term pension costs. These costs, which previously have not been recorded on the fi nancial statements when they were incurred, will dramatically impact large and small governments alike.
KNOXVILLE, Tenn. (AP) — Tennessee’s athletic department posted a $3.98 million deficit for the2011-12 fiscal year that forced it to use a substantial portion of its financial reserves, department officials acknowledged Monday.
Although the athletic department made $106.5 million in revenues, it had $110.5 million in expenses. Those expenses included hefty buyouts to former athletic director Mike Hamilton, football coach Phillip Fulmer, men’s basketball coach Bruce Pearl and baseball coach Todd Raleigh. When Hamilton resigned in June 2011, he received a $1.3 million buyout over three years. Fulmer received a buyout of $6 million over four years after getting fired in 2008.
Tennessee also has more than $200 million in outstanding debt related to the construction and renovation of various athletic facilities on campus.
The deficit, first reported Monday by The Sports Animal radio station in Knoxville, caused the athletic department’s reserves to dip to slightly below $2 million.
Weston Wamp said a new study validates his charge that U.S. Rep. Chuck Fleischmann hasn’t honored a campaign pledge to save taxpayer cash, reports the Chattanooga Times-Free Press.
“Mr. Fleischmann’s record shows that his walk does not line up with his talk,” Wamp said Thursday in a news release. “When he had a chance to make a difference and cut spending, he couldn’t pull the trigger.”
Wamp, who along with two others is challenging Fleischmann in Tennessee’s 3rd Congressional District Republican primary, was remarking on a study released by the Washington, D.C.-based Club for Growth. The study tracked House votes on this year’s 25 proposed amendments to appropriations bills that would have slashed spending and put the savings toward debt reduction — something Fleischmann claims to attempt every time he visits the House floor.
Not so, according to the study. Fleischmann supported 11 of 25 amendments overall, scoring 44 percent and finishing last among seven House Republicans from Tennessee.
The average Republican scored 59 percent.
Fleischmann defended his voting record.
“Most of these votes would have adversely impacted Oak Ridge [Tenn.], and I have said from day one … that the ongoing national security and nuclear energy work at Oak Ridge is a top priority of mine,” Fleischmann said in a email sent by campaign spokesman Jordan Powell.
In his release, Wamp, the 25-year-old son of former U.S. Rep. Zach Wamp, did not say whether he would have supported all the appropriations amendments, but in the past he has praised his father’s support for Oak Ridge and pledged to continue that tradition.
Note: The Wamp release is below.
The decision by Standard & Poor’s to downgrade the U.S. government’s credit rating could affect future borrowing for states like Tennessee, which depend heavily on federal spending, experts tell Andy Sher.
One such expert is Eileen Norcross, a senior research fellow at George Mason University’s Mercatus Center in Virginia. “State and local governments that are otherwise doing well, but are carrying the risk of a lot of federal projects on their balance sheets, may find it more expensive to borrow,” she said.
The credit rating agency lowered the U.S. triple-A credit rating to “AA+,” citing disappointment with the debt-ceiling deal Congress approved last week. The agreement calls for about $2 trillion in deficit reduction over the next decade. S&P analysts had called for $4 trillion in deficit reduction and expressed concern over divisive politics in Washington, D.C.
Even before Friday’s action, Tennessee officials were preparing to travel to New York to defend the state’s triple-A credit rating with analysts from Moody’s Investors Service, another major rating company.
Moody’s on Thursday reaffirmed triple-A ratings for Tennessee and four other states it had put on a credit watch for potential downgrades if a federal default occurred. But the ratings agency also slapped Tennessee, South Carolina, Virginia, Maryland and New Mexico with “negative” outlooks because of the volatile situation in Washington.
Michael Collins provides an account of how two Tennessee freshman congressmen reached their decision to vote against an increase in the federal debt ceiling:
The negotiations were over, a deal was on the table, and decision time had come. But U.S. Rep. Chuck Fleischmann was decidedly undecided as he headed to the House floor Monday afternoon to vote on an emergency debt-limit, spending-cut package that would keep the government from defaulting on its financial obligations.
He’d gone over the 74-page bill with House GOP leaders. He’d talked it over with other House Republicans. He’d even called business and civic leaders back home in Tennessee and asked their advice. But with the final vote just minutes away, the Ooltewah Republican still had no idea which way he would go. “I did not make that decision until I got on the floor,” Fleischmann later recalled.
In the end, what made the difference, he said, was “the overwhelming magnitude of the people of the district who said, ‘No, no, no.’ And so I ended up voting no.”
Fleischmann and other freshman lawmakers like U.S. Rep. Scott DesJarlais, R-Jasper, provided much of the will-they-or-won’t-they intrigue over the past two weeks as Congress raced against the clock to increase the nation’s borrowing authority and avert financial calamity.
….”I didn’t want to see default, and I didn’t want to see a credit-rating change,” DesJarlais said. “But being a business owner and having managed a family budget like other people in Tennessee’s 4th District, I couldn’t see how going another $2.4 trillion in debt was going to help our credit rating either.”
Regardless of how the debt-ceiling fight is resolved, there’s a consensus that the upshot of this year’s budget wars is less spending by Uncle Sam, according to an Andy Sher article.
That’s likely to have a major impact on states such as Tennessee, where federal spending is often derided even as state government, U.S. installations and residents themselves profit from it.
“I really do think that regardless of how this gets resolved, the federal government is going to be sending out less money,” Tennessee Gov. Bill Haslam said last week. “And as a state where about 40 percent of our revenue roughly comes from the federal government, we’ll feel it.”
Though Haslam expects what he calls a “big impact” on Tennessee, he still supports curbing federal spending. “The reality is that as a country we’re spending more than we’re bringing in. And that can’t keep going,” he said.
And the following is from a Tennessean piece with a similar theme:
Funding cuts due to default or to a deficit-reduction deal could disproportionately hurt Tennessee, where a greater-than-average percentage of residents rely on government aid.
The state received $68.5 billion in federal money in 2009, which averages to $10,887 per resident, compared to the U.S. average of $10,396, according to the latest data from the Census Bureau.
Almost 20 percent of Tennesseans receive Social Security payments, compared to 17.5 percent nationally. The state’s 1,251,947 recipients get benefits totaling $1.3 billion a month, according to December data, the latest available.
Seventeen percent of Tennesseans are on Medicare, compared to 15 percent nationally. Twenty-three percent are on Medicaid, compared to 19 percent nationally.
Tennessee receives more of its Medicaid money from the federal government than other states, which led Moody’s to place the state’s triple-A credit rating on review for a possible downgrade.
News release from Senate Republican Caucus:
(NASHVILLE, TN), July 29, 2011 — State Senate Finance Chairman Randy McNally (R-Oak Ridge) said on Friday that it is crucial for the White House to work with Congress to settle their dispute over the federal debt ceiling. McNally made his comments after being briefed by financial experts this week regarding the impact of an impasse on Tennessee.
Congress and the White House have only four days to reach a deal that would prevent the country from defaulting on its debts for the first time in history. McNally said the state’s financial leaders are being consulted due to the broader financial implications to Tennessee if a federal solution is not reached.
“States need stability through development of a long-term budget plan that addresses the federal structural deficit,” said Chairman McNally. “We also need urgent action as there are many programs that would be impacted in Tennessee by an impasse. If a solution is not found, states will need to act quickly and decisively to keep services running; prioritizing help for our most vulnerable citizens whose services are dependent upon receipt of federal funds.”
McNally said state leaders are developing contingency plans in the case of a potential shut-down, depending upon what transpires at the federal level. While McNally applauds the efforts to cut spending, he hopes that Washington will not cut funding to entitlement programs and pass the costs to states without the flexibility to reduce services or enrollees.
Forty-four percent of the state’s budget is federal funding, which amounts to $14 billion of Tennessee’s $30.8 billion budget. Approximately 92 percent of federal funding is contained in only seven departments, with the majority going to TennCare at 44 percent, Human Services at 19.6 percent and Education at 14 percent. A shut-down could jeopardize state-administered federal programs that would be hard to discontinue immediately like individuals being served in Intellectual Disability group homes, children in state custody served by Department of Children Services, persons being served in state Mental Health Institutions, those being served by TennCare, and citizens receiving unemployment insurance payments.
“If the state elects to continue any of the above services, then concerns shift to the state’s ability to fund them with existing cash flow and reserves,” added McNally. “Our reserves will be critical to help us through such a crisis should it occur.”
McNally said that if a solution is not reached, there could also be a significant contraction of consumer spending leading to a decline in sales tax revenue. Tennessee was one of five states put on notice by Moody’s last week that the state’s credit ratings may be downgraded if a solution is not reached. If a long-term plan is not adopted, financial experts anticipate a subsequent federal credit downgrading will occur and trigger a downgrading in several states, including Tennessee.
“A federal shutdown would be harmful to Tennessee’s fiscal strength and make commercial paper more expensive,” McNally continued. “That could impact our cash flow. In addition, an impasse could have an effect on our Tennessee Consolidated Retirement System with the potential to lose value. The next several days of negotiations in Washington will be very important to Tennessee’s financial future.”
Gov. Bill Haslam called the U.S. debt negotiations “an incredibly serious game of chicken” Monday and urged Washington to reach an agreement “for the economic health of the country.”
More from Jeff Woods’ account:
“We have a country that’s literally waiting to see what will happen,” Haslam told reporters. “Until Washington shows that we can live within our means and come to a political agreement about how to solve that, you’re not going to see banks willing to loan money, you’re not going to see people willing to invest their own capital, and so we won’t have any job growth until that happens.”
Moody’s Investors Services told Tennessee and four other states last week that they face downgrades in their AAA credit ratings because of their heavy dependence on federal revenue.
“Should the U.S. government’s rating be downgraded to Aa1 or lower, these five states’ ratings would likely be downgraded as well,” the bond-rating agency said. Haslam said:
“It’s an incredibly serious game of chicken that we’re playing in Washington, quite frankly. If you talk to any governor, they would say, we really need you to solve this for the economic health of the country, No. 1. No. 2, for us as states — I mean, you’ve seen where some of the credit ratings agencies have said, the fact that they don’t have a deal puts Tennessee’s credit rating in peril. That speaks volumes.”
Note: TNReport has video of the governor’s commentary HERE.
Only months after ranking high on the Tennessee Tea Party’s list of public enemies, U.S. Sen. Bob Corker has managed to schmooze and maneuver his way into the hearts of his onetime nemeses and appears poised to skate to re-election in 2012, reports Jeff Woods.
Tea Party leaders suddenly are singing Corker’s praises, saying they never really meant to come across as overly critical even as they angrily protested outside his office and accosted the senator at his town hall meetings last summer.
They say they’ve been swung around by Corker’s outrage over federal spending and the national debt, an outspokenness that has increased in volume as his re-election date has approached.
“Bob’s not a dope. He’s not a dumb guy,” said Memphis Tea Party leader Mark Skoda. “He’s a fella who recognizes that if he wants to remain a senator and he wants to work for the state of Tennessee, he needs to evidence his conservative bona fides. I think he’s doing that more recently.”