BRADENTON, Fla. - Facing a deficit that could run $1 billion or more, Tennessee Gov. Phil Bredesen Monday night told lawmakers he would delay submitting his budget until Congress passes an economic stimulus bill that's projected to bring the state more than $3 billion.
Bredesen, a Democrat, said he planned on making $900 million of cuts to his budget proposal, but delayed presenting it because the federal economic stimulus bill would "help soften the blow of this economy on state government."
However, Bredesen warned that the stimulus should not be viewed as a silver bullet because it represents a one-time source of funding, and substantial budget cuts still would be necessary.
"When we present a budget in March, we will recognize the money we receive as temporary help, and present a multiyear outline for how we will use these funds to ease the transition from current spending levels to what we anticipate for 2011 and beyond," the governor said during his state-of-the-state address.
He said Tennessee would use rainy-day funds cautiously since "no one knows how long this recession will last," and the budget should focus on basics such as health care and education.
The only major initiative Bredesen announced was his support for creating a solar institute, but he did not say how much it would cost or if the state would finance it with debt. He suggested that it would be developed as a public-private partnership.
"Solar power today is a tiny part of the power equation," Bredesen said. "It remains far too expensive, and it's ripe for breakthroughs. We have the pieces - the building blocks - here in Tennessee to be major players in this area."
The state is halfway through its fiscal year and if the decline in revenues supporting the budget continues at the same pace in the second half, the government faces a deficit of more than $1 billion.
On Friday, Finance and Administration Commissioner Dave Goetz released updated revenue figures showing that collections in the first half of the fiscal year were $522.1 million less than the budgeted estimate.
"January is the sixth consecutive month this fiscal year in which sales taxes and corporate income taxes have recorded negative growth over a year ago," Goetz said in a release. "January is also historic in that it represents the 11th negative growth month in sales tax collections out of the last 13 months, starting with January 2008."
The U.S. Senate yesterday approved an $838 billion economic stimulus package that will now need to be reconciled with the version approved earlier by the House before it can be sent to President Obama.
