Saying his budget proposal for fiscal 2010 was being “presented in an economic environment more difficult than any we have been through since the Great Depression,” Tennessee Gov. Phil Bredesen Monday night outlined for lawmakers a $29.3 billion spending plan that includes using debt for some projects previously funded with cash.
Bredesen’s proposed budget is 1.47% less than the current year. He also recommended that the state use $4.5 billion from the federal stimulus package and proposed using $1.4 billion in the current year, $2 billion in fiscal 2010, and $1.1 billion in fiscal 2011.
The state expects to have $1.71 billion less in revenue for the general fund at the end of the current fiscal year on June 30, compared to 2008.
“This so-called stimulus package is not a silver bullet — what it does is buy us time,” Bredesen said. “What I am trying to achieve with this budget is sensible, conservative, long-range fiscal stewardship, to recognize these funds for the one-time help that they are, and to use them wisely and compassionately, and most of all, when this recession is over, to leave our state looking to the future strong and independent.”
In the current fiscal year, Bredesen is recommending the sale of $168.3 million of bonds for previously approved capital projects in lieu of using cash.
The total amount of bonding recommended in the fiscal 2010 budget was not immediately available, but some of the debt will be used to finance infrastructure improvements for several economic development projects.
The governor also is proposing to sell $350 million of general obligation revenue bonds for bridge repair and reconstruction, debt that was originally slated to be sold as grant anticipation revenue vehicle bonds, or Garvees. His plan calls for securing the GO bonds with federal transportation funds to keep borrowing costs low.
“We would like to go ahead with [selling] these because it will save the taxpayers a lot of money and it will fix a lot of bridges in poor repair now instead of in 10 years,” Bredesen said. “And right now we sure can use the jobs it will create here in Tennessee.”
Bredesen outlined a four-year proposal that he said would address closing out the current budget-year shortfall and proposed an outline of state spending in future years to fully fund basic education, reduce overall spending by an average 12% at the end four years, limit layoffs, fully fund economic development projects currently under way, keep the state’s pension fund actuarially sound and health insurance fully funded, and maintain healthy cash reserves.
Under the multi-year plan, the state expects to have $685.4 million in reserves at the close of fiscal 2009 on June 30. The balance would increase to $750 million in 2010.