BRADENTON, Fla. — Tennessee Gov. Phil Bredesen Monday night recommended a $28.41 billion budget for fiscal 2011, a reduction of 5% from the current year.

Bredesen, a Democrat who is in his last year in office, proposed a budget that requires cuts due to declining state revenue, eliminates jobs, raises fees, taps reserves, and uses federal stimulus funds.

The budget he proposed also recommends $419.4 million of bonds.

Bredesen said the state’s financial position is strong despite the recession, but he also proposed using $202 million of $900 million the state has in reserves.

“Given our strong financial position and the fact that we built up these savings to use at a time like this,” he said, “I’m recommending that we draw down modestly from these reserves to soften the worst of the cuts that we would otherwise have to make.” 

With revenue declining $1.5 billion over the last two years, Bredesen proposed a budget that includes an average of 6% cuts to various agencies, or a total of $307 million in cuts in the general fund. However, no cuts were made in pre-kindergarten and primary education budgets, while the prison system budget was cut less than 1%.

The proposed budget uses $87 million in non-recurring funding sources as well as $135.6 million from reserves from the general fund and the state’s health care program to fund certain core services and state positions. It includes the use of $1.3 billion in stimulus funds.

The bond package Bredesen included with his budget would provide $164.5 million for Department of Transportation projects, $135.8 million for schools, $90.9 million to fund a highway patrol communications system and a new driver license system, $16.4 million for projects and maintenance at state office buildings and similar facilities to be secured by a revolving fund through agency rent payments, and $11.8 million for capital maintenance.

Tennessee had $1.68 billion of general obligation bonds outstanding as of Dec. 31. The GOs are rated AA-plus by Fitch Ratings and Standard & Poor’s, and Aa1 by Moody’s Investors Service. The state’s total indebtedness, including commercial paper, was $5.82 billion as of Dec. 31.

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