BRADENTON, Fla. — The Tennessee General Assembly late Wednesday ended its annual session after sending Gov. Phil Bredesen a $29.9 billion budget for the upcoming fiscal year.
The new spending plan represents a decrease of 0.3% from the current year’s budget and plugs a $150 million expected shortfall. While it is supported by $12.8 billion in state dollars, it also taps reserves by $245 million, leaving a balance of $429 million in those accounts, according to Bredesen.
“This was another difficult budget, but we proved once again we can make the tough choices required to manage our state through this difficult economy,” he said in a statement.
Bredesen, a Democrat who is term-limited out of office this year, praised the legislature for making difficult choices as the recession continues. He also said his budget recommendation would have left the next governor with a balanced budget that matched recurring expenditures with recurring revenues.
“The budget passed by the General Assembly will take longer to come back into balance than I had hoped and uses more of our reserves than my original plan,” Bredesen said. “That means the next legislature will have to manage spending even more closely and look for opportunities to build savings back. However, with revenue growth that’s predicted, I believe the state’s finances will remain in good shape again next year.”
Lawmakers rejected several of Bredesen’s recommendations to increase revenues, including the removal of a cap on sales tax collections on items that sell for more than $3,200.
The fiscal 2011 budget authorizes $194.1 million of new general obligation bonds but other debt that may have been authorized in the budget was not immediately available.
The GO authorization will provide $13.2 million for capital outlays, maintenance of various state buildings, and grants to local governments; $16.4 million for state office buildings and the facilities revolving fund; $77 million for the Department of Transportation to build highways, acquire equipment, and for capital outlay; and $87.5 million for the DOT to implement Phase II of the transportation infrastructure improvement bond program for bridges and highways, equipment, and capital outlay.
While the 2011 budget does not raise taxes, it includes layoffs for hundreds of state workers. It also provides retained employees a one-time bonus of $50 for every year of service but only if state revenue collections improve by $50 million.
The budget also provides $20 million in sales tax refunds for people who purchase furniture, appliances, and building materials to replace or repair homes damaged in last month’s historic floods.
As of June 30, 2009, Tennessee’s total outstanding GO debt was $1.3 billion, rated triple-A by Fitch Ratings and Moody’s Investors Service and AA-plus by Standard & Poor’s.