BRADENTON, Fla. — Tennessee Gov. Bill Haslam proposed a $32 billion spending plan for fiscal 2012 that is down 5.6% from the current year and largely reflects a 14.7% drop in federal funds.
Haslam, a Republican elected last fall, filed his budget last week and recommended a sizeable cut in bonding.
He said Tennessee expects a $1.4 billion budget gap that would require cuts and changing the way state government operates.
“Even though we have seen several consecutive months of revenue growth, our job to responsibly and financially position state government for the future is not complete,” he said in a statement. “Tough choices lie ahead.”
Though revenue growth is estimated at 3.65% in fiscal 2012, Haslam said nearly all new funds would be consumed by the state’s health care plan, K-12 education, and employee health care.
“Federal stimulus funds are vanishing, and tapping into the state’s reserve funds is not a choice,” said Haslam, who recommended a total of $552 million in various reserves, up from $545 million this year.
With the reduction in federal stimulus, he said Tennessee would have $1 billion less in revenue to work with in next year’s budget.
“That reality will frame this budget,” Haslam said. “I also want to emphasize that our current financial constraints are not a temporary condition. I think that what we are seeing in government today really is the new normal. Every government, ours included, will be forced to transform how it sets priorities and makes choices.”
If lawmakers agree with Haslam’s strategy, state agency budgets would be reduced an average of 2.5% and 1,180 positions would be abolished, though nearly 90% of the job reductions come from eliminating unfilled positions and the projects tied to non-recurring state and federal stimulus funds.
Haslam is recommending a 1.6% salary increase for all employees, including teachers — the first increase they have seen in four years. He also wants to continue a $50 monthly state match to 401(k) plans.
Senate Majority Leader Mark Norris, R-Collierville, said the governor’s first budget is “responsible, realistic, and refreshingly straightforward as we proceed along the road of economic recovery.”
Haslam suggested $273 million of bond authorizations for fiscal 2012, which is down 9.2% from the current year. The total includes more than $100 million for infrastructure related to development projects.
He joins other new Republican governors in the Southeast region who have recommended cutting traditional bonding levels.
On Feb. 8, Florida Gov. Rick Scott in his first budget slashed bond funding to its lowest level in well over a decade. His plan would authorize $331.3 million of debt compared to $885.6 million of bonds approved in the current budget.
In January, Georgia Gov. Nathan Deal recommended $562.8 million of bonds for fiscal 2012, down from $858.1 million in the current budget.