Name: Lee administration asks state agencies to identify, plan to implement 12% budget cuts
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Lee administration asks state agencies to identify, plan to implement 12% budget cuts

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Nashville TennesseanView CommentsTennessee might need to delay its phase-out of the Hall Income Tax and scuttle pay raises for state employees and teachers — all while using one-time&nbsp;money to plug budget holes from anticipated revenue shortfalls due to COVID-19.That’s according to Department of Finance and Administration Commissioner Butch Eley, who gave a presentation to the Senate finance committee Thursday outlining the state’s fiscal dilemmas in the days ahead.Eley’s presentation came one day after the State Funding Board who offered assessments and financial predictions of the financial impact COVID-19 has had on the Volunteer State.On Thursday, the commissioner noted the wide-ranging&nbsp;projections the economists gave, which&nbsp;range&nbsp;from $231 million&nbsp;to $700 million this year and between $582 million to $1.5 billion in the upcoming fiscal year.But for all the uncertainty about the state’s incoming revenues, Eley laid the groundwork Thursday for what the administration might recommend in the days ahead as officials attempt to tackle the state’s financial woes — including 12% cuts to state agencies.“A lot of the things we recommended in this year’s budget, were certainly I think all good things that we would want to do but in this time, without the funding available, I think we would recommend pulling back on those,” Eley said.His recommendations included:Eley’s presentation, which took place during the only Senate committee meeting this week, comes two days after he issued a memo outlining the proposed 12% budget cuts."In order to adapt quickly to the new economic environments we face, we will need to have a heightened level of fiscal prudence, invest state funds in more targeted policies that show greater returns, operate more efficiently by continuing to provide our vital services with fewer resources, all while remaining stalwart supporters of our customers: Tennesseans," he said.&nbsp;Eley&nbsp;said Lee is asking agencies to immediately begin identifying where budget reductions can occur."As a result, I am asking all agencies to identify and plan to implement reductions totaling 12 percent of their general fund state appropriation budget," Eley said.The commissioner elaborated, providing guidelines each agencies should consider, including:&nbsp;Eley asked all agencies to submit their reduction plans to the Division of Budget by June 30.The Republican administration's double-digit&nbsp;reduction request comes as &nbsp;and a host of other legislation.&nbsp;The request does not mean that every agency could see its budget slashed at equal levels.&nbsp;Previous governors, including Bill Haslam and Phil Bredesen,&nbsp;who served when the state experienced its last recession and the years after, frequently asked state agencies to identify budget cuts.&nbsp;In 2008, Bredesen, a Democrat, asked department heads to identify budget cuts totaling&nbsp;15%, with the possibility of additional cuts.&nbsp;The following year, the governor asked agencies to present him with budgets that included between 6% and 9% cuts.&nbsp;After Haslam, a Republican, entered office in 2011, his administration asked agencies to create plans in anticipation of losing up to 30% of their federal funding due to cuts by Congress.Since he took his oath of office in January 2019, Lee has asked state agencies to identify between 1% to 2% cuts in their budget each year.&nbsp;Speaking to the Senate committee Thursday, Eley said the administration understood each agency had different needs, which could lead some departments to have deeper cuts than others.“At the end of the day ... we’ve also got to go after recurring expenses,” he said.In the immediate future, Eley said the administration is looking at closing out the current fiscal year, which ends June 30, by addressing a shortfall of roughly $500 million. He said the state could fill the gap thanks to implementing hiring and purchasing freezes while tapping into the state’s reserves, unbudgeted non-tax revenues, such as interest, and underspending by agencies.Over the long term, Eley said the governor prefers to implement any reductions over a multiyear period in order to soften the impact and continue to provide services to Tennesseans.That could require the state to have a budget deficit — when expenses exceed revenues — that is covered by one-time revenue.To account for the deficit, the state could use a balance of cash, reserves and reductions, which would allow officials to make the state “structurally balanced” within three years.&nbsp;Tennessee has a constitutional responsibility to have a balanced budget, in which revenues exceed expenses. But Eley said the state is able to have a budget deficit because it can use non-recurring revenue to fill the gaps.“We will definitely balance the budget,” said Eley. “It’s simply a way that we can balance that over a two- or three-year time period where we don’t have to make all of the cuts at one time.” Throughout his presentation, Eley faced a series of questions from members of the finance committee, including from Sen. Jeff Yarbro, D-Nashville, who asked about the legislature’s need to approve certain financial decisions.Eley said while the General Assembly will be involved in the near future, he anticipates the administration asking lawmakers to approve legislation that would allow the state to open up its reserve funds when needed.Eley and Sen. Bo Watson, R-Hixson, made it clear that the state needed to exercise various cuts and other moves before officials can begin tapping into reserve funds, such as the Rainy Day Fund.“Statutorily, we have to look everywhere else,” he said. “We are charged with first looking everywhere else that we possibly can and only then do we go to the Rainy Day Fund.”And although much remains uncertain about the state’s latest revenue collections, which are expected to be released in the coming days, Eley said the legislature would be given the latest data as soon as it becomes available while weighing approval of a new budget.Want to read more stories like this? A subscription to one of our&nbsp;&nbsp;gets you unlimited access to all the latest politics news, podcasts like Grand Divisions, plus newsletters, a personalized mobile experience and the ability to tap into stories, photos and videos from throughout the USA TODAY Network's 261&nbsp;daily&nbsp;sites.Reach Joel Ebert at&nbsp;&nbsp;or 615-772-1681&nbsp;and&nbsp;on Twitter&nbsp;.View Comments

Nashville TennesseanView CommentsTennessee might need to delay its phase-out of the Hall Income Tax and scuttle pay raises for state employees and teachers — all while using one-time&nbsp;money to plug budget holes from anticipated revenue shortfalls due to COVID-19.That’s according to Department of Finance and Administration Commissioner Butch Eley, who gave a presentation to the Senate finance committee Thursday outlining the state’s fiscal dilemmas in the days ahead.Eley’s presentation came one day after the State Funding Board who offered assessments and financial predictions of the...

Lee administration asks state agencies to identify, plan to implement 12% budget cuts

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