With federal economic stimulus aid running out, Gov. Phil Bredesen called Monday night for balancing the recession-battered state budget by slashing $400 million from TennCare, higher education and other social services.
At least 350 state workers would lose their jobs, and another 450 vacant positions would be abolished under the spending plan that the governor outlined in his final State of the State speech to the legislature.
But Bredesen also recommended one-time 3 percent bonuses for all state employees, including teachers and college professors, and he proposed dipping into state savings to prevent the loss of more jobs and social services during the 2011 fiscal year that starts July 1.
With $202 million from savings — about one-fourth of all the reserve funds — the governor would spare nearly 400 state jobs, as well as school nursing programs, breast cancer screening, and alcohol and drug treatment centers, among other services.
Bredesen also proposed two new ways to raise revenue to prevent more cuts. He would increase driver’s license fees by $1.85 a year to keep the Highway Patrol intact. A new tax on cable TV boxes would help colleges and universities, district attorneys and public defenders, probation and parole offices, and agriculture and forestry programs.
“This is the eighth and final time that I will report to you on the state of our state; it is the eighth and final time that I’ll present a budget to you,” the governor told lawmakers. “We’ve had a share of easy years and tough years, but by any standard these past two years have been extraordinary. This coming one will be as well. The recession which has gripped our nation has been felt strongly here in Tennessee. We have seen unemployment and housing issues affect far too many of our families. Our state revenues have plummeted, creating tough challenges for us to maintain the services that our citizens want.
“There are many things about this recession that we can’t affect here in Tennessee. Believe me; I’m very aware of the pain and uncertainty that this recession is causing in homes all over our state, and I’m very gratified by the renewed focus in Washington on our economy. I wish the Congress and the president well in their efforts to address these difficult issues. There are many things we can’t address from Tennessee and what I’ve tried to do is to concentrate on two things that we can: managing our own house — state government — to live within its means, and continuing to look for ways to move forward on those things on which our future depends.”
The $28 billion budget is 5 percent less than this year’s, mainly because of the loss of federal stimulus cash that rescued state government in 2009.
Bredesen’s new budget would decrease higher education by $64 million. Officials said an undetermined number of faculty and staff at colleges and universities will lose their jobs, and classes will be eliminated.
Children’s services will lose $16 million, mental health services $9 million, and other health programs $11 million. But $200 million in reductions — or fully half of all the cuts — would come in TennCare, Tennessee’s version of Medicaid. Among the cuts: a $10,000 annual cap on hospital stays and a ceiling on hospital reimbursements for caring for TennCare patients.
“There are some substantial cuts in TennCare,” Bredesen told reporters in a briefing before his speech. “TennCare is such a big piece of the budget, you can’t get from here to there without substantial cuts in TennCare. These are painful cuts.”
Health care advocates say the latest cuts will jeopardize charity hospitals, such as Nashville General, which will have to absorb any medical expenses above the cap. Officials say they may have to close the publicly owned hospital in Memphis.
“The governor continues to run TennCare the way he ran his private HMO, by focusing on how much surplus it can generate,” said Gordon Bonnyman of the Tennessee Justice Center, an advocacy group for TennCare patients. “He continues to divert hundreds of millions of dollars in TennCare reserves, refusing to spend funds that were appropriated to help desperately ill Tennesseans and the hospitals that serve them.
“That is tragically misguided and reflects how far removed the governor is from the harsh realities of many Tennessee families.”