Monday, March 23, 2009
Legislature / Politics / Woods Taxing HMOs and Other Happy State Budget Headlines
Posted by Jeff Woods on Mon, Mar 23, 2009 at 11:31 AM
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A tax on HMOs! Who could be against that? It's only one of many broadly popular measures in the $29 billion state budget Gov. Phil Bredesen is recommending tonight. Here are the headlines: Full funding for both K-12 education and Bredesen's pre-K program. Higher education avoids cuts. The state's "rainy-day fund" remains fat, dipping only a little in the next year, and only 80 state workers are losing their jobs.
Bredesen appeared cheery and upbeat as he briefed the media this morning. "We can't fix the national economy but we can do everything in our power to support the people of our state through these times," he says.
It's amazing what nearly $5 billion in federal stimulus money can do to improve your outlook on life. Bredesen seems almost giddy about how he's sticking it to Republicans on taxes. His budget forces them to either close the loophole for the FONCE real-estate tycoons or cut $25 million from state services. The media's Q&A with the governor:
Q: You're only cutting about 80 filled positions statewide. What are you comments on that?
Bredesen: We thought we'd be cutting somewhere on the order of 1,600 or 1,700 filled positions. We've gotten it down to about 80 in this budget, and frankly those are positions that are being cut not as some across-the-board thing but because there's a business decision we've made to close something. You will probably see additional positions in the next budget that comes along because I doubt we will get by attrition all the people we need in just the right places. But right now in these times I think we need to do all that we can do to help state employees hang onto positions.
Q: Talk about how the federal stimulus cash is making things easier for you.
Bredesen: Right. This is exactly what the stimulus money really does. It allows us to buy some time. We're still going to have to get to a position of being about three-quarters of a billion dollars down in terms of the budget from where we are in this year's budget. But instead of trying to get that all done by June 30th of this year, we've got basically a two-year window to get it done. That means we can let some things like attrition work for us and help us. It also means we can be more considerate about some of the cuts.
Q: In the next two years, you're going to be bringing the rainy day fund back up to $750 million. Why is that your goal? If this isn't a rainy day, what is?
Bredesen: This is a rainy day, and you'll see that we are proposing to use a little bit of our total reserves, the rainy day fund and the TennCare reserves, to bring this to closure. My problem is this, I'd probably be willing to go a little deeper if we could see an end to this thing. Right now, I don't feel we feel that our feet are touching the bottom. Things could get a lot better over the next two years. It also could get a lot worse. I'm just trying to be very, very conservative in the use of these kinds of funds. Again, if we saw the economy coming back strong, I'd actually be comfortable using a little more about the rainy day fund. Right now, cash is king. You want to have cash in the bank to help you through these times and we're doing everything we can to preserve that cash and keep us in a good position.
Q: Your administration has acknowledged that you're going to seek the FONCE thing. How much of a fight do you anticipate on that?
Bredesen: Um, I certainly think there will be people who will object to that. I guess I would say it's $25 million and if somebody feels like they want to find $25 million in some other place and it's better to take the money out of some department of state government than to close what I think is an obviously loophole, they're certainly entitled to do that. In the scheme of things, it's a fairly amount of money and a fairly small piece of the picture. But I can't look somebody in the eye and say we ought to cut another $25 million out of state government to preserve this particular loophole.
Q: What are you saying about higher education?
Bredesen: Higher education has dodged a bullet in the short run. There's a lot of stimulus money in the budget for higher education. Not only this year will they not get a cut, some of the cuts that have already been made will be restored to higher education. That still doesn't solve the problem of two years down the line when they're going to have to be $150 million to $200 million below where they are today. ... This could be a good time just really to step back and take a new look at that whole thing and we're going to do that.
Q: Higher education is getting an extra $100 million this year. In the next two years, you're holding them whole. Do you still expect them to raise tuition or does that eliminate the need for that?
Bredesen: In the stimulus guidance one of the things that the administration is very interesting in is holding down tuition increases. So we're going to try to do that to help these students during this time. ... I think they should err at the moment on the side of keeping tuition down.
Q: Will you outline specific steps in your speech tonight on restructuring higher education?
Bredesen: No, that's down the road. It's the same discussion we've had before. There's kind of a clearing in the woods here where you've got the vacant presidencies. I've toward the end of my term so most of the board members are my appointees. You've got the need to make organizational changes to get through this. It just seems like an opportunity to do something.
