Senate Finance
Committee passes fiscally responsible budget/
West Tennessee
megasite funded under plan
(NASHVILLE, TN), June 12, 2009 – The Senate Finance Committee has approved a fiscally responsible budget for the 2009-2010 budget year that borrows less, has a little more protection for the Rainy Day (savings) Fund and is closer to balancing recurring and nonrecurring expenditures. The plan, as amended by Senate Republicans, also cuts several of the governor’s proposed tax hikes, including one on cable television boxes and a measure to increase taxes on business phone rates.
On job growth, the legislation, as amendment by the Finance Committee, fully funds Haywood County megasite and Solar Farm in West Tennessee, as well as economic development projects set to establish manufacturing facilities in the state including Volkswagen, Hemlock and Wacker.
“We face many economic challenges in West Tennessee,” said Senator Dolores Gresham (R-Somerville). “I appreciate my colleagues support of the megasite project, which is an investment in our district’s future. At the same time, I remain concerned about the debt incurred in the budget package. The amendment adopted by our Finance Committee does drastically trim this indebtedness back.”
The vote came after Finance Commissioner Dave Goetz told lawmakers that there was a continued decline in Tennessee’s revenues in May. Goetz said sales taxes collected in May were 11 percent lower than the yearly average of 7 percent and franchise and excise tax collections were down 40 percent for the month. Goetz said the revenues fall short of the governor’s revenue predictions for the budget, which were based on the most optimistic end of the state’s Funding Board predictions. The Funding Board consists of the state’s top economic advisors.
“This is a ‘truth or consequences’ budget,” Gresham added. “We must face the truth about our budget and the serious economic condition of our state or we will face serious consequences next year. There is a big risk if the legislature acts as if there is not a problem.”
The plan prioritizes education by fully funding the Basic Education Program, the state’s funding formula for K-12 education. Pre-K would be kept at the same level of funding under the plan. It also funds Tennessee’s higher education at the highest level of funding to draw down approximately $500 million in federal stimulus available through the American Recovery and Reinvestment Act. In addition, it fully funds lottery scholarships to provide students with the opportunity to receive a college education.
Republicans say a list of capital projects will be restored if state fiscal stabilization funds from the federal stimulus package are available or if other federal reimbursement match increases free up state dollars. Last year, the legislature appropriated cash to fund the projects. However, the governor held them after revenues plummeted. This year, he proposed the $168 million in cash previously approved by the legislature for those projects be used to plug the gap in the state budget. In turn, the governor recommended the state incur debt to fund the projects.
The action will keep Tennessee from putting these building projects on the state credit card at a time when economic conditions are unstable. The plan uses the debt service on those bonds, at $23 million per year, for other critical budget purposes like helping the most vulnerable citizens in Tennessee, mentally ill and dependent and neglected children in need of services.
Other highlights of the budget, SB 2355, include:
“Tennessee cannot act like Washington and just print more money,” Gresham continued. We must act responsibly as stewards of the people’s money. We must take a fiscally responsible approach to make sure we can weather any further deterioration in our economy.”