Lee outlines budget cuts due to economic impact of coronavirus

Gov. Bill Lee speaks at a press conference on Tennessee’s coronavirus response in Nashville on March 16, 2020. (Erik Schelzig, Tennessee Journal)

Gov. Bill Lee’s office says $500 million in cuts will be needed for the current budget year and $1 billion for the fiscal year beginning July 1. Finance Commissioner Butch Eley said the administration plans to balance the budget using reserves over three years.

The state plans to create a voluntary buyout program for state employees, reduce spending on building projects and maintenance, and dial back spending in all state agencies. But officials have abandoned previous considerations of suspending this year’s back-to-school sales tax holiday and delaying the end of the Hall tax on income from stocks.

“We will balance our budget each year while providing important services to our citizens,” Eley said in a release. “We’re adjusting to the immediate impact of the pandemic on state revenues of up to $1.5 billion through the end of the next fiscal year, planning for the worst and hoping for the best.

Here’s a release from the governor’s office.

NASHVILLE, Tenn. – Gov. Bill Lee’s administration today outlined new spending plans for state government that reflect significant revenue reductions due to the economic impact of COVID-19.

Department of Finance and Administration Commissioner Butch Eley presented state lawmakers with the revised budget plans for the current fiscal year, as well as FY 2020-21, which begins July 1, 2020, and a framework for the following fiscal year, 2021-22.

“We will balance our budget each year while providing important services to our citizens,” Eley said. “We’re adjusting to the immediate impact of the pandemic on state revenues of up to $1.5 billion through the end of the next fiscal year, planning for the worst and hoping for the best.

“Tennessee has a history of being one of the best managed states in the nation, and we intend to work with the Legislature to continue that tradition, maintaining low taxes and preserving reserves while achieving efficiencies in operations and continuing to serve our citizens.”

In March, the administration and the General Assembly agreed on $397 million in recurring reductions at the onset of COVID-19, and the administration is proposing an additional $284 million in reductions for FY 20-21, bringing the total to $681 million in reductions. Hiring and expenditure freezes have also been in place since March. The state will close the current fiscal year on June 30 with unbudgeted non-tax revenues, agency savings and reserves.

In FY 20-21, the state will utilize reserves to lessen the impact of immediate spending reductions, allowing for thoughtful review of business practices for greater efficiencies and creative delivery of vital services as well as the development of strategic plans to reduce the employee workforce over the next two years.

The state’s multi-year spending plan provides full funding for:

  • The Basic Education Program (BEP) for K-12 public schools;
  • Contributions to the state employee pension fund;
  • State payments for employee health insurance; and,
  • Debt service requirements.

Multi-year reductions will be achieved, in part, through:  

  • Up to 12% reductions through greater efficiencies in all departments;
  • Reduction in new capital projects and funding for capital maintenance;
  • Authorizing bonds for existing capital projects previously funded with cash; and,
  • An employee buy-out initiative to reduce the state workforce over the next two years.

The state has reserve funds totaling $4 billion, including the Rainy Day Fund, which will reach $1.2 billion after an additional deposit of $325 million at the end of the fiscal year on June 30.

11 Responses to Lee outlines budget cuts due to economic impact of coronavirus

  • Stuart I. Anderson says:

    Good Lord how could even delaying the end of the Hall Income Tax, an outrageous confiscation from the state’s most laudable, successful citizens, even be considered. The idea has been “abandoned,” but that it even could be considered outside the fever swamps of the left is “troubling.”

    • Where in the governor’s release, does it mention delayilng the end of the Hall Income Tax?

      The plan outlined in the new release appears to me to be one of the few responsible government responses to the sharp drop in government revenues experienced by cities and states: (1) Cut spending (2) Use the fiscal challenge to search for and adopt new innovation that allows for fewer employes without reduced services and (3) Use the rainy day fund that you have accumulated, like any fiscally responsible business or family, to patch any of the budget holes left by (1) and (2). That is what ALL responsible businesses and families do. Unless the news release is a ruse, the governor’s proposal hits all the right notes — as opposed to Nashville Mayor John Cooper, who wants to increase property taxes by 32% in order to avoid any reduction in force.

      • Erik Schelzig says:

        The adminstration last week floated delaying the Hall tax phase out. At today’s Seante hearing, they said they are keeping it in.

      • Stuart I. Anderson says:

        I was responding to the last sentence in the second paragraph of Erik’s summary.

  • James White says:

    Fix the Roads

  • Cannoneer2 says:

    How much will be cut from the General Assembly’s operating budget?

  • Minuteman Cocaine Cade was making $200k working for Casada. I’d say the staff in Speakers offices still rolling in sloppy money gravy. Look there for at least a million in savings in House and Senate They can use part time staffers

  • Bill Lee Sucks says:

    WBIR reports the Governor is still giving himself and other high level officials nice big raises even though he slashed raises for teachers and every other state employee. That’s sick.

  • Cannoneer2 says:

    I want to know who is getting a raise other than the Governor.

  • Cannoneer2 says:

    A little research uncovered the fact that the Attorney General is one of them. Why in Hades is he getting a raise?? He is already the highest paid AG in the nation!

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