Tennessee state budget

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Tennessee state budget

Flag of Tennessee.png
Budget calendar:  Annual
Fiscal year:  2014
State Credit Rating:  AA+ (as of May 2012)
Current Governor:  Bill Haslam
Financial figures
GF expenses[1]:  $12.622 billion (estimated for FY 2013)
All funds expenses:  $31.453 billion (estimated for FY 2013)
Spending % Change:  Green Arrow Up Darker.svg3.40%[2]
% from Federal Funding:  41.02%
State Debt:  $41,049,738,000
Per Capita State Debt:  $6,358
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Policypedia Budget Policy-logo-no background.png
This page contains information about budget processes and policy issues in Tennessee, including:
  • A summary of the budget drafting process
  • Trends in expenditures and revenues
  • Current and past fiscal year budget developments
  • Financial transparency measures

Between fiscal year 2009 and fiscal year 2013, Tennessee's total expenditures increased by approximately $2.381 billion, from $29.072 billion in 2009 to $31.453 billion in 2013. This represents an 8.19 percent increase, below the cumulative rate of inflation during the same period (9.06 percent, calculated using the Consumer Price Indices for January 2009 and January 2013).[3][4]

Budget process

The state operates on an annual budget cycle. The sequence of key events in the budget process is as follows:[5][6]

  1. Budget instruction guidelines are sent to state agencies in August of the year preceding the start of the new fiscal year.
  2. State agencies submit their budget requests to the governor in October.
  3. Agency hearings are held in November. Public hearings are held in November and December.
  4. The governor submits his or her proposed budget to the state legislature in February.
  5. The legislature typically adopts a budget in April or May. A simple majority is required to pass a budget. The fiscal year begins July 1.

In Tennessee, the governor may exercise line item veto or item veto of appropriations authority.[6]

The governor is legally required to submit a balanced budget proposal. Likewise, the legislature is legally required to adopt a balanced budget.[6]

Expenditures

Definitions

Although each state executes its budget process differently, the National Association of State Budget Officers (NASBO) breaks down state expenditures into four general categories. This allows for comparisons among the 50 states. NASBO's categories are as follows:[7]

  • General fund: "The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state."
  • Other funds: "Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds."
  • Federal funds: "Funds received directly from the federal government."
  • Bonds: "Expenditures from the sale of bonds, generally for capital projects."

2013 expenditures

Breakdown of expenditures in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down expenditures for fiscal year 2013 (comparable figures from surrounding states are provided to give additional context).[7] Figures for all columns except "Per capita expenditures" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita expenditures" have not been abbreviated.

Total state expenditures, FY 2013 ($ in millions)[7]
State General fund Federal funds Other funds Bonds Total Per capita expenditures
Tennessee $12,622 $13,055 $5,394 $382 $31,453 $4,841.92
Alabama $6,897 $9,541 $7,490 $189 $24,117 $4,989.32
Arkansas $4,746 $6,189 $10,447 $203 $21,585 $7,293.77
Kentucky $9,426 $8,001 $8,246 $0 $25,673 $5,841.02
Mississippi $4,699 $8,274 $5,660 $784 $19,417 $6,491.36
Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.[8]
Source: National Association of State Budget Officers

Expenditures by function

Breakdown of expenditures by function in FY 2012.
Source: National Association of State Budget Officers

State expenditures in Tennessee can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2012 data is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures by function, FY 2012 (as percents)[7]
State Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other
Tennessee 17.7% 12.8% 0.4% 30.7% 2.7% 6.4% 29.3%
Alabama 20.9% 20.1% 0.2% 23.3% 2.5% 6.1% 27.0%
Arkansas 16.3% 16.2% 2.1% 21.4% 2.2% 5.8% 36.0%
Kentucky 19.8% 25.7% 0.9% 22.5% 2.4% 8.9% 19.8%
Mississippi 16.9% 16.8% 5.8% 23.4% 1.8% 7.5% 27.7%
Source: National Association of State Budget Officers

Expenditure trends

From 2008 to 2012, the share of the state budget allotted for higher education spending fell by 1.50 percentage points, or 10.5 percent. During the same period, Medicaid spending rose by more than two percentage points, or 7.7 percent, as a share of the budget. The table below details changes in expenditures from 2008 to 2012.[7][9][10][11][12] Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures from 2008 to 2012 (as percents)
Year Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other
2012 17.7% 12.8% 0.4% 30.7% 2.7% 6.4% 29.3%
2011 17.3% 13.3% 0.4% 29.8% 2.6% 6.3% 30.4%
2010 17.7% 13.1% 0.5% 28.8% 2.3% 6.4% 31.3%
2009 17.0% 12.8% 0.4% 25.4% 2.7% 8.9% 32.8%
2008 17.7% 14.3% 0.4% 28.5% 2.6% 6.6% 29.8%
Change in % 0.00% -1.50% 0.00% 2.20% 0.10% -0.20% -0.50%
Source: National Association of State Budget Officers

Revenues

2013 revenues

Breakdown of general fund revenue sources in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down general fund revenues by source in fiscal year 2013 (comparable figures from surrounding states are also provided to give additional context).[7] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, FY 2013 ($ in millions)[7]
State Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
Tennessee $6,643 $126 $1,083 $0 $3,551 $11,403 $1,755.39
Alabama $1,945 $3,104 $376 $2 $1,887 $7,314 $1,513.12
Arkansas $2,125 $3,144 $431 $39 $475 $6,214 $2,099.77
Kentucky $3,022 $3,723 $401 $0 $2,202 $9,348 $2,126.82
Mississippi $1,887 $1,480 $463 $145 $763 $4,738 $1,583.98
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates for 2013.[8]
Source: National Association of State Budget Officers

Revenue trends

The table below details the change in revenue sources in the general fund from 2009 to 2013.[7][9] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, Tennessee ($ in millions)[7][9]
Year Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
2013 $6,643 $126 $1,083 $0 $3,551 $11,403 $1,755.39
2012 $6,500 $120 $1,003 $0 $3,520 $11,143 $1,726.28
2011 $6,112 $123 $898 $0 $3,112 $10,245 $1,601.19
2010 $6,037 $119 $668 $0 $3,193 $10,017 $1,575.82
2009 $5,966 $142 $609 $0 $2,519 $9,236 $1,466.90
Change in % 11.92% 17.00% 26.70% 0.00% -1.87% 14.71% 9.47%
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates.[8][13]
Source: National Association of State Budget Officers

State budgets by year

DocumentIcon.jpg See budget bill: Senate Bill 502

Fiscal year 2014

Tennessee state budget -- 2014
Tennessee State Legislature
Text:Senate Bill 502
Legislative History
Introduced:January 31, 2013
State House:April 17, 2013
Vote (lower house):83-14
State Senate:April 17, 2013
Vote (upper house):32-0
Governor:Bill Haslam
Signed:May 16, 2013

The Tennessee General Assembly voted on April 17, 2013 to pass Governor Bill Haslam's proposed budget for fiscal year 2014. The State Senate approved the budget unanimously, and only 14 dissenting votes were cast in the State House.[14]

Haslam signed the budget into law on May 16, 2013.[15]

Fiscal year 2013

See also: Tennessee state budget (2012-2013)

Fiscal year 2012

See also: Tennessee state budget (2011-2012)

Fiscal year 2011

See also: Tennessee state budget (2010-2011)

Fiscal year 2010

See also: Tennessee state budget (2009-2010)

Historical spending

State budget historical spending below was compiled by the National Association of State Budget Officers. Figures reflect the reported "Total Expenditures" in Table 1. Figures for all columns are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000).[7][10]

Historical state budget spending in Tennessee ($ in millions)
Fiscal year General Fund Other funds Federal funds Bonds Budget totals
Total % of Budget Total % of Budget Total % of Budget Total % of Budget
2011-2012 $11,685 38.4% $5,674 18.7% $12,806 42.1% $254 0.8% $30,419
2010-2011 $10,561 34.9% $5,970 19.7% $13,578 44.9% $119 0.4% $30,228
2009-2010 $9,914 34.8% $5,484 19.3% $12,951 45.5% $100 0.4% $28,449
Averages: $10,720 36% $5,709.33 19% $13,111.67 44% $157.667 1% $29,698.67
General Fund: The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state.
Other funds: Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds.
Federal funds: Funds received directly from the federal government.
Bonds: Expenditures from the sale of bonds, generally for capital projects.

State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, Tennessee had a state debt of over $41 billion. Its state debt per capita was $6,358. The report revealed that state governments faced a combined $5.1 trillion in debt, 33 percent of annual gross state product. The obligation amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79 percent -- was linked to unfunded public pensions.[16][17]

Total state debt in Tennessee[18]
Type Totals U.S. rank
Total state debt $41,049,738,000 33
Per capita debt $6,358 50
State and other fund expenditures $17,359,000,000 44

Public pensions

See also: Tennessee public pensions and Tennessee public employee salaries

A 2012 report from the Pew Center on the States noted that Tennessee's pension system was funded at 90 percent at the close of fiscal year 2010, above the 80 precent funding level experts recommend. Consequently, Pew designated the state's pension system as a "solid performer."[19]

The funding ratio for the state's pension system decreased from 95.10 percent in fiscal year 2007 to 91.54 percent in fiscal year 2011, a decrease of 3.56 percentage points, or 3.7 percent. Likewise, unfunded liabilities increased from $1.6 billion in fiscal year 2007 to more than $3.3 billion in fiscal year 2011.[20]

Credit ratings

States sometimes sell general obligation bonds to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). Credit rating agencies, such as Standard and Poor's, assign grades to states, evaluating their ability to pay the principal and interest on such bonds. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest. Generally speaking, a higher credit rating indicates lower risk for an investor, which in turn lowers costs for taxpayers.[21]

The table below lists the Standard and Poor's credit rating for Tennessee from 2001 to 2012 (grades from surrounding states are provided for additional context).[21]

S&P credit ratings from 2001 to 2012
Tennessee Alabama Arkansas Kentucky Mississippi
2012 AA+ AA AA AA- AA
2011 AA+ AA AA AA- AA
2010 AA+ AA AA AA- AA
2009 AA+ AA AA AA- AA
2008 AA+ AA AA AA- AA
2007 AA+ AA AA AA- AA
2006 AA+ AA AA AA- AA
2005 AA AA AA AA- AA
2004 AA AA AA AA- AA
2003 AA AA AA AA- AA
2002 AA AA AA AA- AA
2001 AA AA AA AA AA

Federal aid to state budget

See also: Federal aid to budgets in the 50 states

The chart below notes how much of the state’s general revenues come from the federal government. Figures were calculated by dividing each state’s federal intergovernmental revenue into its general revenue. The number in the rightmost column indicates the state's ranking in relation to the rest of the nation (e.g., if "1," the state receives the highest percentage of federal funding in the nation). Figures from neighboring states are included to provide additional context.[22]

State governments receive aid from the federal government to fund a variety of joint programs, such as Medicaid. Federal aid varies considerably from state to state. For example, Mississippi received approximately $7.7 billion in federal aid in 2012, which accounted for more than 45 percent of the state's general revenues. By contrast, Alaska received roughly $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.[22]

Federal aid to state budgets in 2012
State Federal aid as % of general revenue Total federal aid National rank
Tennessee 41.02% $11,198,575,000 3
Alabama 36.50% $8,112,509,000 11
Arkansas 34.47% $5,900,988,000 21
Kentucky 35.69% $8,056,691,000 14
Mississippi 45.35% $7,725,294,000 1

Stimulus

Tennessee received $5.33 billion in federal stimulus funding between February 2009 and June 2013.[23]

Budget transparency

Transparency evaluation
Open Government
Searchability P
Partial.png
Grants N
600px-Red x.png
Contracts Y
600px-Yes check.png
Line item expenditures N
600px-Red x.png
Dept./agency budgets Y
600px-Yes check.png
Public employee salaries Y
600px-Yes check.png
Date of last evaluation unknown.
See also: Evaluation of Tennessee state website and Constitutional provisions regarding reading of bills

Tennessee publishes an official, statewide spending database online.

Tennessee House Bill 246 (2009) mandated the creation of transparency site to be made available by January 1, 2010. As Nebraska's treasurer Shane Osborn pointed out in his letter to Tennessee's legislators, "In the current economic climate, it is as important as ever that citizens have the ability to easily navigate the state budget, giving them access to information on how government is spending their hard-earned income."[24]

Multi-measure budget transparency profile

The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for Tennessee, which measured state transparency as of September 2011 using indicators from a range of organizations. These indicators measured both website transparency and other recognized facets of governmental transparency. In addition, IGPA presented four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.[25][26]

IGPA devised a budget transparency index based on information available from the National Association of State Budget Officers. Tennessee tied for 33rd in the nation with 12 other states, earning four out of eight possible points.[26]

Tennessee - IGPA score for budget process, contents and disclosure
Budget transparency indicator Yes or no?
Performance measures
{{{1}}}
"Generally Accepted Accounting Principles" budget N
600px-Red x.png
Multi-year forecasting N
600px-Red x.png
Annual cycle Y
600px-Yes check.png
Binding revenue forecast N
600px-Red x.png
Legislative revenue forecast
{{{1}}}
Non-partisan staff N
600px-Red x.png
Constitution or statutory tax/spend limitations Y
600px-Yes check.png
TOTAL 4

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[26]

U.S. PIRG "Following the Money" report

See also: Following the Money 2014 Report

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending.[27] According to the report, Tennessee received a grade of B and a numerical score of 83, indicating that Tennessee was an "advancing" state in terms of transparency regarding state spending.[27]

Accounting principles

See also: Tennessee government accounting principles

Tennessee's Comptroller of the Treasury, Audit Division is responsible for state and local audits. The Audit Division is divided into the following subdivisions:[28]

  • County audit - The division is responsible for annual audits of all 95 counties in the state. The division establishes standards for county audits conducted by public accounting firms. The division assists local governments with financial administration questions.
  • Municipal audit - This division ensures that municipalities, designated school system funds, utility districts and government-funded, non-profit agencies are audited as required by state statute. The division investigates and issues reports on allegations of misconduct, fraud or waste in local government, often referring findings to other agencies for appropriate action.
  • State audit - The Division of State Audit conducts financial, compliance and performance audits, conducts investigations, and performs special studies to provide the Tennessee State Legislature, the governor, and the citizens of Tennessee with objective information about the state's financial condition and the performance of the state's many agencies and programs.

Tennessee's audit reports are posted online. The Comptroller of the Treasury is a constitutional officer elected by a joint vote of both house of the General Assembly for a two-year term.[29]

Contact information

Tennessee Department of Finance and Administration
312 Rosa L. Parks Avenue, 18th Floor
Nashville, Tennessee 37243
Telephone: 615-741-4806

See also

External links

Additional reading

References

  1. Refers to General Fund spending. Typically in state budgets the General Fund is spending that is most directly controlled by state legislators.
  2. This figure is derived by calculating the percent difference between the prior two years' spending levels according to the National Association of State Budget Officers.
  3. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  4. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  5. National Conference of State Legislatures, "State Experiences with Annual and Biennial Budgeting," updated April 2011
  6. 6.0 6.1 6.2 National Association of State Budget Officers, "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  7. 7.0 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 National Association of State Budget Officers "State Expenditure Report, 2011-2013," accessed February 21, 2014
  8. 8.0 8.1 8.2 United States Census Bureau, "Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2013," accessed February 26, 2014
  9. 9.0 9.1 9.2 National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  10. 10.0 10.1 National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  11. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  12. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  13. United States Census Bureau, "Vintage 2009: Annual Population Estimates," accessed February 26, 2014
  14. WSMV.com, "TN legislators pass $32.8B Haslam budget proposal," April 17, 2013
  15. Tennessee General Assembly, "Bill Information for SB0502," accessed May 5, 2014
  16. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  17. Washington Examiner, "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014
  18. State Budget Solutions "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  19. Pew Center on the States, "Widening Gap Update: Tennessee," June 18, 2012
  20. Tennessee Consolidated Retirement System, "2012 Comprehensive Annual Financial Report," accessed November 20, 2013
  21. 21.0 21.1 Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  22. 22.0 22.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  23. Recovery.gov, "Stimulus Spending by State," accessed February 21, 2014
  24. Treasurer Shane Osborn, "Letter from Treasurer Shane Osborn to Tennessee's Legislators," March 17, 2009
  25. Institute of Government and Public Affairs at University of Illinois, "Home page," accessed February 21, 2014
  26. 26.0 26.1 26.2 Institute of Government and Public Affairs at University of Illinois, "Budget Transparency Profiles - All 50 States," September 2011
  27. 27.0 27.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014
  28. Tennessee Comptroller of the Treasury, "Home page," accessed November 12, 2009
  29. Tennessee Comptroller of the Treasury, "Audit reports," accessed November 12, 2009