Tennessee state budget (2009-2010)

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Tennessee lawmakers approved the state's FY2011 $30 billion budget and Gov. Phil Bredesen signed it into law on June 25, 2010.[1]. Of the 50 states and D.C., Tennessee places 51st in total debt according to NPR.[2]

Tennessee had a total state debt of $5,879,108,014 when calculated by adding the total of outstanding debt, pension and OPEB UAAL’s, unemployment trust funds and the 2010 budget gap as of July 2010.[3] $5,879,108,014

2011 State spending & deficit in billions[4]
Total spending Education Health & human services Protection Resources Transport Departments
$26.7 $9.0 $12.1 $1.4 $.86 $2.2 $.96
2011 Local spending & deficit in billions[5]
Total spending Pension Healthcare Education Welfare Protection Transport Deficit
$35.4 $0.4 $4 $8.5 $1.0 $3.5 $1.6 $45.3

Fiscal Year 2010 State Budget

See also: Archived Tennessee state budgets

The state, according to January 2010 reports, was facing an estimated $1 billion shortfall.[6] The state of Tennessee had a $29.6 billion total budget passed by the Tennessee General Assembly for FY 2010 that started July 1, 2009, $12.1 billion of which was state spending and $2.2 billion federal stimulus money (total federal was almost $12 billion[7]). Phil Bredesen warned in November 2009 the extent of the state's budget problems had been concealed by the federal stimulus funds and that more severe cuts would be coming. Gov. Bredesen said, "This would be my toughest budget year," and had asked state agencies to prepare for 6% budget reductions for their FY 2011 presentations with a potential 3% above that in case of even worse economic conditions.[8]

The FY 2010 budget used state savings to avoid laying off 700 state workers, which would not be an option for the next fiscal year beginning July 1, 2010. Gov. Bredesen said on November 3, 2009 state layoffs would probably be unavoidable.[9]

The Tennessee Department of Finance and Administration released November 10, 2009 revenue figures showing October 2009 was the 17th month of negative sales tax collections. October collections were $31.7 million less than the budgeted estimate. The general fund was under collected by $24.2 million and the four other funds were under collected by $7.5 million during the month. Year-to-date sales tax the growth rate was negative 8.47%. Year-to date collections for three months were $101.3 million less than the budgeted estimate. The general fund was under collected by $88.2 million and the four other funds were under collected by $13.1 million. The budgeted revenue estimates for 2009-2010 were based on the State Funding Board’s consensus recommendation adopted by the first session of the 106th General Assembly in May of 2009.[10]

Budget background

See also: Tennessee state budget and finances

Sales tax makes up 58% of Tennessee's state revenues; a far second source of state income was franchise and excise taxes at 12%. Education consumes 46% of the state budget with Health and Human Services taking 25%.

Tennessee Total State Budget Comparison[11]

FY 2008 FY 2009 Gov. Rec. FY 2010
$26.780 billion $29.774 billion $29.336 billion

Tennessee's budget process begins in August of each year when the Commissioner of Finance and Administration issues budget instructions to all departments and agencies of state government. Agency budget requests were submitted by October 1. During October and November, the Governor meets with the departments and agencies to hear their budget proposals for the following fiscal year.[12] Following the hearings the Governor issues a budget recommendation for the upcoming fiscal year to the Legislature. Both the House and the Senate were required to make any necessary changes or adjustments to the budget until the bill was passed in both houses. Lawmakers must pass a balanced budget before the fiscal year begins on July 1 of each year.[13]

  • Tennessee had no general income tax.[14]
  • Tennessee's current tax structure had the majority of its tax revenue coming from the sales tax, the largest portion of which funds K-12 education.[15]
  • Out of the state's tax revenue the state spends approximately 48 percent on education; 4 percent on resources and regulation; 12 percent on law, safety and correction; 3 percent on the general government; 32 percent on health and social services; 1 percent on business and economic development.[15]
  • State tax revenue was comprised of 57 percent sales tax, 2 percent motor vehicle tax, 7 percent gasoline tax, 3 percent income and inheritance tax, 5 percent gross receipts and privilege, 14 percent franchise and excise tax, 3 percent insurance and banking tax, 6 percent from other taxes, and 3 percent from tobacco, alcohol and beer tax.[15]

Budget figures

The following table provided a history of Tennessee's expenditures and gross domestic product (GDP).

Fiscal Year Expenditures (billions) GDP (billions)
2000 $32.0[16] $174.9[16]
2001 $34.3[16] $180.6[16]
2002 $36.6[16] $191.5[16]
2003 $39.2[16] $200.3[16]
2004 $41.8[16] $214.8[16]
2005 $42.7[16] $224.2[16]
2006 $44.3[16] $235.8[16]
2007 $46.2[16] $243.9[16]
2008 $48.3[16] $252.3[16]
2009 $50.5*[16] $260.9*[16]


Budget transparency

Tennessee had a statewide, official spending database online.[17]

In addition, thanks to Tennessee House Bill 246 (2009), a spending transparency site mandated by the legislature would be 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 was as important as ever that citizens had the ability to easily navigate the state budget, giving them access to information on how government was spending their hard-earned income."[18][19]

Government tools

The following table was helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases
State Database Searchability Grants Contracts Line Item Expenditures Dept/Agency Budgets Public Employee Salary
Tennessee: open gov] P
Partial.png
N
600px-Red x.png
Y
600px-Yes check.png
Y
600px-Yes check.png
N
600px-Red x.png
Y
600px-Yes check.png

Although it was not a searchable database, the Tennessee Arts Commission had provided a .pdf document of its funding history.[20]

See also: Evaluation of Tennessee state website

Limitations and suggestions

While the "Open Government for the State of Tennessee" transparency site did had searchable salary information, its list of vendor payments and expenditures was in .pdf form and not readily searchable.[21]

Economic stimulus transparency

  • The state would receive approximately $433 million from the federal government under HR 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[22][23]
  • Tennessee established an economic recovery website to show how legislators and government officials in Tennessee were spending Federal funds.[25]

Support for creation of the database

In 2008, the National Taxpayers Union endorsed HB 4034, saying "it was imperative that you move forward with this legislation to enable Tennessee's residents to make sense of how their tax dollars were parceled out."[26]

Americans for Tax Reform issued a press release detailing the progress of transparency in Tennessee.[27]

Public employee salary information

The "Open Government for the State of Tennessee" transparency site provided a searchable database of state employees' salaries.[28]

The Bristol Herald Courier performed a salary survey of Southwest Virginia and Northeast Tennessee, and published the results.[29]

Accounting principles

See also: Tennessee government accounting principles

Tennessee's Comptroller of the Treasury Audit Division was responsible for state and local audits and divided into the following divisions:[30]

  • County Audit - The division was 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 were 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 and compliance and performance audits, conducts investigations, and performs special studies to provided the General Assembly, 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 were posted online. The Comptroller of the Treasury was a constitutional officer elected by a joint vote of both Houses of the General Assembly for a two-year term. Justin P. Wilson the current Comptroller.[31][32]

The Institute for Truth in Accounting (IFTA) rates Tennessee “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA did not consider Tennessee's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis did not included significant liabilities for the pension plans and for other post employment benefits, such as health care.[33] Tennessee's CAFRs were annual publications of the Tennessee Department of Finance and Administration. Dave Goetz was Commissioner of the Department of Finance and Administration, the governor's chief financial officer for Tennessee state government and manages over a $21.5 billion budget.[34][35]

Credit Rating Fitch Moody's S&P
Tennessee[36] AA+ Aa1 AA+

Economic Stimulus Package

The state would receive approximately $433 million from the federal government under HR 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[37][38]

Tennessee was expected to receive approximately $4.5 billion from the $787 billion economic stimulus package of 2009.[39] According to White House officials the stimulus bill was estimated to create or save 70,000 jobs.[40] In February 2009 Gov. Bredesen said that he was wary of some of the funds because some provisions in the package for unemployment benefits would force states to expand their programs permanently, even though the stimulus funding only lasts for two years. “We were evaluating this piece of money, whether it makes sense for us to take it,” he said. “We may well be one of the states that say we can’t take on that portion of it.”[41] However, in March 2009 the Governor announced that he would accept all of the unemployment funds. “We had worked through all the issues on that,” Gov. Bredesen said. “Tennessee was going to accept 100 percent of all the unemployment insurance compensation.”[42]

According to preliminary reports Tennessee was expected to receive:[43]

  • $141 million for unemployment insurance benefits[42]
  • $572.2 million for highways and bridges
  • $771.6 million in stabilization funds for education
  • $171.6 million in stablization funds for the state in general
  • $174.2 million for Title I grants to local schools
  • $229.4 million for special education
  • $1.1 billion for Medicaid
  • $71.98 million for mass transit capital grants

An audit recently conducted on the state's weatherization program found that of the 444 programs, over half had deficiencies.[44]

See also

Tennessee government sector lobbying

Tennessee public pensions

Tennessee state budget and finances

External links

Additional reading

References

  1. Nashville Business Journal "Bredesen signs state budget" June 25, 2010
  2. National Public Radio "State Budget Gaps: Debt Holes Deepen" Sept. 10, 2010
  3. State Budget Solutions “States Hide Trillions in Debt” July 22, 2010
  4. Department of Finance and Administration, The Budget, FY2010-2011
  5. USA Spending, State Guesstimated* Government Spending
  6. The Chattanoogan, "Bo Watson: State Could Face $1 Billion Shortfall," January 4, 2010
  7. Tennessee Department of Finance and Administration, "The Budget Fiscal Year 2009-2010," March 23, 2009
  8. Associated Press, "Gov. Bredesen: Extent of Tennessee budget woes 'concealed' by stimulus, more cuts coming," November 3, 2009 (dead link)
  9. Associated Press, "Gov. Bredesen: Extent of Tennessee budget woes 'concealed' by stimulus, more cuts coming," November 3, 2009 (dead link)
  10. Tennessee Department of Finance and Administration, "October Revenues," November 10, 2009
  11. Tennessee Department of Finance and Administration, "The Budget Fiscal Year 2009-2010," March 23, 2009
  12. State of Tennessee, "Budget Process," accessed March 16,2009
  13. Tennessee Department of Finance and Administration, "Budgetary Process," accessed March 16,2009
  14. GovSpot.com, "Which states had no personal income tax?," accessed November 12, 2009
  15. 15.0 15.1 15.2 State of Tennessee, "The budget, fiscal years 2008-2009," accessed March 16,2009
  16. 16.00 16.01 16.02 16.03 16.04 16.05 16.06 16.07 16.08 16.09 16.10 16.11 16.12 16.13 16.14 16.15 16.16 16.17 16.18 16.19 U.S. Government Spending, "Tennessee state and local spending," accessed March 13,2009
  17. "Open Government for the State of Tennessee."
  18. Treasurer Shane Osborn, "Letter from Treasurer Shane Osborn to Tennessee's Legislators," March 17, 2009
  19. Tennessee House Bill 246 (2009)
  20. Tennessee Arts Commission Funding History
  21. "Open Government for the State of Tennessee"
  22. Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  23. H.R. 1586
  24. Wall Street Journal, "Stimulus Spending by State," March 12,2009
  25. Tennessee Recovery
  26. National Taxpayers Union, "An Open Letter to the Tennessee House of Representatives: Taxpayers Support Online Spending Transparency (HB 4034)," March 14, 2008
  27. Americans for Tax Reform, "Transparency on the March in Tennessee," March 21, 2007 (dead link)
  28. "Open Government for the State of Tennessee"
  29. Herald Courier salary survey
  30. Tennessee Comptroller of the Treasury Web site, accessed November 12, 2009
  31. Tennessee Comptroller of the Treasury Web site, accessed November 12, 2009
  32. audit reports
  33. Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  34. Tennessee Department of Finance and Administration Web site, accessed November 12, 2009
  35. CAFRs
  36. State of Indiana, “State Credit Ratings-as of June 24, 2009"
  37. Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  38. H.R. 1586
  39. The Chattanooga Times Free Press, "State stimulus up to $4.5 billion," March 7,2009 (dead link)
  40. American Recovery and Reinvestment Act, "Estimated job effect," accessed March 16,2009
  41. Chattanooga Times Free Press, "Perdue, Bredesen may reject jobless stimulus funding," February 24,2009
  42. 42.0 42.1 Chattanooga Times Free Press, "Tennessee to take stimulus money for unemployment," March 6,2009
  43. Chattanooga Times Free Press, "Tennessee: Stimulus could spare higher education — for now," February 19,2009
  44. Watchdog, Tennessee wastes more stimulus money, Dec. 21, 2010