Tennessee state budget (2010-2011)

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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 placed 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 2011 State Budget

See also: Archived Tennessee state budgets

Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government online.[6]

In FY2011, the state collected $10.5 billion in taxes. It ended the fiscal year with a $269.4 million surplus.[7] The financial commissioner recommended that the state hold a $28 million general fund surplus in reserve in case state tax collections dropped.[8]

Tennessee received approximately $433 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[9][10]

Tennessee's Gov. Phil Bredesen signed the state's $30 billion budget for Fiscal Year 2011 into law on June 25, 2010.[1][11] The Senate passed the budget bill 30-3 and then the house approved the measure 94-0, marking the first time in years that a budget passed the House without dissenting votes.[12]

Gov. Bredesen proposed a series of tax increases as a way to balance the budget, Republicans from the Tennessee Senate favored more spending cuts and House members from both parties from the House wanted to dip into the state's reserve fund.[11] In the end, the budget as passed mostly followed the governor's plan,[12] but relied on reserves more than the governor had suggested.[1] Approximately $12.8 billion in the budget came from state tax dollars. The budget spent approximately $185 million from the state's reserve funds; almost $600 million remained in reserve.[12]

Republicans eliminated some of Bredesen’s proposed tax increases, including lifting of the single-article tax cap for items valued at more than $3,200 that would have raised $85 million.[1][11] Republican lawmakers had declared that plan dead before arrival and were working on a counterproposal as of May 2010.[13]

With the budget Tennessee cut $1.1 billion in spending of state dollars over the previous two years while eliminating about 3,500 state job positions.[12] Some of the provisions included[12]:

  • If state revenues ended up better than officially projected, state employees, teachers and higher education employees would get a salary bonus payment, provided that $50 per year of service as a state employee with a $150 minimum.
  • 120 million was marked for improvements at community colleges and technology centers but would only be spent if federal funds materialized
  • Nearly $10 million for conservation land purchases, stripped from an earlier Senate version of the budget, was restored for two years.
  • $20 million was set aside to help victims of flooding in the middle and western portions of the state, not counting a package of tax credits authorized in separate legislation for businesses and homeowners suffering flood damage.

College and universities in the state were considering tuition hikes ranging from 6% to 11%, depending on how much of the state funding cuts the regents decided to replace with student revenue.[13]

October revenue for 2010 was up by 4.95%, compared to the same month in 2009. The total revenue was $732.8 million in October 2010.[14]

Budget background

See also: Tennessee state budget

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[15]

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.[16] 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.[17]

  • Tennessee had no general income tax.[18]
  • 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.[19]
  • 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.[19]
  • 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.[19]

Budget figures

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

Fiscal Year Expenditures (billions) GDP (billions)
2000 $32.0[20] $174.9[20]
2001 $34.3[20] $180.6[20]
2002 $36.6[20] $191.5[20]
2003 $39.2[20] $200.3[20]
2004 $41.8[20] $214.8[20]
2005 $42.7[20] $224.2[20]
2006 $44.3[20] $235.8[20]
2007 $46.2[20] $243.9[20]
2008 $48.3[20] $252.3[20]
2009 $50.5*[20] $260.9*[20]


Budget transparency

Tennessee had a statewide, official spending database online, "Open Government for the State of Tennessee."[21]

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."[22][23]

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


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.[24]

Economic stimulus transparency

  • The state would most likely receive approximately $433 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[25][10]
  • Tennessee established an economic recovery website to show how legislators and government officials in Tennessee were spending Federal funds.[27]

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."[28]

Americans for Tax Reform issued a press release detailing the progress of transparency in Tennessee.[29]

Public employee salary information

The "Open Government for the State of Tennessee" transparency site provides a searchable database of state employees' salaries.[30]

The Bristol Herald Courier performed a salary survey of Southwest Virginia and Northeast Tennessee, and published the results.[31]

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:[32]

  • 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 provide 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.[33][34]

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 include significant liabilities for the pension plans and for other post employment benefits, such as health care.[35] 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.[36]

Credit Rating Fitch Moody's S&P
Tennessee[37] 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.[38][10]

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]
For more information on how the federal stimulus funds were being used in the state of Tennessee, visit the state recovery website.

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 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 state budget Tennessee public pensions

External links

Additional reading

References

  1. 1.0 1.1 1.2 1.3 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. FY2011 CAFR
  7. The Tennessean "Tennessee finishes year with tax surplus" Aug. 10, 2011
  8. Businessweek "TN finance chief: Keep $28M surplus as reserve" Aug., 2011
  9. Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  10. 10.0 10.1 10.2 H.R. 1586
  11. 11.0 11.1 11.2 Tennessean.com "Politics snarl battle over TN budget" April 25, 2010
  12. 12.0 12.1 12.2 12.3 12.4 Knoxville News "State budget ready to go" June 5, 2010
  13. 13.0 13.1 The Memphis Commercial Appeal "Tennessee's Budget Battle" May 9, 2010
  14. "October Revenue Collections Up," Tennessee Report, November 10, 2010
  15. Tennessee Department of Finance and Administration, "The Budget Fiscal Year 2009-2010," March 23, 2009
  16. State of Tennessee,"Budget Process," accessed March 16,2009
  17. Tennessee Department of Finance and Administration,"Budgetary Process," accessed March 16,2009
  18. GovSpot.com, "Which states had no personal income tax?," accessed November 12, 2009
  19. 19.0 19.1 19.2 State of Tennessee,"The budget, fiscal years 2008-2009," accessed March 16,2009
  20. 20.00 20.01 20.02 20.03 20.04 20.05 20.06 20.07 20.08 20.09 20.10 20.11 20.12 20.13 20.14 20.15 20.16 20.17 20.18 20.19 U.S. Government Spending,"Tennessee state and local spending," accessed March 13,2009
  21. "Open Government for the State of Tennessee."
  22. Treasurer Shane Osborn, "Letter from Treasurer Shane Osborn to Tennessee's Legislators," March 17, 2009
  23. Tennessee House Bill 246 (2009)
  24. "Open Government for the State of Tennessee"
  25. Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  26. Wall Street Journal,"Stimulus Spending by State," March 12,2009
  27. Tennessee Recovery
  28. National Taxpayers Union, "An Open Letter to the Tennessee House of Representatives: Taxpayers Support Online Spending Transparency (HB 4034)," March 14, 2008
  29. Americans for Tax Reform, "Transparency on the March in Tennessee," March 21, 2007
  30. "Open Government for the State of Tennessee"
  31. Bristol Herald salary survey
  32. Tennessee Comptroller of the Treasury Web site, accessed November 12, 2009
  33. Tennessee Comptroller of the Treasury Web site, accessed November 12, 2009
  34. audit reports
  35. Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  36. Tennessee Department of Finance and Administration Web site, accessed November 12, 2009
  37. State of Indiana, “State Credit Ratings-as of June 24, 2009"
  38. Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  39. The Chattanooga Times Free Press,"State stimulus up to $4.5 billion," March 7,2009
  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