Tennessee state budget (2011-2012)

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Lawmakers unanimously approved the state's fiscal year 2012 $30.8 billion budget and signed it into law on June 16, 2011. The fiscal year 2012 budget was approximately $1.23 billion, or 3.9 percent, less than the fiscal year 2011 budget, which was primarily due to the loss of stimulus money from the federal government.[1]

The state ended fiscal year 2012 with $563 million more in revenue than initially anticipated.[2]

Both chambers of the Tennessee General Assembly unanimously approved a $30.8 billion fiscal year 2012 budget. The Senate voted on May 21, 2011. The House approved the budget 96-0 on May 20, 2011.[3] The approved budget bill can be accessed here.

The agreement allowed for the earliest end to a legislative session in the state since since May 1, 1998, and five weeks earlier than the 2010 session ended, saving taxpayers $450,000 in legislative expenses.[3]

Governor's proposed budget


With state tax collections projected to run ahead of expectations, the governor's administration amended its budget proposal to eliminate some previously planned cuts to the state budget. Specifically, the amendment restored $48 million to TennCare, $22 million to HOPE scholarships to college students attending summer classes and $5 million to let the University of Memphis begin operating Lambuth College, a private institution in Jackson facing financial difficulties, as a branch campus.[4] The budget also included $71 million for disaster relief resulting from recent storms and flooding, $8.5 million to restore previously scheduled rate reductions to TennCare mental health providers, and a $6.9 million grant for three programs at Meharry Medical College.[5]

The administration also said that, if the federal government paid Tennessee the $82 million it owed the state, some more initial cuts might also be unnecessary. The federal government, however, had not specified a date for repayment. The Haslam budget amendment allocated funds to be received from the federal government on a "contingency" basis, to be spent only after being received.[4] The budget also assumed reimbursement of $15.7 million for nursing home funding.[5]

Original proposal

On March 14, 2011, Gov. Haslam unveiled his $30.2 billion proposed budget, which closely followed that of his predecessor. Overall, the spending of state dollars increased 3.5 percent under the Haslam plan thanks to a projected increase in state tax collections. But the state would receive and spend about 14.7 percent less from the federal government than in the then-current year.[6] The budget contained no general tax increase.

Haslam's budget sought to begin rebuilding the state's rainy day fund, which dwindled from a $750 million high in 2008 to a projected $257 million at the end of the then-current year. Haslam called for the fund to increase to $326 million by June 30, 2012.[7]

One area of increased spending under the Haslam plan was education. Haslam proposed a $63.4 million increase in K-12 education spending.[8] However, the budget cut $20.2 million from higher education, which was likely to cause an increase in tuition.

In the governor's proposed budget, nearly 1,200 state jobs would be eliminated, starting with unfilled positions and those jobs only recently created with federal stimulus money. For those employees keeping their positions, Haslam also proposed a 1.6 percent pay raise, the first since 2007. The proposal would cost the state about $77 million.[9]

The governor's proposed budget included $40 million in cuts to services to TennCare patients and a reduction of $2.8 million in Children's Services funding.[10] The cuts came through such things as tightening the rules for when TennCare would pay for child delivery by C-section rather than normal birth and eliminating the Governor's Office of Children's Care Coordination.[11] The Tennessee Hospital Association proposed a tax as a means to draw down the federal Medicaid money at the almost $2-for-$1 match to avoid the cuts.[12]

The budget included an agreement drafted by former Gov. Bredesen to provide Electrolux $97 million in incentives to build a new plant in Memphis.[10]

Some budget highlights included:

  • Elimination of 1,180 positions - 575 of which were filled at the time
  • Used $160 million of reserve money to preserve programs in the health, mental health and children's services departments for one more year
  • Imposed a 4.52 percent fee on hospital gross receipts for the coming year, up from 3.52 percent in the then-current year
  • Reduced funding for TennCare by 2.1 percent to $8.7 billion
  • Granted $131.6 million to two companies building plants in Tennessee, including Electrolux
  • Provided no new funds for new higher education capital projects, but called for $54 million in capital maintenance for existing structures
  • Allocated $30 million for continuing Corrections Corporation of America's contract for operating a prison at Whiteville
  • Reduced funding for higher education by $20 million, approximately two percent of the budget
  • $7 million for the Port of Cates Landing near Tiptonville, Tenn


Protests at the state Capitol at times included thousands of those opposed to the collective-bargaining bill and to other measures in the legislature that would limit the power of unions. On March 15, 2011, seven protesters were arrested at the state Capitol.[13]

A compromise plan that reduced unions’ role in representing teachers passed the state legislature May 20, 2011, with a compromise by Republicans in the House and the Senate allowing the Tennessee Education Association to continue to represent teachers in contract talks with local school boards but also involving other organizations at the bargaining table. It set new limits on what could be written into final agreements, stating that while compensation, insurance and benefits could be spelled out, matters directly impacting the performance of students, including job assignments and bonuses, could not be part of the agreements. The bill was sent to Gov. Haslam.[14]

Prior to the compromise, companion bills had been pending in the Tennessee House and Senate that would end collective bargaining by teachers, making it so that Tennessee school districts would no longer have to negotiate with teachers' unions.[15] The Senate Education Committee approved Senate Bill 0113 along party lines by a vote of 6-3 on February 16, 2011.[15] The Senate held up a vote on the bill while House leaders worked on an amendment that would give local school boards the option of deciding whether to negotiate contracts with their teachers, and which had the potential to passage of the bill.[16] Republican Gov. Bill Haslam remained neutral on the bill. House Bill 130, as initially approved by the House Education Committee, would eliminate collective bargaining on wages and benefits, but would have allowed negotiations to continue on some other working conditions.[17]

On May 3, 2011, the House Finance Committee voted to send HB 130 back to the House Education Committee for another hearing. The bill had previously been approved, but not in the form as approved by the Senate. The Education Committee had officially closed for the year, but was expected to reopen for the additional hearing.[17]

Supporters of the bills noted that none of Tennessee's neighboring states required collective bargaining with teachers, and that the teachers' negotiating rights were unique among public employees.[15] Arguing against the bill, a lobbyist for the Tennessee Education Association said that the legislation unfairly targeted teachers.[15] Opponents also said the move took away the assurance that teachers would be compensated at decent levels, noting that Tennessee teachers earn salaries below the national average.[18]

Use of reserve funds

The governor and legislative leaders all said that the fiscal year 2012 budget should include spending around $186 million in "core services reserves" from the fiscal year 2011 budget. "Core services reserves" are earmarked funds set aside for specific programs, but the governor had the option of recommending they be used for purposes other than their earmarks in the fiscal year 2012 budget.[19]

The rainy day fund declined from $1.2 billion in 2007 to $500 million in 2012. The governor and legislative leaders favored building that fund back up.[19]


The State Funding Board, which includes the state comptroller, treasurer, secretary of state and the governor's top financial adviser, did not meet as scheduled and officials said Dec.ember 16, 2010 that they were uncertain when final revenue projections for Tennessee would be released. Lawmakers were expected to use the figures to draft the 2012 budget and they had typically been released around the middle of December.[20]

In January 2011 the state delayed issuing its comprehensive annual financial report due to computer problems.[21] The report is used to draft the new budget and as Comptroller Justin Wilson said regarding the information and the new budget, "Whenever you have current information, you make better decisions than when you don't have current information."[21]


  1. The Times Free Press, "Haslam signs budget, lawsuit caps legislation," June 17, 2011
  2. The Knoxville News, "Political notebook: State finance chief warns against spending tax surplus," August 12, 2012
  3. 3.0 3.1 Tennessee Report, "Legislature Unanimously Approves State Budget," May 21, 201
  4. 4.0 4.1 The Knoxville News, "Some state budget cuts avoided," May 4, 2011
  5. 5.0 5.1 Businessweek, "Gov: Budget to fund more key services in Tenn.," May 16, 2011
  6. The Knoxville News, "Haslam presents $30.2B budget," March 15, 2011
  7. The Knoxville News, "Haslam Presents $30.2 Billion Budget," March 15, 2011
  8. Memphis Commercial Appeal, "Gov. Haslam Unveils Tennessee Budget," March 15, 2011
  9. MSNBC, "Gov. Proposed Pay Raises, Layoffs in First Budget," March 15, 2011
  10. 10.0 10.1 The Tennessean, "Haslam puts budget to test," March 16, 2011
  11. The Knoxville News, "Haslam Presents $30.2 Billion Budget," March 15, 2011
  12. Memphis Commercial Appeal, "Gov. Haslam Unveils Tennessee Budget," March 15, 2011
  13. The Tennessean, "Police remove, arrest 7 people at TN Capitol after union protests," March 16, 2011
  14. The Tennessean, "Bill limiting teachers union's role heads to Haslam," May 21, 2011
  15. 15.0 15.1 15.2 15.3 The Deseret News, "Bill targets teacher collective bargaining rights," February 16, 2011
  16. The Tennessean, "At TN Capitol, 3,000 rally for teachers' voices to be heard," March 6, 2011
  17. 17.0 17.1 The Knoxville News, "Some state budget cuts avoided," May 4, 2011
  18. The Mountain Press, "Union busting? Legislature studies bill that would reverse teachers’ right to collective bargaining," February 21, 2011 (dead link)
  19. 19.0 19.1 The Knoxville News Sentinel, "State to tap reserve fund," February 14, 2011
  20. Businessweek, "Uncertainty about final revenue estimates in TN," December 16, 2010
  21. 21.0 21.1 WSMV.com, "Computer System Delays State Budget," January 6, 2011 (dead link)