Tennessee state budget (2012-2013)

Note: This article was last updated in 2013. Click here for more recent information on state budgets and finances.

Gov. Bill Haslam signed the $31.5 billion fiscal year 2013 state budget into law on May 15, 2012. The fiscal year 2013 state spending plan was $627 million less than that for fiscal year 2012.

The budget bills were SB 3768 and HB 3835, the latter of which can be accessed here.

The state general fund included $210 million from the surplus remaining at the end of fiscal year 2012.

At the conclusion of fiscal year 2013, the state's rainy day fund would be $356 million.

Legislative budget

Both chambers of the legislature approved a final version out of the conference committee report on April 30, 2012. A conference committee began resolving differences between the House and Senate budgets on April 27, 2012.

On April 26, 2012, the House approved a $31.4 billion fiscal year 2013 state budget by a vote of 66-30. The House budget followed the governor's proposed budget closely, but left out several pet projects that appeared in the Republican-authored Senate version. House legislators authorized the state to issue up to $381.9 million in bonds.

The next day, April 27, 2012, the Senate approved its $31.1 billion version of fiscal year 2013. The Senate budget cut millions of dollars in funding for programs and projects in what was seen as a retaliatory move against the House for cutting some Senate projects.

Federal funding would account for $12.3 million, or about 39.6 percent of the state’s budget.

Governor's proposed budget

Governor Bill Haslam unveiled his $30.2 billion proposed fiscal year 2013 budget on Jan. 30, 2012. Haslam said $12.3 billion in federal funding would account for 39.6 percent of the state's budget. Three years ago, it was 43.1 percent of the budget. As a result of the reduced federal contribution, the governor recommended shrinking the total state budget by 2.7 percent.

On April 2, 2012, the governor announced changes to his proposed budget, increasing spending by $28 million due to higher than anticipated revenue collection. The governor would also lower the state sales tax on groceries from 5.5 percent to 5.25 percent instead of the 5.3 percent he originally proposed and restore $5.5 million to the Department of Intellectual and Developmental Disabilities.

Under the governor's budget, all state employees would receive a 2.5 percent raise in fiscal year 2013.

The budget was originally built on the assumption that tax collections would grow four percent in the next year, reaching $9.4 billion. The budget made two tax cuts:

• Reducing the state sales tax on grocery food from 5.5 percent to 5.3 percent, costing the state $18 million; and
• Raising the inheritance tax exemption level from $1 million to $1.25 million, costing the state $15 million.

Highlights of the governor's proposed budget included:

• $263 million toward construction on college and university campuses;
• $70 million in additional state funds to give businesses expanding or relocating in Tennessee;
• Cut more than 1,100 state jobs across the state, 617 filled positions statewide and 549 that were vacant;
• 2.5 percent raise for state employees, costing $123.8 million;
• $30 million to cover the cost of an ongoing comparison of public and private sector salaries; and
• Full funding of the kindergarten-through-12th grade basic program, including about $55 million in new money to cover enrollment increases and other added expenses.

The Governor said in December 2011 that his administration needed to close a gap of $360 million, a little more than one percent of Tennessee’s $32 billion budget and 2.5 percent of the portion of the budget funded by state tax dollars. Although the state had generated more revenue than expected in the first months of fiscal year 2012, officials anticipated that the cost of TennCare, state pensions and public education would rise by $500 million, using up all of the increased tax revenues and then some. Officials also wanted to cover the cost of $160 million in programs that were funded using money from the state’s financial reserves. The governor requested that departments prepare for cuts of as much as five percent so that his budget writers could choose from them as they write the state’s next spending plan.

Preparation for budgeting

State Finance Commissioner Mark Emkes asked state government agencies to submit by September 30, 2011, base budget reduction plans for fiscal year 2013 that included five percent reductions in their state funding for the next year. He also stated that agencies should not propose any new programs unless they could save an equal amount with cuts elsewhere. Emkes said that spending cuts of $270 million would be necessary despite the prediction that state revenues would increase three percent in fiscal year 2013.