Tennessee state budget (2012-2013)

Gov. Bill Haslam signed the $31.5 billion FY2013 state budget into law on May 15, 2012. The FY2013 state spending plan is $627 million less than that for FY2012.

The budget bills were SB 3768 and HB 3835. They can be found as enacted online.

State state general fund include $210 million from the surplus remaining at the end of FY2012.

At the conclusion of FY2013, 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 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 FY2013 state budget by a vote of 66-30. The House budget follows the governor's proposed budget closely, but leaves out several pet projects that appear 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 the FY2013. The Senate budget cuts millions of dollars in funding for programs and projects in what is 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 FY2013 budget on Jan. 30, 2012. Haslam said the $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%.

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 FY2013 and is contained in HB2384.

The budget was originally built on the assumption that tax collections would grow 4 percent next year, reaching $9.4 billion. The budget makes two tax cuts:

• reducing the state sales tax on grocery food from 5.5 percent to 5.3 percent, costing the state $18 million;
• 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:

• $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 are currently vacant;
• 2.5% raise for state employees, costing $123.8 million;
• $30 million to cover the cost of an ongoing comparison of public and private sector salaries;
• 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 Dec. 2011 that his administration needs to close a gap of $360 million, a little more than 1 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 FY2012, officials anticipate 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 to prepare for cuts of as much as 5 percent so that his budget writers can choose from as they write the state’s next spending plan.

Preparation for budgeting

State Finance Commissioner Mark Emkes asked state government agencies to submit by Sept. 30, 2011, base budget reduction plans for FY2013 that include 5 percent reduction in their state funding for next year. He also stated that agencies should not to propose any new programs unless they can 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 3 percent in FY2013.