Tenn. finance head says state faces more cuts

NASHVILLE, Tenn. -- Tennessee Finance Commissioner Dave Goetz said Wednesday that continued poor sales tax revenue means state departments will likely have to make more cuts.

Goetz told the state legislative Fiscal Review Committee that the state is experiencing the "fourth month in a row of double-digit sales tax losses." Sales taxes are about 60 percent of the state's money.

As a result, the commissioner said state departments won't be receiving $56.1 million that had been appropriated in the governor's budget. Reception of the money was contingent on whether the state met certain budget expectations for this year, but Goetz said projections have been complicated by the sales tax losses.

However, if the economy should take a turn for the better and revenue improves, Goetz said state departments could receive the money.

"If the economy comes back ... these funds don't have to be withheld," he said. "But we won't know that for a long time."

State Sen. Bill Ketron, a Murfreesboro Republican and chairman of the Fiscal Review Committee, said he agrees with releasing the funds if the economic climate improves, but warns state departments should be careful in their spending because cuts are still expected next year.

"When it comes back to them, I think they need to be very conservative ... in knowing that there are going to be possibly more cuts," Ketron said.

Goetz said state officials are currently reviewing departments' plans on how they intend to operate on the budgets they've been allotted. He said much of the savings are through not filling vacancies, and that Tennesseans will likely be affected by "responsiveness in agencies because of the vacancies."

"It's the nature of where we are," he said. "Our employees are stepping up and doing the best they can, but it may take a little longer to get some things done."

The agency hit hardest by withholding funding is TennCare, the state's expanded Medicaid program. It was to receive $20 million, but Goetz said services provided by the program shouldn't be affected because it still has millions of dollars in "reserves to fall back on."

Last month, Goetz sent out a memo to all state agency heads urging them to manage responsibly.

For instance, they were asked to limit in-state travel, and out-of-travel was to be for "emergency or mandatory situations only."

Source: forbes.com