Dear fellow Tennessean:

Earlier this month, I delivered my eighth and final State of the State Address to the 106th General Assembly, and I presented a budget that has been the most difficult to prepare since my time in public office.  Despite the economic downturn, I’ve continued to focus on outlining a path to ensure that state government lives within its means while continuing to look for ways to move forward in priority areas critical to the future of our state.

The recession that has gripped our nation has been felt strongly here in Tennessee. We have seen unemployment and housing issues affect far too many families and state revenues have plummeted, creating tough challenges for us to maintain the services our citizens want. However, the state of our economy should never be an excuse for failing to advance those things most important to us in areas like education and job creation.

My goal has been to remain true to the principle of the “family budget” that I’ve talked about since first becoming governor. It’s nothing more than the commonsense idea that we’re going to adjust expenses to match our income and be very careful about using money from our savings. It’s the way sensible families have to manage through these times, and while state government is much larger, the principle is the same. It’s extremely important to have our finances stabilized so the next governor and legislature inherit a budget that matches recurring revenues and expenses.

The budget I’ve proposed is consistent with the four-year plan submitted last year with additional reductions to reflect the further revenue declines we’ve experienced along with the rest of the country.

Once again we have fully funded Tennessee’s formula for funding K-12 public education and the state’s pension system. Beyond that, state agencies will make budget reductions that average about six percent. This year it was not feasible to make reductions across the board, so a number of departments contributed nine percent and others – including Higher Education, Mental Health, Intellectual Disabilities Services, Children’s Services and Correction – contributed less.

TennCare is the largest single line item of the budget, and though we can’t achieve the spending reductions we need without affecting TennCare, we focused carefully on areas with the least direct impact to patients. These are tough times and the TennCare program, like every other state agency and sector of the economy, is not immune from the impacts of budget reductions.

In the Department of Safety, proposed reductions would have meant elimination of 85 filled trooper positions and 56 filled positions in driver’s license stations. Rather than do this, we proposed an increase in the driver’s license fee – the first increase since 1988 – from $3.90 to $5.75 annually, and we’ve extended the time these licenses are valid - to eight years instead of five.

With these reductions, we had a budget consistent with our four-year plan, but to achieve all of the reductions in their entirety required elimination of a variety of programs of real value. It would also require additional layoffs of 1,363 people and the elimination of 456 unfilled positions.

Our reserves are strong and prospects for a return to growth in the months ahead look far better today than a year ago. In this environment, I believe we can make judicious use of some of our savings to fund the continuation of a number of particularly important programs for a two-year period. This will allow additional time for the economy to recover and perhaps make the cuts ultimately unnecessary.

Programs that will be funded for two years through use of reserves include school health programs, Career Ladder extended contracts for teachers, safety net grants to health centers, disease prevention programs, community mental health recovery services, alcohol and drug services and juvenile justice grants in the Department of Children’s Services.

These reserve funds will also be used to preserve nearly 400 state employee jobs that would otherwise have been eliminated due to the economy.

Though I’ve had to make some very difficult decisions with this budget, I am confident this is a commonsense, straightforward approach that addresses the current economic challenges while ensuring Tennessee’s finances remain strong and stable over the long-term.

If you have questions or comments about this issue or any other, please e-mail me at HYPERLINK "mailto:phil.bredesen@tn.gov"phil.bredesen@tn.gov.