Updated: State revenues slow as budget hearings near

Agencies asked to prep 5% budget cuts

As Gov. Bill Haslam’s administration prepares to evaluate budget requests from each of its departments, the state could be looking at something of a budget crunch.

Although the state only has data for two months into its budget cycle, revenues are so far $83.3 million below expectations.

“We are somewhat concerned about the slowing growth of the revenue and our key revenue stream is our sales tax and so we’re watching that closely,” said Larry Martin, state finance commissioner.

State agency leaders plan to begin pitching budget plans to the governor next month. Most agencies tend to ask the governor for more money, although all are asked to present a contingency plan to cut 5 percent from their budgets as an annual exercise.

Last year, the state lost nearly $72 million in federal funding to state agencies, according to figures the state presented to bond rating agencies this month provided by the Department of Finance and Administration. Of those cuts, $36 million came from K-12 education, and almost $13 million in the Department of Health.

Ultimately, Tennessee boosted state spending by 6 percent for the current fiscal year, to the tune of $860 million, according to a department spokeswoman. For example, state spending to K-12 education went up by $175 million, and the state budged an extra $132 for higher education, which more than offset federal cuts. 

Although the state is asking for cuts from all the agencies, Martin said it would be “pure speculation on my part” whether the early revenue numbers will translate to budget tightening next year.

“We’re wanting to be cautious and careful with it,” said Martin.

The governor has voiced interest in shifting budget attention to help drive college and post secondary graduation rates next year, and lead the nation over time in advancing teacher salary. He is expected to present his budget proposal to the Legislature in January.

(Editor's note: The original version of this story contained statistical information provided by the state that was incorrect.)