Governor Bill Lee’s proposed amendment to the budget for the 2020-2021 fiscal year resorts to zero growth, in order to weather the impact of the coronavirus pandemic.
Members of the Senate and House Finance Committees both heard Wednesday from Finance and Administration Commissioner Stuart McWhorter, who was accompanied by Budget Director David Thurman, to get an overview and background of the amendment to the fiscal year 2021 state budget.
McWhorter, reading from prepared comments, started off by saying that no one envisioned the current situation and being on the verge of a recession from the pandemic, while Benton, Carroll, Davidson, Gibson, Putnam and Wilson and other impacted counties are still recovering from a devastating tornado just two weeks ago.
Despite consultations with economists, scientists and medical professionals to better understand the potential impact the coronavirus will have on the world, nation and state’s economy, McWhorter said it is very difficult to predict the short- and long-term impact it will have.
He added that it is important to note that Tennessee is better prepared than most states, but that doesn’t mean we won’t have our challenges and have more tough decisions to make in the future.
Because of our history of being fiscally conservative, McWhorter pointed out, we are better prepared and better positioned than most. He credited members of the committee, members of the Tennessee General Assembly, previous governors and the constitutional officers for being well prepared.
McWhorter hopes that after this proposal is considered and passed, more time can be taken over the next 60 to 90 days to better evaluate the short- and long-term economic impact and reevaluate the economy and the budget to better prioritize efforts for what is in the best interest of the state.
McWhorter gave the highlights of the budget amendment, distributed to committee members prior to their respective meetings, which recognizes the sudden change in the economic situation:
- Lowering the growth rate for fiscal year 2020 from 3.75 percent to 2.5 percent
- Revising fiscal year 2021 growth rate of 3.1 percent to essentially a zero growth rate
- Making an additional $57 million in base reductions, combined with $91 million of base reductions included in the February proposal
The lower growth rate is achieved by reducing or removing fiscal year 2021 cost increases from the February budget proposal.
McWhorter went on to list the limited yet key spending items, including fully funding:
- BEP (Basic Education Program) formula
- higher education outcomes based funding formula
- pension contribution
- OPEB (Other Post Employment Benefit) liability contribution
- inflation growth in TennCare
- DCS growth in children’s state services
In addition there will be focus areas in critical services, including:
- driver’s license services and driver’s license stations
- additional state road troopers
- additional TBI field agents
The proposal also includes:
- continuing to address the long list of deferred capital maintenance items in both state government and higher education
- salary funding for state employees, higher education and K-12
In response to the tornado disaster and coronavirus:
- adding significantly to the disaster relief fund for TEMA
- adding significantly to the fund to repair state buildings
- establishing a new fund to help responsiveness to health and safety issues resulting from the virus
- doubling local government grants from $100 million to $200 million and will allow county and local governments to apply for funds for either tornado or virus recovery
- strengthening safety net for mental and primary care health
- Rainy Day Fund deposit of $350 million, an increase of $300 million over the original plan
Through February 2020, seven months into the fiscal year, the state had a budget surplus of $543.6 million.
Lee’s priorities in his fiscal 2021 budget of nearly $41 billion, as laid out in his state of the state address, originally included hundreds of millions of increased spending for education, capital, rural Tennessee and health care.
The Tennessee General Assembly will receive details on the amended budget Thursday.
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