Because of the lingering effects of COVID-19, Tennessee Commissioner of Finance and Administration Butch Eley this week asked all of the state’s agency heads and budget officers to plan to reduce their budgets by 12 percent.
This, according to an email Eley sent Tuesday to state officials.
No one in Tennessee Gov. Bill Lee’s office returned The Tennessee Star’s request for comment on the matter Thursday.
“The financial challenges which have evolved over the past two months are unprecedented in recent times. Although the state is in a strong financial position, thanks to a longstanding and rich partnership with the legislature and years of bipartisan commitment to financial stability, the impact of COVID-19 on our economy and our state revenues is projected to be unparalleled in terms of both its suddenness and magnitude. While revenues are expected to drop by such a large degree that experts predict it could take years to recover, we will always uphold our constitutional duty to balance our budget,” Eley said.
“In order to adapt quickly to the new economic environments we face, we will need to have a heightened level of fiscal prudence, invest state funds in more targeted policies that show greater returns, operate more efficiently by continuing to provide our vital services with fewer resources, all while remaining stalwart supporters of our customers: Tennesseans.”
This economic situation, Eley went on to say, came on quickly and will now require a multi-year approach of restraint and reductions.
“While the plans to address this crisis are multifaceted, the Governor is asking that we immediately begin the process of identifying where budgetary reductions may occur,” Eley said.
“As a result, I am asking all agencies to identify and plan to implement reductions totaling 12 percent of their general fund state appropriation budget.”
In his email, Eley said that, as plans develop, agencies should consider the following guidelines:
• Agencies should prepare to implement all reductions identified in their plan by July 1.
• State officials should evaluate all programs for reduction/elimination.
• Revenue Offsets – Adjustments that propose to offset a reduction of state appropriations with a corresponding increase in departmental revenue are not encouraged and should not represent a significant portion of the reduction plan. Because the impact of COVID-19 on departmental revenues is not clear, agencies should not necessarily expect prior year collection trends to indicate future collections, Eley said.
• Assume all programs and associated funding reduced or eliminated through this exercise will not get added back in any future budget.
• All Internal service funded agencies and programs are expected to participate and should develop plans to begin Fiscal Year 2021 with a reduced billing rate of 6 percent.
Officials should submit reduction to the Division of Budget by June 30, Eley said.
“We will provide more specific instructions in a later communication regarding the exact reduction amount for your agency as well as the submission format and process,” Eley said in the email.
“As the Governor has said, everything is on the table and we have an obligation to be good stewards of taxpayer funds. I encourage each of you to think critically and creatively about ways we can achieve our goals of financial stability and outstanding service to our customers.”
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