State Counting on Fiscal Cliff Deal

Governor Bill Haslam speaks to the Tennessee Captives Insurance Association Wednesday. Courtesy TN Photo Services

Governor Bill Haslam doesn’t appear to be spending much time working on the “what if’s” of a fiscal cliff. He’s counting on a compromise.

According to Tennessee’s budget director, more than $100 million of direct federal spending would vanish if automatic cuts take effect next year.

Asked what department posed the greatest concern, Haslam said he wasn’t sure, mentioning special education is largely funded by the feds. A necessity like that, he says, the state would just have to cover. But less essential programs might get dropped altogether. Haslam says these are decisions he shouldn’t have to consider.

“If the country goes off a fiscal cliff, then shame on our leaders in Washington. I think the whole country is saying right now there should be a deal made here.”

It’s not so much the spending cuts that may be the problem. State revenue officials say the fiscal cliff’s tax hikes could do more damage. They foresee a cascading effect, reducing how much people spend, thus hitting state sales tax collections.