Budget Shortfall Could Hit $585 Million

The state funding board set the official estimated range for next year’s tax collections today. The figure could be as much as 585-million dollars lower than previous estimates.

The board now calculates that this year’s shortfall could be as much as 385-million dollars more than expected. With the fiscal year ending June 30th, Finance Commissioner Dave Goetz says there’s not time to cut spending, so that shortfall will be paid out of reserves.

Goetz says the administration isn’t interested in tapping into the more than 700-million dollar rainy day fund to cover the shortfalls expected next year. That’s what the state employees union suggested when an unknown number of job cuts were announced this week.

“If anyone could predict the nature of this economic downturn, I’d like to hear that. No one that I know of is able at this point to be able to say whether this will in face, which a lot of people say prayerfully, by the end of the calendar year begin to turn around.”

Beyond not knowing how long the downturn will last, Governor Phil Bredesen says the state government has to tighten its belt just like families and businesses are doing in this economy.

“We certainly can’t put ourselves above that kind of thing. I think we’ve got to recognize the people paying the bills for us are going through some of these hard times too.”

Bredesen says his proposal for layoffs will not necessarily take a last-hired, first-fired approach. He says he’ll try to minimize the impact on state services first. His new budget is expected some time next week.