State of the State finds governor with lotto funds up, revenues down

On January 28, 2008, in News 2008, by Mark Norris

By John Rodgers, NashvilleCityPaper.com January 28, 2008 Gov. Phil Bredesen will deliver his sixth State of the State address tonight. With state tax revenues plummeting and surplus lottery dollars overflowing, Gov. Phil Bredesen will deliver his sixth State of the State today and is expected to address the conflicting situations. The budget talk comes as […]

By John Rodgers, NashvilleCityPaper.com
January 28, 2008

Gov. Phil Bredesen will deliver his sixth State of the State address tonight.

With state tax revenues plummeting and surplus lottery dollars overflowing, Gov. Phil Bredesen will deliver his sixth State of the State today and is expected to address the conflicting situations.

The budget talk comes as the nation’s worsening national economy has affected Tennessee’s tax revenues.

So far, the state has about a $182 million shortfall this fiscal year, thanks mostly to reduced consumer spending and weakening business profits.

Bredesen recognized the tough financial situation and said he would be telling the state Legislature how “we’re getting through this year and how we’re going to get through next year.”

“I think sometimes people in government, people in the Legislature think if you don’t have a lot of money to spread around you can’t do anything,” Bredesen said Friday. “There’s lots of things we can do and this is a year in which we’re going to manage our budget smoothly.”

In addition to delivering the State of the State today, Bredesen will also present his administration’s proposed budget for the year.

That proposed budget might have to be changed. State Finance Commissioner Dave Goetz cautioned recently that the budget had to be sent to the printers when tax collections for December holiday purchases were still being tabulated.

If those revenues come in worse than expected, Bredesen’s budget could have to be changed, Goetz has said.

One line item Bredesen said would be included in his budget is the next installment of his “BEP 2.0” program.

Last year, Bredesen, with broad consensus from state lawmakers, pushed through changes to the state’s Basic Education Program (BEP), the state’s funding formula for K-12 schools, adding $295 million to it.

It is expected that another $100 million would be devoted for the next installment of those school funding changes in Bredesen’s proposed budget.

“That certainly will be far and away the single most expensive thing we will do this year,” Bredesen said of possible new initiatives. “But I want to keep pushing forward on education because I just believe it underlies everything else.”

While budget revenues have dwindled, lottery surplus dollars have exploded, and Bredesen is expected to unveil his proposal on how to spend some of the state’s expected $447 million lottery surplus for next fiscal year.

Bredesen said that amount is “a little bit too large.”

“I certainly don’t think (the Legislature) should take $400 million and go write checks for it,” Bredesen said. “I think there are some sensible things that we can do to trim them down some and still keep ourselves with some good reserves.”

While Bredesen’s lottery surplus plans will be disclosed today, Republicans already have a different plan for the extra dollars — setting up a matching fund program with local school districts to give them money for K-12 capital building projects.

Lt. Gov. Ron Ramsey (R-Blountville) said that’s the “best use” of the lottery surplus dollars that he knows of at this point.

“I know my community, Sullivan County, Johnson County, there are lots of small projects, air conditioning units, heating units, things of that nature where schools need to be updated where that money could be put to really, really good use,” Ramsey said.

Bredesen and many Democrats, however, are against the Republicans’ K-12 school construction plan, calling it a “giveaway” and not the best use of the lottery surplus funds.

Another hot-button topic whose fire could get further stoked today is Bredesen’s pre-Kindergarten program.

The governor wants to expand pre-K to make it universally available to all preschoolers and not just those children from low-income families.

Some Republicans aren’t entirely sold on that idea.

“The plan that was originally approved is one thing,” said Senate Republican Leader Mark Norris (R-Collierville). “To expand it to everyone is a different kettle of fish all together.”