Gov. Haslam tells Tenn. agencies to plan for cuts

NASHVILLE, Tenn. – Republican Gov. Bill Haslam is calling on all state agencies to plan for up to 7 percent spending cuts in the upcoming budget year.

The Chattanooga Times Free Press reports (http://bit.ly/1qP4Zxh ) the move comes following a spending year in which revenues fell more than $300 million short of projections, leading the governor to cancel planned raises for state workers and teachers.

The actual amount of any potential cuts for the upcoming budget year will depend on whether revenues rebound and on the governor's spending priorities.

Haslam recently traveled to meet with bond rating agencies in New York to tout Tennessee's fiscal strength. He said the agencies expressed concern about flagging corporate tax collections.

"Because that was the cause of our shortfall, there were quite a bit of questions about that in terms of cause and whether we see a long-term trend there," Haslam said in a conference call after meeting last week with Fitch Ratings Inc., Moody's Investors Service and Standard & Poor's Financial Services.

The governor said a recent decline in business taxes is due to overpayments the previous year.

He said the agencies are aware that revenues will fluctuate.

"They want to see if you are willing to adapt regardless of the circumstance," he said.

One lawmaker said the directive to cut more after years of reductions could lead to tough choices, including the possibility of eliminating entire programs.

"I think that could be the case," said Senate Finance Chairman Randy McNally, R-Oak Ridge. "In the past they've done some of that trimming through things like over appropriations (automatic holdbacks of funds) and positions unfilled for years."

McNally added, "I think all of that's gone now."

Information from: Chattanooga Times Free Press, http://www.timesfreepress.com