Governor Bill Haslam is again asking state agencies to trim their budgets, but this year he warns they might actually have to follow through.
Low unemployment and a healthier economy continue to push up tax revenues, and the state of Tennessee is expecting a surplus of $400 million. But even more so than in years past, Haslam believes most of that money will go into the biggest items in the state budget — public education, government pensions and TennCare, the state's Medicaid program.
"So we're having ask people to be a lot more realistic," Haslam says, "in both what they're looking for in increases, as well as a lot of these cuts we will have to address if we want to invest new money."
What Haslam means is that many state agencies may have to cut some programs to free up funds for other ones. His administration has asked them to come up with plans to take as much as 2.5 percent out of their budgets.
It's not clear what those would be, and it's unlikely many departments would have to take out that much.
But some of the programs Haslam says he'd like to spend on are plans to fight the opioid epidemic, as well as pay increases for state workers. A 1-percent, across-the-board increase for all state workers would cost the state $50 million, Haslam says.
And although tax revenues are up overall, there is one funding source that's certain to decline. Officials say they need to prepare for the loss of more than $200 million in revenue from the state's investment tax, the so-called Hall income tax, which is being phased out.