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How Can You Claim Budget Cuts When Spending Goes Up
Tennessee's State Budget

March 15, 2003

In my last column, I made a weather prediction: If Tennessee's Democrat governor, Phil Bredesen, submits a state budget (specifically a general fund budget) with actual cuts in it and the Democrat controlled legislature passes it, then hell will freeze over.

Lucifer, don't get out the mukluks yet!

Let's review: Bredesen started out his budget review process asking for 7 ½ % reductions from most departments. Later he increased the reductions to 9%, after the state Medicare program, TennCare, learned of greater cost overruns than previously reported.

Bredesen submitted his budget earlier this week in a stack of detailed reports and estimations. I have been skimming them in the past couple of days trying to figure out what it represents. (I may be simplistic in my expectations, but one of the best budget reports I have ever seen was from my days involved in San Francisco city politics. Someone created a city budget report in comic book format: color, ~20 pages, very readable, pie charts, simple flow charts, etc. Why more government entities do not pursue this "USA Today" format, I do not know.)

Let's review the "cuts" in his budget:

A total of 809 state job positions will be abolished. 602 (or 74%) 4of those job positions ARE NOT EVEN OCCUPIED. I think it is safe to say that the rapid annual state budget growth of the last ten years has created state job positions faster than the administrators can fill them.

That leaves 207 state positions currently occupied that will be eliminated. There are 44,020 state employees. 207 represent ½ of 1% of total state employees. Normal attrition from retirement, job changes, death, etc. will create more than enough openings for those 207. So is this really a cut?

Higher education (state universities and colleges) will see its budget cut 9%. The University of Tennessee system chancellor states the cuts will eliminate 375 positions on his campuses, but admits that only 125 (33%) of those were filled anyway! (I suspect the higher education budgets will get a shot of the arm once the new state lottery scholarship program kicks in next year.)

Other cuts are the closing of departmental field offices; school crossing guard budgets (the kids took turns doing it without pay in my elementary schools), etc.

Not every department is being "cut". Several are actually seeing significant increases. From the (Memphis newspaper) Commercial Appeal: " Despite the cuts, Bredesen proposed major spending increases, which he called 'investments', in several key areas - primarily K-12 public schools, TennCare, corrections, children's services, health, services for the mentally retarded and safety."

In summary, Tennessee's budget cuts total $355.1 million dollars. State revenues are going up $242 million. Simple math tells me that there is $597.1 million in spending increases in the budget. So much for reducing the state budget.

I continue to have strong expectations from Bredesen. This may sound contradictory from what I have written above, but he walked into a dysfunctional state government as created by his own party - the Democrats - in the state legislature and assisted by a GOP governor and did an admirable job of finding a short-term solution - in reality a slowing of spending, not cutting. In the long term, however, he is changing the debate from one of "where do we get more revenues" to one of "where do we best spend our money for results". I hope this will help arrest the faster-than-economic-growth state spending (even faster than state revenues, which have grown 15% in two years!) that has characterized the last decade. Next year, after a full year in office, he has the opportunity to remake state government and bring it back into focus: determining what the state should being doing and how and what the state should let others do. Bredesen is an uncommon Democrat, but from my taxpayer's point of view, so far, a welcomed one.


Sam T. Harper graduated cum laude from Vanderbilt University.  Following a tour in the US Navy and a stint as Operations Manager at Roadway Express, he earned his MBA from Stanford University Graduate School of Business.  He was a contributor to “In Search of Excellence,” the best selling business book of all time.  Sam was also Manager, Economic Planning & Analysis at Sohio Petroleum, Partner and Chief Financial Officer at investment-banking firm Bridgemere Capital, and Chief Operating Officer of the Institute for Contemporary Studies, a San Francisco Bay Area-based think tank and international publishing firm that specializes in self-governing and entrepreneurial public policy.  Sam was a chairman of the San Francisco Republican party and the GOP co-host of California Political Review on KALW-FM in San Francisco.  Sam is currently the co-owner of the Tennessee based Institute for Local Effectiveness Training, LLC – a management consulting, training, and coaching firm.