Tennessee state budget

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Tennessee, according to January 2010 reports, is facing an estimated $1 billion shortfall.^[1] The state of Tennessee has a $29.6 billion total budget passed by the Tennessee General Assembly for FY 2010 that started July 1, 2009, $12.1 billion of which is state spending and $2.2 billion federal stimulus money (total federal is almost $12 billion^[2]). Gov. Phil Bredesen warned in November 2009 the extent of the state's budget problems have been concealed by the federal stimulus funds and that more severe cuts would be coming. Gov. Bredesen said, "This will be my toughest budget year," and has asked state agencies to prepare for 6% budget reductions for their FY 2011 presentations with a potential 3% above that in case of even worse economic conditions.^[3]

The FY 2010 budget used state savings to avoid laying off 700 state workers, which will not be an option for the next fiscal year beginning July 1, 2010. Gov. Bredesen said on November 3, 2009 state layoffs will probably be unavoidable.^[4]

The Tennessee Department of Finance and Administration released November 10, 2009 revenue figures showing October 2009 was the 17th month of negative sales tax collections. October collections were $31.7 million less than the budgeted estimate. The general fund was under collected by $24.2 million and the four other funds were under collected by $7.5 million during the month. Year-to-date sales tax the growth rate is negative 8.47%. Year-to date collections for three months were $101.3 million less than the budgeted estimate. The general fund was under collected by $88.2 million and the four other funds were under collected by $13.1 million. The budgeted revenue estimates for 2009-2010 are based on the State Funding Board’s consensus recommendation adopted by the first session of the 106th General Assembly in May of 2009.^[5]

[edit] Budget Background

Sales tax makes up 58% of Tennessee's state revenues; a far second source of state income is franchise and excise taxes at 12%. Education consumes 46% of the state budget with Health and Human Services taking 25%.

Tennessee Total State Budget Comparison^[6]

Tennessee's budget process begins in August of each year when the Commissioner of Finance and Administration issues budget instructions to all departments and agencies of state government. Agency budget requests are submitted by October 1. During October and November, the Governor meets with the departments and agencies to hear their budget proposals for the following fiscal year. ^[7] Following the hearings the Governor issues a budget recommendation for the upcoming fiscal year to the Legislature. Both the House and the Senate are required to make any necessary changes or adjustments to the budget until the bill is passed in both houses. Lawmakers must pass a balanced budget before the fiscal year begins on July 1 of each year. ^[8]

• Tennessee has no general income tax.^[9]
• Tennessee's current tax structure has the majority of its tax revenue coming from the sales tax, the largest portion of which funds K-12 education. ^[10]
• Out of the state's tax revenue the state spends approximately 48 percent on education; 4 percent on resources and regulation; 12 percent on law, safety and correction; 3 percent on the general government; 32 percent on health and social services; 1 percent on business and economic development. ^[10]
• State tax revenue is comprised of 57 percent sales tax, 2 percent motor vehicle tax, 7 percent gasoline tax, 3 percent income and inheritance tax, 5 percent gross receipts and privilege, 14 percent franchise and excise tax, 3 percent insurance and banking tax, 6 percent from other taxes, and 3 percent from tobacco, alcohol and beer tax. ^[10]

[edit] Budget figures

The following table provides a history of Tennessee's expenditures and gross domestic product (GDP).

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
• See Tennessee state budget (2008-2009) for more information.

[edit] Accounting Principles

Tennessee's Comptroller of the Treasury Audit Division is responsible for state and local audits and divided into the following divisions:^[12]

• County Audit - The division is responsible for annual audits of all 95 counties in the state. The division establishes standards for county audits conducted by public accounting firms. The division assists local governments with financial administration questions.
• Municipal Audit - This division ensures that municipalities, designated school system funds, utility districts and government-funded, non-profit agencies are audited as required by state statute. The division investigates and issues reports on allegations of misconduct, fraud or waste in local government, often referring findings to other agencies for appropriate action.
• State Audit - The Division of State Audit conducts financial and compliance and performance audits, conducts investigations, and performs special studies to provide the General Assembly, the Governor, and the citizens of Tennessee with objective information about the state's financial condition and the performance of the state's many agencies and programs.

Tennessee's audit reports are posted online. The Comptroller of the Treasury is a constitutional officer elected by a joint vote of both Houses of the General Assembly for a two-year term. Justin P. Wilson the current Comptroller.^[13]

The Institute for Truth in Accounting (IFTA) rates Tennessee “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Tennessee's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[14] Tennessee's CAFRs are annual publications of the Tennessee Department of Finance and Administration. Dave Goetz is Commissioner of the Department of Finance and Administration, the governor's chief financial officer for Tennessee state government and manages over a $21.5 billion budget.^[15]

[edit] Accounting transparency checklist

Comprehensive Balanced budget Timeliness Usability

[edit] The good

• The website has Comprehensive Annual Financial Reports (CAFR) dating back to 1997.^[17]
• An independent auditor’s report is published on page 10 of the document.^[18]
• It provides supplements to the budget workup, starting on page 111.
• The budget is posted using organized and consistent methods of financial reporting.
• Tennessee law requires a balanced budget and a deficit is forbidden.^[19]
• It includes all costs incurred by the government, including long-term liabilities, starting on page 30 of the document.^[18]
• The CAFR compares estimated and actual budgetary numbers, such as on page 114 of the document.^[18]
• The Tennessee office was timely in submitting the budget.

[edit] The bad

• The CAFR is posted in a PDF format, so it’s not searchable online.

Tennessee has a statewide, official spending database online, "Open Government for the State of Tennessee."

In addition, thanks to Tennessee House Bill 246 (2009), a spending transparency site mandated by the legislature will be available by January 1, 2010. As Nebraska's treasurer Shane Osborn pointed out in his letter to Tennessee's legislators, "In the current economic climate, it is as important as ever that citizens have the ability to easily navigate the state budget, giving them access to information on how government is spending their hard-earned income."^[20]

In 2007, Senator Jim Tracy and Representative John Mark Windle introduced the Taxpayer Transparency Act of 2007 (SB 1066 and HB 915). This legislation would have created a public website that listed every entity receiving Tennessee grants and/or contracts over $5,000 and for what purposes the money is being disbursed.

A fiscal note issued for SB 1066 and HB 915 put a $3.6 million one-time price tag on upgrading the state’s existing financial software to allow for the creation of the spending database. The note also projects annual costs of over $500,000.

Transparency advocates noted that this cost estimate ignored low-cost alternatives and lessons from the launch of USASpending.gov. The Congressional Budget Office estimated that implementation of USASpending would cost about $4 million initially in 2007 and about $15 million more over the 2007-2011 period (although actual expenses came in at a much lower number). It is hard to imagine that the estimate for one state’s initial costs is the same as the price tag for the entire federal government.

[edit] Economic Stimulus Package

Tennessee is expected to receive approximately $4.5 billion from the $787 billion economic stimulus package. ^[21] According to White House officials the stimulus bill is estimated to create or save 70,000 jobs. ^[22] In February 2009 Gov. Bredesen said that he was wary of some of the funds because some provisions in the package for unemployment benefits would force states to expand their programs permanently, even though the stimulus funding only lasts for two years. “We are evaluating this piece of money, whether it makes sense for us to take it,” he said. “We may well be one of the states that say we can’t take on that portion of it.” ^[23] However, in March 2009 the Governor announced that he would accept all of the unemployment funds. “We have worked through all the issues on that,” Gov. Bredesen said. “Tennessee is going to accept 100 percent of all the unemployment insurance compensation.” ^[24]
For more information on how the federal stimulus funds are being used in the state of Tennessee, visit the state recovery website.

According to preliminary reports Tennessee is expected to receive:^[25]

• $141 million for unemployment insurance benefits ^[24]
• $572.2 million for highways and bridges
• $771.6 million in stabilization funds for education
• $171.6 million in stablization funds for the state in general
• $174.2 million for Title I grants to local schools
• $229.4 million for special education
• $1.1 billion for Medicaid
• $71.98 million for mass transit capital grants

[edit] Budget transparency

Tennessee has a statewide, official spending database online, "Open Government for the State of Tennessee."

In addition, thanks to Tennessee House Bill 246 (2009), a spending transparency site mandated by the legislature will be available by January 1, 2010. As Nebraska's treasurer Shane Osborn pointed out in his letter to Tennessee's legislators, "In the current economic climate, it is as important as ever that citizens have the ability to easily navigate the state budget, giving them access to information on how government is spending their hard-earned income."^[26]

[edit] Website evaluation

Budget Usability Elected Officials Administrative Officials Ethics Audits Contracts Lobbying Public records Taxes

TN.gov is the website for the state of Tennessee.

• Main article: Evaluation of state websites

[edit] The good

• Site has a search function and is fairly easy to navigate.
• Provides lists of public record requests received by each agency.^[27] Includes form for making requests under the Tennessee Open Records Act.^[28]
• Annual financial reports^[29], audits,^[30] and budget is published.^[31]
• Tax information is posted.^[32]
• Ethics commission information available.^[33]
• State officials are listed with contact information under respective office/agency.^[34] Employee information can also be found in a searchable database.^[35]
• Lobbying information provided includes a searchable database of all registered lobbyists and their reports.^[36]

[edit] The bad

• Requests for proposals and contract bid information is posted but all current contracts are not available.^[37]
• Does not provide information on state-paid lobbying and agency lobbying contracts.

[edit] Legislation

In 2007, Senator Jim Tracy and Representative John Mark Windle introduced the Taxpayer Transparency Act of 2007 (SB 1066 and HB 915). This legislation would have created a public website that listed every entity receiving Tennessee grants and/or contracts over $5,000 and for what purposes the money is being disbursed.

A fiscal note issued for SB 1066 and HB 915 put a $3.6 million one-time price tag on upgrading the state’s existing financial software to allow for the creation of the spending database. The note also projects annual costs of over $500,000.

Transparency advocates noted that this cost estimate ignored low-cost alternatives and lessons from the launch of USASpending.gov. The Congressional Budget Office estimated that implementation of USASpending would cost about $4 million initially in 2007 and about $15 million more over the 2007-2011 period (although actual expenses came in at a much lower number). It is hard to imagine that the estimate for one state’s initial costs is the same as the price tag for the entire federal government.

[edit] Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
Tennessee: open gov]

Although it is not a searchable database, the Tennessee Arts Commission has provided a .pdf document of its funding history.

[edit] Limitations and suggestions

While the "Open Government for the State of Tennessee" transparency site does have searchable salary information, its list of vendor payments and expenditures is in .pdf form and not readily searchable.

[edit] Economic Stimulus Transparency

• The American Recovery and Reinvestment Plan of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[38]

• Tennessee will receive an estimated $2,929,163,793.^[39]

• The economic recovery website to show how legislators and government officials in Tennessee are spending Federal funds is available here.

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[40][41]

A non-existent District in Tennessee received nearly $41 million in stimulus funds and used that money to produce 0 jobs, according to recovery.gov. District 00 received all but $13 million that was sent to the seven phantom districts in the state, but produced fewer jobs than the non-existent 11th district, which created or saved 3 jobs using $39,000, according to the site.

The 29th District, also non-existent, received the next largest sum of money, using nearly $10 million to create 20 jobs.^[42]

[edit] Support for creation of the database

In 2008, the National Taxpayers Union endorsed HB 4034, saying "it is imperative that you move forward with this legislation to enable Tennessee's residents to make sense of how their tax dollars are parceled out."^[43]

Americans for Tax Reform issued a press release detailing the progress of transparency in Tennessee.^[44]

[edit] Public employee salary information

The "Open Government for the State of Tennessee" transparency site provides a searchable database of state employees' salaries.

The Bristol Herald Courier performed a salary survey of Southwest Virginia and Northeast Tennessee, and published the results here.

[edit] See Also

Tennessee taxpayer-funded lobbying

[edit] External links

[edit] Additional reading

• Knoxville News Sentinel,"The stimulus plan: Impact on Tennessee," February 19,2009
• The Daily Times,"Tennessee not putting some public records online," March 15,2009

[edit] References

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	v • d • e State of Tennessee Nashville (capital)
Transparency	Open Records Act | Transparency Checklist | Government corruption reports | Transparency Legislation | Open Records procedures | Transparency Advocates | Transparency blogs | State budget | Taxpayer-funded lobbying associations |
Divisions	State | List of Counties | List of Cities | List of Towns | List of School Districts | Evaluation of county websites | Evaluation of city websites | Evaluation of township websites | Evaluation of school district websites |
Government	Tennessee State Constitution | Executive | House of Representatives | Senate |
Judiciary	Tennessee Supreme Court | Court of Appeals | Circuit Court | Chancery Court | Probate Court | Criminal Court | Judicial nomination process | Judicial news | Judicial activist organizations |
Ballot Measures	Ballot measures | 2006 constitutional amendments | 2002 constitutional amendments | Procedures for qualifying an initiative | Amending the constitution | History of direct democracy | Campaign finance requirements |