Bad News For Tennessee Economy

As Tennessee Governor Phi Bredesen prepares to release details of budget cuts that will result in 2,000 state employee layoffs, Tennessee's sales tax collections dropped to a record low in April.

Finance and Administration Commissioner Dave Goetz reported today that overall April revenues were $1.39 billion or $88.9 million less than the state budgeted.

"Almost two dozen other states are experiencing similar revenue conditions; we expected a slowdown in growth, but nothing this dramatic," Goetz said. "We are committed to keeping our spending in line with revenues, while balancing the budget without raising taxes or raiding the Rainy Day Fund to cover the shortfall."

For the nine months of the current fiscal year, state tax collections were $356.9 million less than the budgeted estimate.

Gov. Bredesen had been scheduled to provide more details this evening about his plans for a 5 percent reduction in the state's workforce. However the Nashville Tennessean newspaper is now reporting that the it will be several weeks before the Governor will be able to offer specifics on a buyout package aimed at reducing 2,000 state government jobs. The governor says officials will need more time to figure out complicated legal questions about a voluntary buyout program.

Bredesen plans to offer the buyout packages to targeted state workers by June 6. Some state employees who had announced their retirement have placed those plans on hold as they await the Governor's buyout details. See link to right.

The reductions would represent a 5 percent cut in the state's work force and an annual savings of $64 million.

Bredesen has said he will need to cut $468 million from the spending plan that begins July 1.