March 10, 2005

Bredesen Unveils Alternate Budget if TennCare "Reform" Stalls

Tennessee Gov. Phil Bredesen has put forth an alternative state budget plan in case the big cuts in TennCare spending needed to balance his first budget proposal aren't allowed to be enacted. The Nashville City Paper rather ridiculously calls the alternative budget a "doomsday budget" and a "disaster budget" that would impose "massive cuts to K-12 education."

Both the City Paper - and The Tennessean in its story today - mislead readers on the true size of the spending cuts that the so-called "doomsday budget" would cause in the state's spending on education, and fail to inform readers of the truth about the rapid-growth trend of the Tennessee state budget. (Short version: Spending since Bredesen became governor is on a rocket ride straight up.)

Here's an excerpt from the City Paper's coverage:

Bredesen also offered an alternative in which he would scrap pharmacy benefits for TennCare recipients. Under federal Medicaid law, pharmacy benefits aren’t required. The move is a "Plan B" in case the TennCare reform Bredesen wants is blocked by legal action brought by advocates for the 323,000 recipients that reform would remove from the rolls.

The alternative document was submitted to the legislature and also to federal court where top officials faced depositions Wednesday in one of several TennCare cases that jeopardize the future of Bredesen’s current $25.1 billion budget. If the state is barred from disenrolling the recipients by the courts, state lawmakers and the administration would be facing a roughly $575 million shortfall.

The alternative or "disaster" budget would close this gap by cutting K-12 education by more than $278 million, higher education by $77 million and other areas of state government by a total of $150 million. Cuts across the board without a K-12 cut would equal roughly 14 percent, Bredesen said.

Nevertheless, Bredesen said he would seek first to scrap TennCare pharmacy benefits — more than $2.5 billion in federal and state funding in the next year. The state would save roughly $664 billion by cutting the drug program, which is widely considered by far the most out-of-control component in TennCare.

That's a $191 million spending cut to anyone except politicians and bureaucrats who must think if they wish for a $10,000 pay raise and get only a $5,000 pay raise they actually took a pay cut.

The fact - though neither paper tells you this - is that even under the so-called Doomsday Budget, the state of Tennessee would still spend a lot more next fiscal year overall than it did just one year ago. How much more? About $3 billion.

In late January, Bredesen proposed a fiscal year 2005-06 budget of $25.1 billion - fully $3 billion more (including $1.33 billion in revenue from Tennessee taxpayers) than his budget for the 2003-04 fiscal year, which ended less than one year ago on June 1, 2004. The alternative so-called "doomsday" budget would represent an actual reduction in overall state spending, and in spending from state tax dollars, compared to the current budget for FY 2004-05, but it would still spend about $3 billion more than the state spent in the 2003-04 fiscal year.

The cuts envisioned on the so-called "Doomsday Budget" would not change that figure. That's because those would not be actual cuts to the overall budget, but merely a shifting of spending from K-12, higher-ed and other programs to TennCare if Bredesen's plans to cut TennCare are thwarted by a federal judge.

Bredesen claims to be a fiscal conservative, and short-term, Bredesen's January budget proposal seems to prove his claim. Including the TennCare reductions, it does represent a small decrease in spending - the state would spend about $300 million less in the coming fiscal year than it is spending this fiscal year.

But long term - even under the "doomsday" budget - Tennessee state government would still remain on a path of fairly rapid spending growth, and Bredesen is just as responsible for that as his predecessor, Gov. Don Sundquist. Billion-dollar annual spending increases presided over and pushed by Sundquist were what ultimately led Sundquist to propose a massive tax increase and call for creation of an unpopular and unconstitutional state income tax.

Spending increases of $1.5 billion annually under Bredesen aren't likely to lead in a much different direction.

UPDATE: Other bloggers weigh in: Blake Wylie at NashvilleFiles, Doc Brown at ...Right Justified ...