NASHVILLE, Tenn. (WVLT) -- Tennessee Governor Bill Haslam has proposed eliminating raises for state employees and teachers in a move to close a $160 million state budget shortfall.
The proposal would eliminate those employee raises for an expected savings of $72 million. It would also level funding for higher education, reduce the Basic Education Program's growth fund, cut back on funding for Families First vendors, and reduce funding for the state's Rainy Day Fund.
Haslam says the cuts come as state sales tax collections dropped following both a lackluster holiday season and a harsh winter that kept potential shoppers indoors. Haslam says when added to Tennessee's inability to collect online sales tax, the state continues to lose significant amounts of revenue.
“Our state depends heavily on sales tax, and because so much commerce has shifted online without us being able to collect a majority of the taxes owed, that continues to have a negative impact on our budget year in and year out,” Haslam says.
The governor’s budget amendment eliminates a proposed increase to health insurance premiums for state employees and teachers to provide them some compensation. It also keeps funding increases intact for DCS services and for the Department of Intellectual and Developmental Disabilities. The amendment proposal also preserves funding for the Basic Education Program’s salary equity fund.
The budget amendment will be filed this week.