State Budgets: Tennessee Cuts Non-Education Spending, Hopes for Future Federal Bailout

Gov. Phil Bredesen (D) is now estimating a budget shortfall of between $884 million and $1.02 billion (out of a $27 billion budget). The estimate has accelerated, with Bredesen in August warning departments to cut spending by 3%, revised to 10% in November, then 15%, and now 20%. The state may extend a hiring freeze, and the rainy day fund may be exhausted just to close this year’s budget. K-12 education spending is exempt from the cuts. Bredesen hopes that increased federal Medicaid spending as part of a stimulus or bailout of the states will allow Tennessee to shift $500 million from Medicaid to other budget items.

More on Tennessee here.