State Budgets: Tennessee Cuts Non-Education Spending, Hopes for Future Federal Bailout December 26, 2008 Joseph Bishop-Henchman Joseph Bishop-Henchman 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. Stay informed on the tax policies impacting you. Subscribe to get insights from our trusted experts delivered straight to your inbox. Subscribe Share Tweet Share Email Topics Tennessee Tags State Tax and Spending Policy