Update/Memo
The General Assembly gaveled back into session Monday, June 1. Highlights of the week included a presentation on Gov. Bill Lee’s proposed revisions to the budget for fiscal year 2020/2021 by Butch Eley, Commissioner of Finance and Administration to the Senate and House Finance Committees. The revised budget includes significant budget cuts in light of revenue reductions from COVID-19. In March, the administration and the General Assembly agreed on $397 million in recurring reductions at the onset of COVID-19. Gov. Lee is proposing an additional $284 million in cuts for FY 20-21, bringing the total to $681 million in reductions.
Eley said the new spending plan pulls back proposed pay raises for state employees and teachers that were approved in the preliminary budget passed in March. However, employee pay and 401k contributions will remain at current levels under the proposal. Gov. Lee has proposed a voluntary employee buyout initiative to reduce the state workforce over the next two years. The details of that plan are still under review. The plan also calls for some reductions in new capital projects and capital maintenance. In addition, they propose to strengthen Tennessee’s cash position by using bonds for some existing capital projects previously funded with cash.
Eley said tapping into the state’s Rainy Day Fund would be a last resort to fill any budget gaps. Lawmakers want to ensure, given the uncertainty of the length and depth of the recession and any future effects of COVID-19, that adequate emergency funds are maintained. The fund will reach $1.2 billion after an additional deposit of $325 million at the end of the fiscal year on June 30.
Both the House and Senate continue to work on legislation in conjunction with business leaders and governmental entities that would provide protection from liability resulting from COVID-19. The House Civil Justice Subcommittee and the Senate Judiciary Committee are set to review this proposal next week. The Senate remains steadfast in their commitment to only consider legislation which is COVID-19 or budget related or any time-sensitive measure. The House is still considering other measures which are not moving in the Senate. At this time, no targeted adjournment date has been announced.
