Balancing the state’s budget is the one task the Tennessee Constitution mandates that our General Assembly address each year. The people of this state have rightfully put into place a mandate which requires Tennessee’s state government to live within its means. As Chairman of the Finance, Ways and Means Committee’s Revenue Subcommittee, I can affirm that we take this requirement very seriously and with due caution to ensure we don’t spend more than the state collects.
In order to accomplish this task, our Finance Committee heeds the advice of the state’s top financial officers. The state’s Funding Board, comprised of Governor Bill Lee, Comptroller Justin Wilson, Secretary of State Tre Hargett, Treasurer David Lillard and Commissioner of Finance Stuart McWhorter, forecasts how much Tennessee’s revenues will increase or decrease after reviewing information provided to them from a variety of sources. This includes expert advice from leaders of the state’s top economic centers at our colleges and universities.
Recently, our state’s Funding Board met to hear from these experts and recommend the level at which Tennessee’s revenues are expected to grow. The board recommended a 2.7 to 3.1 percent growth rate next year which will generate $354 to $408 million in new recurring funds. They also adjusted upward the growth rate of the current fiscal year from a low range of 2.71 to 3.2 percent to a high of 3.21 to 3.75 percent. This will generate approximately $430 to $500 million over the previous fiscal year. This is good news as we prepare the state’s budget for the new legislative session.
Although this positive revenue growth forecast is great news, the expert economic advisors cautioned us that the longest economic expansion in U.S. history is due to slow down. That is why the recommendation for next fiscal year, even though it reflects significant revenue growth, is cautiously reduced from the current budget year which will end in July.
During my legislative tenure, I have seen both good and difficult economic times for Tennessee. I have also seen both sides of a revenue forecast which does not meet the mark set by the budget by our experts. I can attest it is much better to err on the conservative side and exceed your budget estimates than to fall short of that goal. It is a very painful process to make cuts in midstream.
Our careful approach to budgeting has yielded great results in Tennessee. I am glad to report that our state’s finances are the healthiest in Tennessee’s history. In fact, we have been named the most financially stable state in the nation. The rating agencies which assign credit worthiness grades to states each year have given Tennessee a AAA bond status, the highest grade a state can receive. If the rating agencies continue Tennessee’s top bond status for a third year in a row – and I have confidence that they will – it will be unprecedented in state history.
The rating agencies have given us this status in most part due to our preparedness to meet the financial challenges of tough economic times. Tennessee has the lowest per capita debt burden of any state in the country, we are one of only five states in the nation without road debt, and our pension plan is ranked as one of the best-funded state pension programs in the country. In addition, our Rainy Day Fund, which is the state’s emergency savings account, has a record investment to help us withstand a downturn in the economy.
The state’s financial stability is a key factor in the success Tennessee has experienced with historic low unemployment rates, robust job growth and rising income levels. Passage of a conservative balanced budget that makes improvements in education, job creation, rural economic development, healthcare and public safety will be a priority during the 2020 legislative session. The growth of state revenues will help to ensure we make advancements. As Tennessee and many families across the state have learned through experiencing tough economic times, it is also important that we are financially prepared and keep our constitutional commitment to be efficient stewards of taxpayer dollars.