- Associated Press - Friday, March 28, 2014

NASHVILLE, Tenn. (AP) - Senate Speaker Ron Ramsey says worse-than-expected revenue collections could force Tennessee to cancel planned pay raises for state employees and reduce planned investments in higher education.

The Blountville Republican told reporters at his weekly news conference on Thursday that he would prefer finding the savings among bigger ticket items rather “the little nickel-and-dime issues where you just stir up constituencies and there’s no big saving there.”

Fellow Republican Gov. Bill Haslam is expected to release his revised spending proposal next week.

The state’s general fund revenues have fallen $260 million short of projections through the first seven months of the budget year, and estimates for the budget year beginning in July will have to be readjusted depending how deep that hole ends up.

Haslam acknowledged the funding challenge after a higher education summit organized by the Nashville Business Roundtable on Thursday.

“We’re obviously trying to prioritize higher ed funding,” he said. But he added that “we have to live within the limits of the funds we have … even though we’re not still funding it at a level we’d like to.”

Public colleges and universities traditionally make up for unmet funding needs by raising tuition.

“I think you’ll see a lot of pressure for the Legislature and the governor for that not to happen,” Ramsey said.

Ramsey noted that state employees have received raises through the first three years of Haslam’s first term in office, after several years of without raises under Democratic predecessor Phil Bredesen.

Haslam had originally proposed a 1 percent pay increase for state employees, though his administration signaled that this was to be the last across-the-board raise for state workers. Haslam instead wants to offer targeted raises based on performance and staffing needs.

“We think it would be unfortunate if the state is unable to fund a meager 1 percent raise for state employees,” Robert O’Connell, the executive director of the Tennessee State Employees Association, said in an email.

The group has scheduled a meeting with Haslam’s finance chief on Monday, he said.

It wasn’t clear from Ramsey’s comments whether he also expect to cancel a planned 2 percent raise for teachers. Haslam had announced the $63 million proposal in his State of the State address in early February.

Haslam, who is running for re-election this year, has announced that by the time he leaves office, he wants Tennessee’s teacher salaries to have grown more than teacher salaries in any other state.

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