A Prescient Forecast
The governor's proposed budget, due for release Friday, will indeed be well beyond $20 billion including federal dollars and revenue sources - and its 'deficit' is inflated by a large dose of new spending - just as I forecast seven months ago in a column published in the Nashville City Paper.

I wrote:
"My prediction is Sundquist will propose a budget of around $20.6 billion next year that will include all sorts of new programs he’ll call 'improvements,' and then he’ll use that expensive wish list to issue an inflated deficit projection. But next year’s real deficit can be forecast rather easily right now. It is $345 million.

We’ll be $220 million in the hole next fiscal year because of use of one-time money this year. Revenue growth next year is forecast to be $300 million, which would give us an $80 million surplus before we factor in the $425 million extra needed to fund the current level of government services given inflation, population growth and rising medical costs. That adds up to a $345 million shortfall, barring substantial changes in revenue growth. Any higher deficit forecast will reflect merely the governor’s wish list of larger government."

So how close was I? Administration officials say the state will need $1.167 billion in new revenue to balance the budget. But subtract the $437 million in new spending and the real deficit, based on the administration's calculatons would be $730 million. If we also subtract the $103 million the state plans to put into the state's rainy day fund next year and the deficit drops to $627 million.

That's still $282 more than I projected. The difference? Two things: the first is that, seven months ago, state officials were forecasting fiscal 2002-03 revenues would be around $300 million. Today, the forecast is $197 million, a difference of $103 million.

Also, the administration's deficit includes this year's revenue shortfall projected at $312 million. My projection for the fiscal 2002-03 deficit didn't include any revenue shortfalls this year. Accounting for those two factors, the state's projected deficit for fiscal 2002-03 is a mere $63 million more than I forecast. That number represents the difference between what state officials thought seven months would be the inflation and population growth-induced increases in the cost of current government services and their best calculations (or budget padding) today.

So, my deficit projection proved was fairly prescient, and my projection of a total budget of $21.6 billion is likely to be on target when the administration releases its budget today.

The solution to the budget mess? It is the same thing I proposed seven months ago in that same column:

"Add no new programs, reform TennCare and reallocate the savings to cover normal growth of the cost to existing programs."

Various reform plans that have been proposed for TennCare but rejected over the years by the administration would save $200 million to $475 million in state funds per year. Instead, the governor is once again proposing an income tax.

Here's the math on the above deficit projection comparisons:
State's projection: $1,167 million.
Subtract new spending of $437 million.
Subtract rainy day fund contribution of $103 million but add back $103 million for the lower revenue forecast.
Subtract $312 million from deficit that is for the current year's budget hole.
Total: $428 million.
Subtract my forecast deficit of $345 million.
Difference in projections: $63 million.