Chas Sisk

csisk@tennessean.com

Gov. Bill Haslam's plan to boost pay for teachers will be put on hold for at least a year, the governor announced Monday, as he works to close a $160 million gap in the state budget.

Haslam said Monday that he will put off a proposal to give raises to teachers and other state workers, blaming poor sales and business tax collections. A one-year delay will save the state about $72 million in next year's budget.

The Republican governor said last fall that he wanted to give Tennessee teachers the biggest raises in the country over the next five years, and his initial $30 billion budget proposal released in February included a 2 percent across-the-board increase. The governor said he had not abandoned that goal.

"My priorities haven't changed at all," he said. "If the funds were there, that was our full intent."

Tennessee has taken in $33 million less in sales taxes than it expected, and Haslam said his administration has not yet figured out exactly why. He said the causes could include bad weather, a slow Christmas shopping season and the failure of online retailers to collect state and local sales taxes.

Business taxes have missed projections by $215 million this year, and state officials do not know the reason for that problem either. Companies may have found a loophole they can exploit, changed how they do business or simply paid too much in taxes in the past, Haslam said.

Regardless of the cause, cuts are required, Haslam said. In addition to dropping his proposal to raise teacher salaries, Haslam will abandon plans to give other state workers a 1 percent pay increase.

Haslam also will not seek to increase the budget for the state's colleges and universities by $12.9 million, as he had intended. Meanwhile, the $10 billion budget for TennCare will be cut by $25 million. Haslam also hopes to save $4.75 million by renegotiating contracts with private administrators of Families First, the state's welfare program.

Democrats criticized the governor's change of course.

"The governor's budget represents a broken promise to the people of Tennessee," said House Minority Leader Craig Fitzhugh, D-Ripley. "We should not be balancing the budget on the backs of parents, teachers, state employees, colleges and universities, and countless other hard-working Tennesseans."

Haslam said he plans to put $35.5 million into the state's "Rainy Day Fund," its reserve against an economic downturn. He also intends to press ahead with his proposal to encourage Tennessee high school students to enroll in community college by adjusting Hope scholarships.

No cuts are planned to the Department of Children's Services or the Department of Intellectual and Developmental Disabilities, and the cuts will not result in any layoffs, Haslam added.

Reach Chas Sisk at 615-259-8283 and on Twitter @chassisk.

Amended budget

Gov. Bill Haslam on Monday amended his budget request to:

• Abandon a plan to give teachers a 2 percent raise and state workers a 1 percent pay raise next year.

• Withdraw a proposal to increase funding to the state's colleges and universities by $12.9 million.

• Propose cutting the $10 billion budget for TennCare by $25 million.

• Propose saving $4.75 million by renegotiating contracts with private administrators of Families First, the state's welfare program.