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.
