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Regional & National

Tenn. OK for 6 weeks if impasse on debt ceiling

July 31st, 2011 8:54 am by Staff Report

NASHVILLE (AP) — State Finance Commissioner Mark Emkes said Tennessee has a contingency plan if Congress misses the deadline for raising the national debt ceiling.

Emkes told the Knoxville News Sentinel the state can go for more than six weeks without major financial problems, even if there is an impasse in Washington.

"If there's not an agreement during that period of time, I think the world explodes," Emkes said.

State Senate Finance Committee Chairman Randy McNally said 44 percent of the state's budget relies on federal funding. That money goes to hospitals, nursing homes, schools, unemployment benefits and multiple other purposes.

"If the state elects to continue any of the above services, then concerns shift to the state's ability to fund them with existing cash flow and reserves," the Oak Ridge Republican said. "Our reserves will be critical to help us through such a crisis should it occur."

Gov. Bill Haslam agreed that the state would be in good shape for the short-term but said Tennessee's credit rating could suffer.

Moody's Investors Service has warned that if the federal government defaults on its debt, the company probably will lower the triple-A credit ratings of five states, including Tennessee.

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Information from: The Knoxville News Sentinel, http://www.knoxnews.com

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