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Lee: COVID-19 will cause 'real strain' on state's budget

David Floyd • Updated Apr 23, 2020 at 9:04 AM

Spurred by the economic fallout of novel coronavirus (COVID-19), Tennessee officials expect to grapple with “significant” revenue shortfalls in the state budget.

“We are facing a significant reduction in revenues,” said Gov. Bill Lee. “Everyone can imagine that, but we believe that will be a tremendous challenge for us going forward.”

That was one item addressed during the first meeting Wednesday of the state’s Stimulus Financial Accountability Group, a committee composed of lawmakers and state officials established to ensure proper management of money from the Coronavirus Relief Fund created by the CARES Act.

Tennessee is expecting to receive a total of $2.3 billion from that fund, which is just one pot of enhanced federal funding that has flowed to entities in the state.

Responding to a question from Lt. Gov. Randy McNally, Budget Office Director David Thurman said the state hasn’t received stimulus money to address the loss of tax revenue.

“Dollars that we’re receiving through the first three stimulus bills are really programmed into existing programs,” Thurman said.

McNally added that revenue issues are a problem also plaguing local governments.

Lee said Wednesday afternoon that Tennessee has been in stable economic condition thanks to the efforts over the years of state leaders, pointing to the state’s “significant” revenues, the status of the unemployment trust fund, reserves built up in the Temporary Assistance for Needy Families program and the state’s rainy day fund.

“All of those things have been done to prepare for a difficult economic time,” Lee said. “Now, the extent of the damage to our revenues is unknown. We’re only a few weeks into this, and there’s no real data that shows just how hard this economy and the downturn of this economy will affect our state’s budget.”

Lee said he’s encouraged by the work the state has done to prepare for this, but it’s difficult to determine what will happen in the next year.

“Certainly, we know there will be a real strain on the state’s budget because of the downturn in revenues,” Lee said, “and we’re trying to collect data right now to that will give us some indication of what that might look like.”

Motivation for reopening

Referencing a set of federal guidelines released last week, Lee also outlined his justifications for reopening the state’s economy.

“Virtually every indicator of success in containing COVID-19 show that your efforts have been working,” Lee said. “This isn’t an indication that we should slack off at all, but it does give us a path to move toward doing some of the things we did before.”

He added that Tennesseans will need to continue social distancing practices even as the state’s economy reopens.

The White House guidelines address three benchmarks that a state should meet before reopening its economy: Symptoms, cases and hospitalizations.

Over a three week period, Lee said the state has seen a decrease in flu-like and COVID-19 symptoms within the vast majority of hospitals. He added that Tennessee has seen a steady decline in the growth rate of new COVID-19 cases over a 19-day period.

The federal guidelines say states should see a “downward trajectory” of flu-like and COVID-19 symptoms over a 14-day period. It should also see a downward trajectory in documented cases or positive tests as a percent of total tests over a 14-day period.

Third, Lee said the state has kept a close eye on the capacity of hospitals caring for COVID-19 patients, which he said continue to be able to deliver that care without a change in their normal operations.

The federal guidelines say hospitals should be able to treat all patients without crisis care. They must also have a strong testing program in place for healthcare workers and emerging antibody testing, a capability that the Lee said the state expects to start in the coming weeks.

Latest numbers

The Tennessee Department of Health on Wednesday reported 448 new confirmed cases of the novel coronavirus (COVID-19), bringing the total to 7,842.

Of those new cases, two were in Northeast Tennessee, which has now seen a total 166 cases. Both of the new cases were in Sullivan County. Statewide, there have now been a total of 166 deaths, 775 hospitalizations and 4,012 recoveries, an increase of 437 over Tuesday.

Locally, the state reports that Washington County has reported 46 cases, Sullivan 47, Unicoi 1, Carter 5, Johnson 2 and Greene 37.

Additionally, there are 375 total confirmed cases of COVID-19 and 37 confirmed deaths among residents and staff across 22 long-term care facilities in Tennessee, according to new data released by the state on Wednesday.

None of the impacted nursing homes on the state’s list are located in counties in Northeast Tennessee. The state also released a plan to prevent further contagion at the facilities.

Editor’s note: This story has been updated to correct the spelling of budget director David Thurman’s name.

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