VOL. 123 | NO. 153 | Wednesday, August 6, 2008
Gov. Bredesen Says Buyout Plan Helps Bond Ratings
By ERIK SCHELZIG | Associated Press Writer
NASHVILLE, Tenn. (AP) - Gov. Phil Bredesen said Tuesday that Tennessee's willingness to address worsening economic conditions without "playing games" could help solidify the state's credit rating, which helps determine how much the state pays to borrow money for big projects.
The Democratic governor was in New York this week for his annual presentations to bond rating agencies. He told reporters in a conference call that he cited Tennessee's goal of reducing the state's work force by 5 percent as an example of fiscal responsibility during tough economic times.
"It's been our willingness to address this issue without playing games or hoping for better times in the future that has really impressed these ratings agencies," Bredesen said.
All three major ratings agencies have Tennessee at one notch below their top credit ratings. Bredesen has worked since coming into office in 2003 to restore Tennessee to the AAA rating it lost under his Republican predecessor.
Improved bond ratings mean the state can get lower interest rates on bonds issued for large projects. Bredesen also calls the ratings a third-party confirmation that the state is doing a good job managing its finances.
But the buyout plan hasn't worked as well as Bredesen had hoped. By Tuesday morning only 2,000 state employees had applied for the buyout - and not all of them will be approved.
About 12,000 state employees were eligible to apply for buyouts aimed at eliminating nearly 2,300 jobs, or 5 percent of the state work force. Applications needed to be postmarked by midnight Tuesday to be eligible for consideration.
Bredesen said the administration will determine which applications will be approved by Aug. 11. But he insisted that the state will find ways to reach its savings goal.
"I'm adamant that we need $64 million annually in state savings, and we're going to get them," Bredesen said.
The governor said he hopes state employees aren't holding out for a more lucrative buyout proposal at a later date.
"Just as a matter of principle for me I would not treat someone better in the future who didn't take part in this first one," he said. "Anything that comes from here is going to be less attractive."
"The most likely alternative at this point would be some sort of set of layoff notices in January," he said.
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