NASHVILLE — Despite the state’s worsening revenue picture, Gov. Phil Bredesen said Monday he will do all he can to avoid swinging a budget ax next year at the state’s Basic Education Program funding formula or at pre-kindergarten programs.

But state employees and higher education will not be so lucky as the administration grapples with cuts of 10 percent or even higher across most other departments.

“You can’t have 10 percent cuts across the board without having fewer personnel when you get done,” Gov. Bredesen said.

He said he hopes to go a “long way” in getting there through a hiring freeze.

“But I’m certainly not taking off the table the possibility that there have to be layoffs or some other type of personnel action,” he said.

Higher education, which has been cut extensively both last fiscal year and this year, will see further reductions as well, the governor said.

Gov. Bredesen’s comments came as he kicked off several weeks of open budget hearings in order to prepare the 2009-2010 spending plan he must present to the General Assembly by Feb. 1.

He acknowledged the outlook is bleak. Tennessee general fund tax collections in the first three months of the current fiscal year fell $200 million as the nation stumbles into what a University of Tennessee economist has said may be the worst recession in 26 years. The current budget year shortfall could hit $800 million.

“I’m going to break my back to keep pre-K and K-12 education funded at its current level and not have to have cuts in education,” Gov. Bredesen said.

Gov. Bredesen said he still hopes to fund a recommended $80 million increase in the BEP formula for schools. The money would cover enrollment growth as well as inflation in the school funding formula. He also hopes to do the same with pre-kindergarten programs, although no figures were provided.

But Tennessee’s worsening revenue picture rules out new dollars for expanding the 2007 BEP formula reform known as “BEP 2.0,” the governor said.

“I do not expect to be able to increase that percentage this year, but I’m going to do everything in my power to hold it where it is,” Gov. Bredesen said.

The 2007 BEP 2.0 reforms were an effort to make the school funding formula fairer to school systems such as Hamilton County’s. Lawmakers put in an additional $290 million, funding half the changes. But as revenues took a nosedive this year, it kept lawmakers from providing any of the estimated $250 million to $300 million needed to fully realize the reforms. And now, that money doesn’t seem possible in the 2009-2010 budget.

Hamilton County schools spokeswoman Danielle Clark said the local system’s chief finance officer, Tommy Kranz, “recognizes our revenues could be very flat.”

“We’ll just continue on with what we received,” she said.

Senate Education Committee Chairman Jaime Woodson, R-Knoxville, said, given the “challenging” economy, “all of us are going to be working hard to keep education as our top priority — period.”

She said she is worried that no progress likely will be made on BEP 2.0, but added that she also concerned about higher education, saying the system “seems to be bleeding quite seriously” with $55 million in cuts last year and about $42 million or more in the current budget.

Asked if pre-k should be spared from cuts, Sen. Woodson said, “I think time will tell on any of these issues. But I will say unequivocally I’m very concerned about the cuts higher education is receiving.”

Gov. Bredesen acknowledged that pre-k is “quite controversial among some members.” Since taking office in 2003, he has expanded the number of pre-k classrooms from 148 to 935. The program serves about 80,000 children.

The Tennessee State Employees Association, meanwhile, urged Gov. Bredesen to dip into the state’s $750 million “rainy day” reserve fund as well as a $500 million TennCare reserve before laying any employees off.

“With the hiring freeze and the Voluntary Buyout, our state work force is functioning at a bare-bones level and services to our citizens should not be impeded further,” said association President Zoyle Jones in a news release.

The one bright spot in the first day of budget hearings was when Tennessee Education Lottery Corp. President Rebecca Hargrove said the lottery, which grossed $1.064 billion last fiscal year, will earn $3.5 million more this year.

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