Governor Bill Haslam spoke before a packed legislature in Nashville on Monday evening.
He told lawmakers that Tennessee faces a new reality and will have to do more with less. "I think that what we are seeing today in government really is the new normal. Every government, ours included, will be forced to rethink how it sets priorities, and how it makes choices," said Haslam.
The governor's budget proposal eliminates nearly 1,200 government jobs. He said most of them are unfilled or temporary.
The plan also gives a 1.6% raise to state workers, but calls for millions in cuts to public universities.
Governor Haslam also defended his education reform proposals including one that limits teacher tenure, which has received strong protests from unions.
"There is nothing that makes as much difference in a child's academic progress as the teacher standing in front of the classroom. its more important than background, zip code, race, gender. ...every discussion should begin and end with what is best for the child in the classroom," explained Haslam.
The governor praised Daytona 500 winner and fellow Knoxville native Trevor Bayne and a national guard soldier from Tullahoma who was recently awarded the Bronze star for his service in Iraq.
Read the full State of the State Address
Previous AP story: Haslam budget cuts state jobs but includes raise
NASHVILLE, Tenn. (AP) -- Gov. Bill Haslam's first budget proposal eliminates nearly 1,200 government positions, gives a raise to remaining state workers and makes the deepest spending cuts in higher education and TennCare.
The new Republican governor's $30 billion budget plan sticks close to the blueprint from his Democratic predecessor for coping with the end of $2 billion in federal stimulus grants that helped offset the steep revenue drop of the Great Recession.
The state's revenue collections have improved in recent months, but the governor has said Tennessee's finances won't fully rebound until 2014.
One major change Haslam made in former Gov. Phil Bredesen's cost-cutting plan would restore $30 million to keep open the privately-owned Whiteville Correctional Facility in Hardeman County. Bredesen had wanted to close the prison and move inmates elsewhere.