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The road appears to have smoothed for Tennessee Gov. Bill Haslam.

Four years removed from his first campaign for governor, Haslam has cruised this summer toward a second term, without spending much time or money campaigning. His dealings with the state legislature have become less cantankerous, and his family company appears to be on its way toward resolving a federal investigation.

But the election may not be the biggest impediment to a successful second term.

A steep downturn in business tax collections over the past year has left the state with nearly $300 million less than it anticipated. Federal Race to the Top funding for education is being phased out. State universities are clamoring for the governor to stem decades of cuts to higher education programs.

And the cost of TennCare, Tennessee's Medicaid program, keeps rising — even as the governor has to yet to resolve the politically contentious decision about whether to expand health insurance for the poor, which could bring millions of new federal dollars to the state.

For now, though, Haslam is proceeding cautiously. His approach starts with spending less.

"To do all of that, you've got to figure out a way to run your government in a less expensive way," he said in an interview earlier this month in his office on the first floor of the state Capitol. "We don't have a choice."

Radical changes

The rumor mill grinds with speculation about what Haslam wants to do next. Run for the Senate? Vice president? President? Popular — even among Democrats — Haslam has shrugged off would-be scandals and tea party attacks. The most persistent criticism seems to be that he avoids trouble too often, lying low rather than trying to steer fellow Republicans to his position.

That perception makes it easy to overlook the ways in which Haslam has altered the course of Tennessee, perhaps permanently. Since being sworn into office in January 2011, Haslam has extended education reforms begun by his Democratic predecessor, Gov. Phil Bredesen, while keeping at bay proposals he appears to dislike, including school vouchers and efforts to roll back Common Core standards.

This year, he persuaded the General Assembly to approve a program to offer free community college to all graduating seniors, an idea that Bredesen proposed but did not pursue.

Other parts of state government have been shaken just as radically. Haslam has pushed through a new civil service measure that has made it easier for managers to hire, fire and promote whom they choose, and his administration has cut 6,000 positions from the state payroll. Many others have seen their offices moved, as his administration has renovated and consolidated state buildings.

On top of that, Haslam has set in motion the elimination of Tennessee's inheritance tax, and he has overseen an economy that has added about 73,100 jobs. Last week, Haslam's administration struck a deal to bring 2,000 more jobs to Volkswagen's Chattanooga plant, a major coup that appeared to be in jeopardy a few months ago when Haslam and other Republicans were accused of interfering in a drive to organize workers at the factory.

Under pressure

Although Haslam says he's not taking re-election for granted, he can afford to consider what his administration plans to do with a second and final term. The governor hopes to start by proposing next year a plan to expand efforts to recruit and train school principals, taking a program the state developed with Vanderbilt University to other parts of the state.

He acknowledged that his effort to raise college graduation rates in Tennessee will require giving state universities the funds they were promised under the Complete College Tennessee Act. He said schools also have to do more to rein in their costs.

Even more pressing is the issue of TennCare. Enrollment in the program is growing already, in part because of the Affordable Care Act, and the state is under pressure to expand eligibility to about 175,000 more Tennesseans. Doing so would make the state eligible for about $1 billion annually in federal funding.

Haslam said in March 2013 that he would like to develop a "Tennessee Plan" that would allow the state to offer these new enrollees coverage similar to private insurance, but talks with federal officials appear to have gone nowhere. Skepticism has grown as the months have worn on, but Haslam says he has no choice but to come up with a proposal that pleases officials in Washington and state lawmakers.

"I can come up with any plan I want, but unless we can get it passed upstairs (in the Capitol's second floor legislative chambers), it's just that," he said. "I don't have to tell you, it's not easy."

Haslam also faces some wrenching choices on the death penalty. Tennessee has not put anyone to death since he took office in January 2011, largely because the drugs needed to carry out lethal injection have not been available.

But late last year, the Department of Correction scheduled executions for 10 inmates, and earlier this year, Haslam signed a law that would let the state use the electric chair in all cases. The governor has said he will pray over each execution individually, but he also has said he is reluctant to overrule judges, legislators and Tennessee voters, a majority of whom favor the death penalty.

Haslam the administrator

Haslam's handling of state government has not been seamless. Earlier this month, TennCare administrators blamed a vendor for delays in launching a state portal for people to enroll in the program, the latest in a string of information technology problems.

Haslam's administration also has faced questions about its relationship with Jones Lang LaSalle, a Chicago real estate firm that the state hired to advise it in lease negotiations shortly after it recommended closing several state buildings. The heads of the Department of General Services, the Department of Children's Services and the Department of Labor and Workforce Development have all left under fire, and Education Commissioner Kevin Huffman has been criticized repeatedly.

But Haslam says state government is on the right track. Information technology spending has increased from $2.8 million in the 2012-13 fiscal year to $26.5 million this year. The number of children in state custody has fallen to 7,970, the backlog of unemployment claims has fallen to 5,332, from a high of about 25,000, and the state exited a court-ordered settlement to resolve problems at the Arlington Developmental Center in West Tennessee.

Wait times at driver service stations are down to an average of 21 minutes, the administration says. But Haslam says many of his reforms will produce benefits that cannot yet be quantified.

"What are the metrics on investing now in a roof of a building? You don't know for 10 years," he said. "What are the metrics hiring somebody great that's going to be a 30-year employee of state government, and they're put in place because they really are the best person and not the next in line?"

Haslam should have the opportunity to add to his record after November. Of the seven other people running in next month's Democratic and Republican primaries, only one, former Sullivan County Mayor John McKamey, a Democrat, has notable experience in government.

Facing stronger competition eight years ago, Bredesen managed to sweep every county in the state. Haslam might repeat the feat this November.

That would give him four more years to see his programs play out.

Republicans in governor's race

Bill Haslam, 55, of Knoxville

Haslam was an executive with Saks Fifth Avenue and Pilot, his family's chain of truck stops, before being elected mayor of Knoxville in 2003.

Mark Coonrippy Brown, 55, of Gallatin

Brown, an animal control specialist, gained Internet fame in 2012 with a series of YouTube videos that showed him cavorting with a pet raccoon. The videos prompted wildlife officials to seize the animal.

Basil Marceaux, 62, of Soddy Daisy

Marceaux, a former Marine, is best known for a 2010 appearance on a Nashville television station in which he identified himself by the name of his website and delivered a rambling message about his run for governor. The video went viral.

Donald Ray McFolin, 67, of Nashville

McFolin, a commercial artist specializing in wildlife scenes, ran unsuccessfully for governor as an independent in 2010. He also has run for school board in Davidson County.

6 issues on the horizon

Here's what Gov. Bill Haslam faces if Tennesseans give him four more years.

TennCare expanion. Gov. Bill Haslam says he's been working for more than a year on a "Tennessee Plan" to expand TennCare, but he hasn't made much progress. A breakthrough could smooth other reforms.

State finances. The state has brought in about $300 million less than it expected this year, led by a sharp drop in business tax collections. On top of that, Haslam is dealing with an influx of people into TennCare.

Death penalty. Tennessee has not put anyone to death since 2009, but the schedule of executions suggests he may face a tough, 11th-hour decision on whether to go forward with the death penalty.

Government management. Haslam promised to take a business approach to government, but the benefits haven't been obvious. Haslam says the payoff will show, but he needs results to burnish his reputation as a manager.

Higher education. Haslam has shifted his focus recently to higher ed. He says more needs to be done to reach his overall goal: Increasing the share of Tennesseans with a post-high school education.

His future. A successful second term would set Haslam up to run for another office. If he handles TennCare expansion, education, state management, finances and the death penalty well, his future should be very bright.

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