Senator Bo Watson told the Pachyderm Club on Monday that the state has not met its budget projections for 14 straight months and could be facing a $1 billion shortfall by the time the Legislature must draw up a new spending plan.

He said the state revenue collections by the end of November were $114.8 million below the numbers projected by the Legislature in 2009.

Legislators will have a "very challenging task" in dealing with the budget shortfall - especially in an election year, he said.

He said meeting the budget will remain the top priority in the upcoming regular session.

The speaker said Governor Phil Bredesen has already outlined 6-9 percent cuts for departments, but he said that won't be enough to close the gap.

Senator Watson said Republicans in the Senate last year offered a budget with $750 million in cuts. Instead, he said the House returned a spending plan with $250 million in increases.

He said there are not many easy areas for cuts, saying Tennessee's government is already "lean and mean." He said Tennessee was recently ranked the 15th best-managed state.

He said the dire budget projections do not even take into account the major cost expected eventually after the passage of the new federal healthcare bill.

Senator Watson said he welcomes many of the reforms outlined in the special education session of the General Assembly that opens next week.

But he said the changes are tied to promised millions in federal funds that have "strings attached." He said, "It is a two-edged sword."

The speaker said Tennessee has more data available regarding state education, but has not been making effective use of it.

He said the pile of data has been used to evaluate school systems, but not principals and teachers. He said the Tennessee Education Association has long resisted that. But he said since the federal funds are dependent upon that move, TEA is "backing away" from its previous resistance.

He also said he favors making it easier for students at community colleges to transfer to universities. He said it is easier for a student at Chattanooga State to transfer to Tennessee Tech than to UTC - three miles away.

Senator Watson said the push will be away from universities being involved in remediation of students. He said that should happen at the community colleges. He said 60 percent of high school graduates need remediation before moving on in their schooling.

He said in the current economy and job market that Tennessee has to do better than sending only 26 percent of its people on to higher education.