Tennessee Gov. Bill Lee files a $343M budget update. Here's what's in the plan.

Yahoo

26-03-2025

Tennessee Gov. Bill Lee rolled out a $343 million amendment to his $58.4 billion state budget proposal on Tuesday that includes nearly $39 million in K-12 funding diverted from public school districts, millions in grants for faith-based nonprofits, and $10 million in funding to use artificial intelligence for some state services.
Commissioner of Finance and Administration Jim Bryson proposed the governor's budget amendment to lawmakers, framing the new additions as a 'plain vanilla' request.
Spending outlined in the new amendment brings Lee's total state budget pitch to just under $59.76 billion – about a 1.3% decrease from last year's budget. Bryson said Tuesday the main reason for the reduction is the decrease in federal funding.
Here's what is included in Lee's amendment:
Lee's budget amendment includes a $3 million allocation toward a limited summer food services program offered by the Department of Human Services – announced after The Tennessean reported that the state had declined $75M for a full program.
'I can't get my head wrapped around why we turned down the federal money and we're going to be serving less children,' Sen. Paul Rose, R-Covington, said.
Bryson could not answer questions from members of the Senate Finance Committee on why the state turned down the federal funds on Tuesday. He said the department would meet with members separately to go over the details.
'I'm not prepared to talk through all of those policy issues with you,' Bryson said. 'The purpose of this is to make sure that everybody that needs to be served gets served. That is what we want to do. There is no intent to cut out individual groups or places.'
Sen. Page Walley, R-Savannah, said he is concerned about students' access to healthy foods during the summer in his rural district.
'The administration turned down $70 million in federal funding for the summer food program, but this budget allocates $3 million of state money to do less food service,' said Sen. Jeff Yarbro, D-Nashville. 'I'm trying to understand the rationale of that.'
Overall, state funding for K-12 education will likely increase. Lee has proposed $244 million in new funding this year for Tennessee Investment in Student Achievement, the state's education funding formula known as TISA. That includes $80 million in funding rolled from last year, and $164 million in new TISA spending ― including scheduled pay raises for public school teachers.
But Lee's budget amendment does reflect nearly $40 million in total reductions to the state share of funding for K-12 public schools based on enrollment and cuts to three school districts as a hold harmless provision in the state's first school choice program has now run out.
The Education Freedom Scholarships approved this year applies to both students who are in public school and want to attend a private school and those already enrolled in a private institution. The state's first school choice program, Education Savings Accounts, only applied toward students wanting to transition out of the public school system in Davidson, Shelby and Hamilton counties.
When passing the legislation in 2019, lawmakers included a three-year 'hold harmless' provision to reimburse districts for lost state contributions for pupils that quit public school to attend a private institution.
That hold harmless period has now expired, resulting in $23.7 million in funding that will not go to schools those three counties
'Those are dollars that would otherwise be sent to districts to hold them harmless,' Yarbro said on Tuesday.
State funding for public schools through the TISA formula is reduced by $15.9 million, based on updated enrollment reports from school districts.
'In the spring, we get an updated number from the Department of Education, and this makes the difference,' Bryson said, adding that the K-12 education budget has 'significantly increased' this year.
Lee is also proposing $20 million in new spending for school safety grants, and $20 million for charter school facilities.
The governor's budget amendment includes more than $16 million in grants for faith-based nonprofits and entities, to be administered through various state agencies. Included in the proposed grants is $350,000 for a Christian youth camp in Kentucky, and $1 million for the Human Coalition, a national nonprofit anti-abortion activist group that has published a 'Complete Guide to Defunding Planned Parenthood.'
Lee's proposed grants to faith-based entities include:
$5 million for Men of Valor through the Department of Correction. Lee sat on the Men of Valor board prior to his election.
$500,000 for Cul2Vate, a spiritual agriculture ministry in Davidson County
$1 million for the Human Coalition, the anti-abortion activist group involved with the Southern Baptist Convention. The money is through the Department of Human Services
$3.5 million to Agape Family Services through the Department of Children's Services
$350,000 to Barefoot Republic, a Christian camp and retreat center located in Scottsville, Kentucky, through DCS
$1.5 million for Coalition for Kids through DCS
$500,000 to Viable, Inc. through DCS
$1 million to Hopeworks through the Department of Correction
$250,000 to Lipscomb University LIFE Program through TDOC
$500,000 to TN Prison Outreach Ministry through TDOC
$750,000 to Hope House of Tennessee through DHS
$1 million grant to the Church of God in Christ through the Department of Health
$250,000 to Neighborhood Christian Centers, Inc. through DHS
Lee is requesting $10 million for artificial intelligence implementation at the Department of Finance and Administration, but few details are available about how exactly AI would be used.
The state's AI Advisory Council established last year, of which Bryson is a co-chair, has met several times. A first report from the council is expected in May.
Bryson said the funding would 'help us transition some of our services and capabilities to AI.' The Department of Finance and Administration did not immediately respond to an emailed inquiry on what services would be transitioned to artificial intelligence.
With revenues flat, and slow growth projected, the Lee administration this year is recommending slightly less than $1 billion in general obligation bonds to cover the budget. State officials have typically shied firmly away from taking on new debt.
If approved by the legislature, debt service payments would remain at 1.76%, a slight increase from the current 1.36%, and well under the rate of 2.4% when Lee took office. State finance officials recommend keeping debt service payments at 6% or lower.
'We've been very good with debt,' Bryson told lawmakers Tuesday. 'We feel that now it's time that we can look at adding some additional debt because we have significant debt capacity, and we can move forward without putting the state at significant risk.'
Notably absent from the amendment is any grocery tax holiday or other tax cuts for families, as Lee has backed in previous years. This comes as lawmakers from both sides of the aisle have had ongoing discussions about a grocery tax cut this year.
History and tourism
$15 million waterfront grant for the city of Chattanooga
$3.2 million grant to United Way of Anderson County to fund a monument to honor the actions of the Scarboro 85 during the Civil Rights Movement
$1 million grant for Zoo and Aquarium Consortium
$5 million grant for Tennessee Sports Hall of Fame
$3 million for Center of Memphis Music/Rock N Soul Museum
$6.2 million grant for the Andrew Jackson Foundation
$3 million for the Tennessee Battlefield Preservation Fund
$1 million for Miracle on the Mountain ability-inclusive playground in Grundy County
Health and social services
$28 million for provider stability funds to nursing homes ($53 million federal match)
$10 million for mental health infrastructure facility grants at children's hospitals
Infrastructure and capital projects
$25 million in infrastructure funds for the state's 72 general aviation airports
$10 million for McKellar-Sipes Regional Airport
$4 million for Murfreesboro Airport
$4 million for Rockwood Airport Terminal
$1.04 million for projects at the East Tennessee State Veterans Cemetery
$41.3 million to move and rebuild Memphis Airport TCAT
$25 million to renovate Murphy Center at Middle Tennessee State University
Criminal justice
$17 million to establish a new statewide indigent representation program
$20 million in one-time funding for victim services through the Victims of Crimes Act
Vivian Jones covers state government and politics for The Tennessean. Reach her at [e-mail].
Want to share your thoughts with the legislators that represent you?Find your state Senator and Representative and their contact information on the Tennessee General Assembly website here.
This article originally appeared on Nashville Tennessean: Tennessee Gov. Bill Lee files $343M budget update. Here's what's in it