Gov. Lee introduces state budget proposal for upcoming year

NASHVILLE — Gov. Bill Lee introduced his proposed budget for the 2026-27 fiscal year in the Senate Finance, Ways and Means Committee Tuesday. The $57.9 billion budget is a stark decrease from last year's proposed budget, at $64.1 billion. Commissioner of the Department of Finance Jim Bryson attributed the lower budget to a "significant" decline in federal funds, as well as an expectation of slowing growth in GDP and tax collections in the state. Bryson described the budget as "a conservative budget for conservative people." The General Assembly will spend the next few weeks amending the budget, and by the end of this legislative session in April, will have a finalized budget ready for a vote. Some of the budget's biggest additions: a proposal to double the private school voucher program; a proposal for state controlled Artificial Intelligence; and funding for campus improvements to East Tennessee State University. Private school vouchers, K-12 education During his State of the State address Monday night, Lee announced his intentions to double the amount of private school vouchers currently available through the Education Freedom Scholarship. Bryson followed up on the claim while presenting the governor's budget Tuesday, requesting an additional $155 million to double the program's size from 20,000 available vouchers to 40,000. That $155 million would also increase the value of each voucher from $7,295 to $7,530 to keep up with inflation. An additional $250 million will be added to Tennessee's base funding formula for K-12 public schools; however, it represents an increase of only about 2%, not enough to keep public schools on pace with the U.S. inflation rate of 2.7%. Nashville state Sen. Jeff Yarbro, D, had some reservations about doubling the size of the Education Freedom Scholarship program. "It looks like you would need at least another $100 million in [K-12 funding] just so schools break even," he said during the committee meeting. "And it is deeply troubling to me that we're talking about doubling the size of a program that is brand-new while we're not even keeping public school funding up to par with inflation." Artificial intelligence/technology $50 million was requested for artificial intelligence-related technology improvements, such as a state-controlled large language model – the same kind of artificial intelligence as prominent chatbots such as ChatGPT, Claude and Grok. Only about $8 million was set aside for "guardrails and risk management." Over $111 million was requested to upgrade the operating systems for state employees and the state judicial system. Increase in road funding Lee proposed increasing funding for Tennessee's roadways by $425 million, with only $25 million recurring. Last year, over $1 billion was added to help alleviate some of the deferred maintenance to Tennessee's roads. Tennessee's roadways have more than $30 billion in outstanding maintenance and construction needs. "It will not solve the problem, but it will move in that direction," said Bryson. Higher education/capital improvements The budget proposes adding $83 million to higher education in the state, increasing employee benefits and investing funding in corrections education. In addition, $433 million is directed to capital improvements to universities across the state — including $19.2 million for improvements to campus utility infrastructure at East Tennessee State University. In addition, Lee's administration proposes $146 million for state parks, a figure which includes funding to rebuild Davy Crockett Birthplace State Park in Greenville, damaged during Hurricane Helene. Law and safety Since his first budget proposal in 2019, Lee has continued to add Tennessee Highway Patrol positions. In 2021, there were 672. This year, he requested an additional $17.6 million for 50 new positions, bringing the total number of available positions to just under 1,100. Lee also requested $19 million for salary increases for these positions. When asked how many of these positions are actually filled, and how many are vacant, Bryson said he did not know. Healthcare and social programs The budget will allocate an additional $214.6 million dollars to various Medicaid and TennCare-associated cost increases, caused by inflation and decreases in federal funding. Additionally, the federal government has stopped covering the full portion of food stamps benefits for states, leaving the state with a $58 million dollar tab to pick up if it hopes to cover SNAP benefits for its recipients.