NASHVILLE, Tenn. (WTVF) — In his State of the State address on Monday night, Gov. Bill Lee announced more money for public education, transportation and conservation efforts in Tennessee.
The governor's proposed budget — in his second to last — totals $59.4 billion. That money will fund schools, roads, higher education and all state departments.
There are no tax cuts for Tennesseans in this year's budget. While lawmakers have proposed a tax cut on groceries, Lee didn't include it in his proposed budget to lawmakers.
Of note, the governor increased funding for public schools and transportation. It also includes money to hire 100 additional Tennessee Highway patrolmen and more agents for the Tennessee Bureau of Investigation. Lee also wants municipal and regional airports to have more funding. He also wants $94 million allotted to commercial air projects.
The governor's budget includes money for the Department of Children's Services facility at Wilder and Woodland Hills. Both facilities have deteriorated, and financial experts with the state said the initiative has needed attention for some time.
While this is the governor's wishlist, lawmakers have the final say on the state budget, which is usually approved in late April or early May.
The new budget year begins July 1.
Education
While education took top billing in the special session, funding for K-12 education is expected to top $7 billion in Lee's budget outline.
Lawmakers approved money for the governor's expanded school voucher program as well as a one-time bonus for teachers during the special session. The money in this budget proposal is specifically for K-12 public schools.
Gov. Lee wants to give school districts enough money to raise starting teacher pay salaries to $50,000 — a goal the state has been working on for years.
That $50,000 base salary is in addition to the one-time bonus approved during the special session.
Finance experts said the budget will give more money to K-12 education but didn't break down how that would translate into per-student spending.
Transportation
In an unusual move, the state will provide more money to the Tennessee Department of Transportation through the general fund.
That will amount to $1 billion in one-time funding. The governor is also pushing a plan to generate $80 million a year in new money.
Lee wants to divert the sales tax from tires directly to TDOT instead of the state's general fund.
Right now, Tennessee has a backlog of TDOT projects totally more than $30 billion.
Farmland Conservation and the Duck River
Already filed by lawmakers, HB 1325/SB207 looks to address the loss of farmland in Tennessee.
By 2027, the amount of land lost to development is expected to hit 2 million acres, according to a University of Tennessee-Knoxville study. Tennessee has already lost 1.5 million acres of farmland to development. That figure equates to the loss of six counties' worth of pasture and forest land.
The bill — filed by Rep. William Lamberth and Senate Majority Sen. Jack Johnson — would create a permanent easement program to the tune of $25 million.
Farmers who want to enter the program must prove they are still using the land for agriculture or forestry. They also cannot sell the land for any reason other than agricultural once the permanent easement is entered.
Additionally, the governor wants to protect more of the water in the Duck River.
The Duck River was hit hard this summer. An extreme drought lowered water levels and several water utility companies drew more water out of the river to try and keep up with the demand of their growing communities.
The result — a shoreline usually teaming with life became a graveyard of dead organisms.
To better conserve water and the Duck River watershed, the governor wants to put forth $100 million to protect that state resource.
Tennessee State University
Tennessee State University has struggled to make ends meet this year.
Earlier this month, the TSU Board of Trustees met to listen to a consultant hired by the Tennessee Higher Education Commission about a process that would cut tenured faculty and slash degree programs. By late spring, the school could be in a $58 million deficit without changes to the way it operates.
Lawmakers quietly gave TSU money in the fall to make payroll. That money was basically an advance on their 2025-2026 school year funds.
Right now, the governor is recommending it's normal allotment for TSU in next year's budget: $69 million. That includes the main campus, TSU McMinnville Center, TSU Cooperative Education, TSU McIntire-Stennis Forestry Research and TSU Institute of Agriculture and Environmental Research.
Finance experts with the state said they won't know how funding will go for TSU until after a state building commission meeting on Feb. 19.
The Governor in his Own Words
You can read the governor's transcript for his address below.
Thank you. Lieutenant Governor McNally, Speaker Sexton, Speaker Pro Tem Haile, Speaker Pro Tem Marsh, Members of the 114 General Assembly, Justices of the Supreme Court, Constitutional Officers, Cabinet and staff members, my friends and family: I’m honored to be with you tonight in this chamber, as we mark our seventh year of working together for the Volunteer State and her people.
I especially want to thank the one person who has given so much of her life to this endeavor and has made my life complete, who has walked this road right by my side every step of the way loving me, and loving Tennessee. Thank you, Maria. I also want to extend a welcome to the newest members of the General Assembly. You have joined a group of remarkable citizen legislators who are committed to doing what’s right for the people of Tennessee. We’ve had an exciting and productive start to the year with a pivotal special session. So, before we get into what’s next for our state, I’d like to take a moment to applaud all of you.
Government is usually seen as a bureaucratic mess. But this General Assembly proved everyone wrong and showed what happens when we move, not at a government pace, but at a real world pace. East Tennessee continues to face an unprecedented disaster with damages to the tune of $1.2 billion. Our initial response was immediate and substantial. State agencies have been on the ground for months helping with recovery efforts. Still, there is a long road ahead. Hurricane Helene was a disaster that requires innovative solutions to ensure a full recovery, and that’s exactly what we accomplished in the special session just a week ago.
This General Assembly – representing the entire state – stepped up to support East Tennesseans in their greatest time of need. And I thank you. I spent a lot of days in Upper East following this disaster and was struck by the peoples’ response – churches, non-profits, everyday Tennesseans – and also by the local leaders’ passion, resilience, and love for their communities.
Tonight, we’re joined by four county mayors from some of the hardest hit areas – Patty Woodby of Carter County, Kevin Morrison of Greene County, Larry Potter of Johnson County, and Joe Grandy of Washington County. Mayors, please stand and be recognized. Also, the American people have spoken loud and clear that they want secure borders and dangerous criminals removed from our communities.
So, last week, this General Assembly demonstrated a continued commitment to combating the problem of illegal immigration, and we will once again make significant investments in local crime prevention grants in the upcoming budget to keep Tennesseans safe. Both local government and the federal government will need a partner, and the Volunteer State is ready. And third, we innovated our approach to education with new, creative investments in public school facilities, and we have finally brought universal school choice to Tennessee families. These pressing issues could not wait, and yet, we still have a lot of work to do in the legislative session before us.
We stand in the arena at a pivotal time for our state and for our country. A new Administration in Washington has created new optimism across America and a new partnership for Tennessee. In last year’s state of the state, I said 2024 was the year to hold our places on the wall – to fortify and build upon our state’s previous successes. 2025 should be the year to think bigger and to think boldly about what’s possible, and go there. If Tennessee has led the nation as a beacon of opportunity, security and freedom, why can’t we be the nation’s capital of innovation too? Somebody is going to determine what the future looks like. That should be Tennessee. Now, it’s true that solving incredibly complex problems requires the courage to embrace extraordinary approaches.
When I was studying to be an engineer, I took an entire course on Albert Einstein’s theories of relativity. In that course, I came to understand how Einstein redefined not only science but the very way that we look at the universe. He taught us that space and time – once thought to be fixed – are actually interconnected and dynamic, relative to one another. Einstein’s legacy isn’t as much about discovery as it is about challenging conventional thinking and proving it wrong. It’s something I’ve never forgotten, and this is a lesson that we need now more than ever before. Because the challenges we face today – from energy and infrastructure to housing and childcare – cannot be solved with conventional thinking. Just as Einstein challenged the accepted theories of his time, we too must be willing to rethink, reimagine, and embrace bold ideas.
God has favored our state, and one of the things that has helped Tennessee lead the nation is our willingness to take on complex problems and try things that have never been done. A great example is our work on transportation.
Safe, reliable roads are a primary responsibility of the state, yet there are limited funds to fulfill an unlimited need. So, two years ago, we began addressing this challenge by passing the Transportation Modernization Act to finally innovate how we build our roads.
And we’re not stopping there. This year we will propose an additional $1 billion to TDOT to build and maintain roads and bridges all across Tennessee. Perhaps the most innovative approach this General Assembly has taken in my time as Governor…four years ago, you asked my administration to pursue a block grant for Medicaid.
Today, we are still the only state that has a shared savings agreement with the federal government in the entire country. Because Tennessee was willing to challenge the status quo, we have saved $1 billion in Medicaid costs to date that has enabled us to invest more in mothers and infants, mental health, and rural health. And we will continue to reinvest these savings into our Medicaid population to improve the health and wellbeing of the people we serve. But it’s not enough to have just led the nation in the past. We have to be willing to be bold to lead America into its future.
Often, business leaders borrow a famous hockey phrase that says, “we need to skate to where the puck is going, not to where it is.” But rethinking and reimagining doesn’t mean compromising our values. So, as we innovate, we can stay true to our deeply-held values and remember that innovation does not change tradition – it strengthens it. We have a great Tennessean with us tonight – one who has taught us a lot about the connection between innovation and tradition. He served our state as governor, the president of University of Tennessee, U.S. secretary of education, and United States Senator. A common thread throughout his service is a passion for conservation. In fact, he was the author of the Great Outdoors Act, which preserved our National Park System.
This year, we are incredibly proud to support the creation of the Alexander Institute for Environmental Education and the Sciences, which will serve as a “base camp” for environmental learning perfectly situated along the main route to the Great Smoky Mountains National Park. Tonight, it’s my honor to welcome a great son of Tennessee and a true statesman – our Senator, Secretary, Governor Lamar Alexander
From the Delta to Appalachia, Tennessee is blessed with natural abundance that we have to protect and preserve for future generations. Yet, we also continue to be one of the fastest-growing states in the nation, in rural and urban areas alike.
So, how do we balance record growth with a plan to protect our natural resources? You start by rejecting conventional wisdom that says you cannot do both. To grow Tennessee, we have to conserve Tennessee. Our state is home to the most biologically diverse freshwater river in all of North America. The Duck River is a scenic, natural treasure.
It’s also the sole water source for more than 250,000 Tennesseans who live in one of the fastest-growing regions in the country. This presents a complex problem. That is why I signed an Executive Order in November to preserve the Duck, and that is why our budget will propose $100 million to create a regional water supply strategy that will solve this problem once and for all.
Another blessing that holds challenges – farm families in this state keep food on our tables and drive our economy. However, our state is losing ten acres of farmland per hour, which is a staggering number when agriculture is our number one industry.
That’s why we are again proposing a grant program for farmers who voluntarily preserve and protect their land for future generations. It’s time that we support Tennessee farmers by finally passing the Farmland Conservation Act. It’s time that we support family farms like Noble Springs Farm in rural Tennessee, owned by first-generation dairy farmers Dustin and Justyne Noble. Together, they source food for their local community to make a living and help drive our economy, all while teaching their children the value of agribusiness. Our strategy will ensure farms just like theirs can be preserved well into the future. Please join me in welcoming a great Tennessee farming family – the Noble family. Our greatest challenges provide the environment for our greatest innovations.
The Volunteer State is on track to be the epicenter of energy innovation, and it couldn’t happen at a more crucial time. For the past few years, Washington has prioritized social agendas over practical energy policy. As a result, we’re staring down the barrel of an energy crisis with an electrical grid that is on the fragile verge of being completely overwhelmed. President Trump warned Americans in his inaugural address three weeks ago, and Tennessee is not immune to this challenge. So, Tennessee’s ambition to lead in nuclear innovation is much bigger than just competing with other states. This is about securing the future of America.
The Nuclear Energy Fund that I proposed and you created two years ago has grabbed the attention of America’s most cutting-edge energy companies. Now, East Tennessee is home to global industry leaders like Kairos, X Energy, Orano – which is seeking to make the single-largest investment in Tennessee history – and more are on their way. That’s why, this year, we are proposing an additional $10 million investment in this Nuclear Energy Fund, so Tennessee remains at the head of the pack. But we have to go further. Tennessee is home to one of the only federally-approved, undeveloped nuclear sites in the country. A few weeks ago, TVA applied for an $800 million federal grant for the development of the Clinch River Site.
Our proposed budget also includes $50 million to demonstrate the state’s commitment to this project. We’ve laid the groundwork. We have a willing partner in the White House. Now is the time to develop the Clinch River Site and build the nation’s first small modular reactor on Tennessee soil. Why does nuclear energy matter to working families? Economic development stops, and job creation stops, if we don’t have energy. I meet with companies all the time from across the country and around the world that are looking to move to the Southeast, and their decision hinges on two questions: do you have the energy, and do you have the workers?
I’ve been saying for years – the state with the workers will win every time. That is even more true today. Together, over the last six years, we have recruited more than $40 billion in capital investment that has resulted in 234,000 new jobs. Tennessee is a top contributor to our nation’s economy because of our willingness to adapt and welcome emerging industries.
Start-ups, new technology, and research and development – these are all pieces to a larger puzzle that will diversify our economy, which will bring even better jobs to Tennessee families and ensure Tennessee remains a leader in the Southeast. That’s why, this year, we will dedicate $80 million for strategic ECD grants, signaling that Tennessee is the new frontier for America’s greatest innovators. While we have one of the strongest economies in the nation, Tennessee’s labor force participation rate continues to be one of our greatest and most stubborn challenges. We’ve built the workforce pipeline, but how do we innovate to fill that pipeline?
Most of you have heard me talk about my experiences in rural Tennessee meeting kids who have a unique ability to connect their brain to their hands, making them gifted in skilled trades. Together, we have worked hard to connect these young Tennesseans to the workforce by clearing TCAT waiting lists and expanding vocational, technical, and agricultural education in all 95 counties. Still, financial barriers exist. Our current system covers the cost of TCAT tuition for most students, but some are still left out. We also know that a lot of these courses require expensive books, tools, and equipment – costs that deter many from enrolling.
These gaps hold thousands of Tennesseans back from the opportunity to reach their full potential. So tonight, I am proposing the Tennessee Works Scholarship – a new award that will cover every penny of TCAT tuition and fees for all students, and will finally relieve the extra cost burden of tools and equipment for those most in-need.
We are sending a message that TCATs are open, available, and free to any Tennessean who’s ready to skill up and enter our best-in-the-nation workforce. To truly innovate our workforce, we have to start early. Last year, we created a new model – the Tennessee Youth Employment Program – to do just that. Thanks to Commissioner Thomas and her team, in just one year, this strategic partnership has connected over 4,500 young Tennesseans to local employers and given them real work experience that will open doors and strengthen our workforce at the same time. The Youth Employment Program has been such a huge success. It’s time to take it to the next level. This year we will expand the program to operate year-round, seek to double participation and reach even more under-served communities. I’ve had the privilege of meeting many of our Youth Employment Program participants across the state.
Corday Guy is a young man from Memphis who gained hands-on skills during his internship at Aztec Masonry. His outstanding leadership and dedication resulted in a full-time job, where he is now thriving in his craft.
Then look to rural Tennessee. Mallory Hardison got a summer job in the Marshall County Mayor’s Office and made such a strong impression that her supervisors hired her again after the Youth Employment Program ended. These two students come from different communities, yet they’re a whole lot alike in the opportunity that lies before them. They’re also both here tonight.
Please join me in welcoming Corday Guy and Mallory Hardison. We have more and more people in this state, and we have to clear the path for them to enter the workforce. What’s one of the biggest obstacles in that path? Both as Governor and as a former business owner, I’ve recognized the difficulty for families to grow and remain in the workforce at the same time. If we really want to create an environment for families to thrive, we have to find innovative ways to make childcare more accessible and more affordable. Today, infant care in Tennessee carries virtually the same price tag as in-state tuition at a four-year public college. That is an insurmountable cost for the vast majority of moms and dads who want to be in the workforce.
But hear me clearly – we don’t need to start a new government program to solve the childcare problem. We need to empower tried and true community partners who know what they’re doing and are already making a difference. That’s why, this year, we are proposing an additional $11 million investment in the Boys and Girls Club – one of our premier childcare providers – to serve 7,500 low-income kids across Tennessee, with hopefully more to come.
And innovation doesn’t have to be something brand new. It can be leaning into a strategy that’s already working. So, this year, we will propose a better approach to the Smart Steps Child Care Program by easing the benefits cliff and covering more middle and low-income working families. And to reduce turnover in the workforce, we will provide more childcare workers with more pay by expanding eligibility in Tennessee’s existing WAGES program, allowing for more daycare spots and greater access for families in need.
All of this – plus our work to streamline childcare facility licensing and permitting – will lead to tens of thousands of new daycare spots across rural and urban Tennessee, and in turn, create one of the most family-friendly workforces in the nation. Just like childcare, every growing community across the country is wrestling with how to make housing more accessible and affordable. As I’ve said, our greatest blessings are often tethered to our greatest challenges. It’s a blessing that people all across America want to be here. Once again, U-Haul has ranked Tennessee among the top five most moved-to states. 90 of our 95 counties are experiencing population growth. While it’s a point of pride, it’s also a call to action. Whether you’re born in Tennessee or choose to move to Tennessee, we want you to stay in Tennessee. The housing market has changed dramatically since I bought my first home.
Over the last four years, historic inflation has driven average home costs up 42% in Tennessee. Mortgage rates have more than doubled. Meanwhile, starter home demand is completely outpacing supply. Today, Tennessee is ranked 5th worst in the nation for the loss of starter homes.
Our state needs a housing plan that makes this key part of the American Dream possible. First, we’re proposing a $60 million Starter Home Revolving Loan Fund. This self-sustaining program will provide 0% interest construction loans for the building of new single-family homes. Second, we are funding the Rural and Workforce Housing Tax Credit, which will make sure that every dollar we spend on affordable housing goes further and reaches more of the people with the greatest need.
These are important steps, and together, we should continue looking for more solutions that are fiscally responsible to finally address the issue of housing – through innovation, not through regulation. In fact, “innovation over regulation” is something Tennessee is good at. I’ve often said that Washington could learn a thing or two from Tennessee’s approach to budgeting. The truth is, most young Americans have never known a day when their federal government lived within its means. But that could change in 2025. Thanks to the new federal Department of Government Efficiency, Washington is finally seeing a revival of our nation’s founding principles, aligning with Tennessee’s commitment to limited government, fiscal responsibility, and individual liberty.
There is no greater example of this commitment than this General Assembly’s long standing, bipartisan approach to responsible fiscal management. You all know the first priority of our budget is ensuring the state can withstand any economic crisis. That’s why, we will again make a significant deposit into the state’s Rainy Day Fund, bringing the total to nearly $2.2 billion. Limited government is knowing how to do more with less. More bureaucracy does not mean better service. Businesses already know this – government should do the same. So, this year, we are bringing multiple proposals to streamline state boards, to simplify licensing practices, and to save local governments millions in administrative fees. All of this will save taxpayer dollars and better serve Tennesseans. When I took office, I made a commitment to efficiency and to shrinking state government, while raising our standard of service. Our state is growing rapidly, and our revenues have increased by 50% since 2019.
But I’m also proud to report that, today, we are serving more Tennesseans than ever before with fewer positions in state government than when I took office six years ago. We started tonight talking about our commitment to education, and the future for Tennessee students and teachers is very bright.
This year, we’ll dedicate more than $580 million more to public education, which includes a major investment in the TISA formula and another pay raise for Tennessee teachers. This brings our administration’s public school investments to a total of $2.5 billion so far, and this work will not stop. Our budget confirms what I’ve said all along – Tennessee will strive to have the best public schools in the nation and give parents choices in their child’s education, both at the same time. But that’s not all. Sometimes the most innovative solution is the obvious one. For example, why not allow an expert welder to teach a welding class?
So, our proposed limited occupational teaching license will make it possible for experienced tradesmen and women to teach their craft without having to jump through all the hoops of extra coursework. With this, we can address teacher shortages and give students real world experience at the same time. As I said earlier, innovation does not change tradition – it strengthens it. One way we strengthen tradition is by teaching civics and American exceptionalism. Three years ago, we established the Institute of American Civics at the University of Tennessee to serve as a beacon and teach the value of a civic-minded people. This year, I am proposing funding to expand the Institute’s reach and make sure Tennessee children – from Kindergarten to 12th grade – learn about the founding principles that make America the greatest country on earth.
Just like a business innovates to better serve their customer, or as science innovates to save lives, or as an athlete innovates to change the game, this is a time for us to innovate to create a brighter future for Tennesseans. I believe the best way to honor our state’s storied history is to climb the next mountain, to chart new waters, and to lead the next era of American innovation.
When I was in elementary school, one of my textbooks predicted that some time in the future, we could have the capability to make a phone call and not just hear but also see the person on the other line. I remember looking at that illustration and thinking…“not in my lifetime.” But a couple months ago, Maria and I had the opportunity to meet virtually with an astronaut from Tennessee – Butch Wilmore – who is living on the International Space Station.
And by the way, we pray for his swift return home. As we talked to Butch, he flipped the camera to show us his breathtaking birds eye view of Earth at sunrise – all on a phone call…in my lifetime. Our state’s next great achievements will come from those who dare to question, to innovate, and to see the world not just as it is, but as it could be. We know what it takes to be better, and as Einstein also said, “Those who have the privilege to know, have the duty to act.” May each of us respond to that duty together. May the Lord continue to pour out his favor and bless the people of the great state of Tennessee.
Do you have more information about this story? You can email me at emily.west@newschannel5.com.
It takes village! Hats off to the Wilson County Rotary clubs for investing in our kids in such a tangible way. Putting 100,000 books in the hands of little learners is something to celebrate. I love that they store the books in a bank vault — they truly are priceless!
-Carrie Sharp
