Passage of fiscally responsible balanced budget signals end of session
(NASHVILLE, TN) -- The Senate and the House concurred on passage of a nearly $60 billion budget this week which provides the essential needs of Tennessee citizens while protecting the state’s taxpayers.
This year, the legislature made several substantive changes to the administration's initial budget proposal, chief of which was moving many items from recurring to non-recurring in order to better manage the state’s future finances. The completion of the budget process, the legislature's only explicit constitutional duty, signals the end of the session is near.
In addition to the budget, the Senate also provided a new framework for turning around Tennessee’s failing schools, reigned in Tennessee’s Wild West hemp industry and worked to end the practice of health care providers discriminating based on vaccination status.
Next week the Senate will work to pass the final pieces of legislation still outstanding and adjourn the first year of the 114th General Assembly.
General Assembly passes state’s $59.8 billion budget
This week the Tennessee House and Senate passed the state’s $59.8 billion budget for the 2025-26 fiscal year, fulfilling the General Assembly’s only constitutional duty.
This year’s spending plan, which recognizes a 2% growth rate, reaffirms the General Assembly’s commitment to conservative budgeting, while prioritizing the needs of Tennesseans across the state. The balanced budget advances the state’s efforts to improve public safety, invest in infrastructure, advance education, support rural healthcare, and increase disaster relief funding for Hurricane Helene recovery.
“With revenues at more typical levels after years of historic growth, this budget reflects the careful discipline needed to protect Tennessee's financial future,” said Senate Finance, Ways and Means Chairman Bo Watson (R-Hixson). “We’ve kept recurring spending in check and preserved low taxes, while supporting critical community services and investing in rural hospitals that serve some of our most vulnerable populations. Tennessee is a shining example of fiscal conservatism, and this budget reflects that lasting commitment.”
The legislative amendment makes fiscally responsible adjustments to the administration’s initial budget proposal by shifting $19.94 million in recurring allocations to non-recurring, allowing the state to better manage long-term spending obligations.
“Tennessee's strong and historical commitment to fiscal responsibility continues to serve taxpayers well,” said Lt. Governor Randy McNally (R-Oak Ridge). “Despite slow revenue growth and a national economy in reset, Tennessee is investing in education, cutting spending and making strong commitments to public safety. We are also redoubling our support for infrastructure by allocating additional money for our roads. While other states struggle to stay afloat financially, we are operating with little debt and our rainy day fund remains at historic levels. Once again, Tennessee is leading the nation in fiscally responsible, conservative budgeting.”
Additionally, the General Assembly repurposed funds for legislative initiatives to support critical community needs, while maintaining Governor Lee’s major priorities.
Grant Pool for Critical Community Services
In the 2025-26 budget, the General Assembly created a $42.5 million grant pool, with nonrecurring funds, for important emergency and community services. The grants include:
$20 million for Volunteer Fire Departments
$5 million for Rescue Squads
$5 million for Emergency Medical Services
$5 million for Senior Centers
$5 million for Local Museums for capital improvements
$2 million for Courthouse Restoration
$500,000 for Second Harvest Food Bank
Disaster Relief for Hurricane Helene
The General Assembly continued to support victims of Hurricane Helene by providing $26 million nonrecurring for disaster relief for Helene victims in Northeast Tennessee and $20 million nonrecurring for local match funds for FEMA disaster relief.$46
Rural Hospital Support and Healthcare Investments
Lawmakers made significant investments in hospitals by using TennCare Shared Savings to provide an additional $78 million to help hospitals, particularly in rural areas, with uncompensated care and $4 million to complete capital projects at county health departments.
Additional healthcare investments include:
$4 million recurring to increase pediatric dental rates
$3 million nonrecurring to the Adult Healthcare Safety Net
$500,000 nonrecurring to assist those living with epilepsy and their caregivers statewide
$1.4 million recurring to provide scholarships for the joint public-private partnership in the Medical School Early Acceptance Program between MTSU and Meharry Medical College
$1 million nonrecurring to Live Like Lou Foundation for ALS research
$1 million nonrecurring for Volunteers in Medicine
Safety and Security Improvements
The Legislative amendment also provides additional allocations in safety and security:
$5.4 million nonrecurring to improve campus safety and security at the University of Memphis
$500,000 nonrecurring to establish and operate the UT Law Enforcement Innovation Center
$400,000 nonrecurring to support the East Tennessee Regional Forensic Facility and Training Program
“This budget prioritizes critical investments for Tennesseans, keeps our state financially secure, and advances us toward a prosperous future,” said Senate Majority Leader Jack Johnson (R-Franklin). “It continues our commitment to education and infrastructure, while also streamlining government operations and eliminating hundreds of vacant positions to protect taxpayer dollars. I commend Governor Lee and my colleagues in the General Assembly for their work to craft a budget that meets the needs of our citizens and upholds Tennessee’s legacy of fiscal responsibility.”
Major investments secured
In addition to the adjustments made to fund legislative priorities, the budget maintains important investments proposed by Governor Lee including:
$1 billion into the road fund to address the state’s transportation infrastructure needs
$62.7 million for K-12 infrastructure and facilities funding
$244 million to strengthen education through the Tennessee Investment in Student Achievement (TISA) formula growth, including teacher pay raises
$198.4 million for teacher bonuses in recognition of their hard work and dedication and for leading the nation in student achievement and growth
$35.6 million investment into the Rainy Day Fund, bringing Tennessee’s reserves to nearly $2.2 billion, the largest in state history
$25 million for FastTrack grants to recruit new business to Tennessee and support workforce development
Expanding choices for parents
In the January special session, the General Assembly passed historic legislation to provide Education Freedom Scholarships to empower parents with the freedom to pick the right school for their child and have a say in where their tax dollars are spent – regardless of income or zip code. This school choice initiative invests $145.9 million in Education Freedom Scholarships.
Framework for turning around low-performing schools
Senate Bill 1273 passed the Tennessee Senate this week. Sponsored by Majority Leader Jack Johnson (R-Franklin), the bill creates a new framework that provides local school districts greater authority to implement turnaround strategies for struggling schools.
Currently, Achievement Schools Districts (ASD) are responsible for these turnaround programs. This program has consistently not met the goal of turning around Tennessee’s lowest performing schools.
“While ASD’s have resulted in encouraging progress and played an important role in raising awareness and accountability for struggling schools, it is time for a new, innovative approach,” said Johnson.
Senate Bill 1273 replaces ASDs with a new system that empowers local school districts while continuing strong partnership with the state. The new bill creates a 3-tiered intervention framework that gives local school districts better ability to implement strategies that best fit their schools needs.
The three tiers are:
Tier 1 allows LEAs to select an evidence-based intervention or partner with a turnaround expert, giving schools a chance to improve through district-led solutions.
Tier 2 includes more intensive options such as charter conversion, partnership with a higher education institution, or staffing and leadership reconstitution.
Tier 3 is the most rigorous, authorizing either school closure or a full reconstitution overseen by the department when other interventions have failed.
Every school identified as a Priority School for the first time, must begin in Tier 1, ensuring the least intrusive interventions are tried first. The Department of Education must review the performance of each school annually. The review process may require a change in strategy or movement of tiers.
New guardrails for hemp industry
On Tuesday, the General Assembly passed Senate Bill 1413, a measure aimed at tightening regulations on hemp-derived cannabinoid products (HDCP). Sponsored by Chairman Richard Briggs (R-Knoxville), the bill introduces restrictions on product potency, who can sell these products, and oversight responsibilities.
The measure transfers compliance and enforcement of hemp products from the Department of Agriculture to the Alcoholic Beverage Commission (ABC) and establishes new rules for their sale, manufacture, and distribution.
“This bill will ensure that hemp products in the state are very carefully regulated to protect the health and welfare of our citizens,” said Briggs, who is a retired heart surgeon. “All of these substances are intoxicating. They can impair individuals and be harmful to children. There is a world of counterfeit products out there. Quite frankly, it has been the wild west.”
Key provisions of Senate Bill 1413:
Prohibits the sale of THCa and THCp
Bans direct shipping of hemp products to consumers
Requires a hemp wholesale license for distributors
Implements licensing fees for wholesalers and increases existing fees for suppliers and retailers
Restricts sales to 21 and older establishments, licensed manufacturers, and businesses with wine and spirit or liquor-by-the-drink licenses
Adds a wholesale tax of $0.02 per milligram on cannabinoid products, a tax on flower at a rate of $50 per ounce, and a tax on the sale of liquid HDCPs at wholesale of $4.40 per gallon of liquid HDCP
The new tax structure is expected to generate $126 million in revenue for the state per year, starting in 2027, with 80% of the new revenues going to the general fund, 10% to the ABC, and 10% to the department of revenue.
Caps single-serving size at 15 milligrams and container size at 300mg
Increases oversight of suppliers, wholesalers, and retailers to ensure compliance
“THCa is a precursor to marijuana,” explained Briggs. “While marijuana is not legal in Tennessee, loopholes in our current regulations have allowed the sale of hemp products - like THCa and THCp - that are converted into marijuana when heated up through smoking, vaping or cooking.”
Prohibition on providers discriminating based on vaccination status
Senate Bill 1389, sponsored by Senator Bo Watson (R-Hixson), passed the Senate Wednesday. This bill prohibits TennCare and CoverKids providers from refusing care to patients based on their vaccination status.
“Providers in Tennessee are refusing to treat patients based on a decision families make for themselves,” said Senator Watson. “It is critically important for physicians to see these patients, provide them with information on immunizations, and consult on other types of care. Ostracizing these patients is completely counter-culture to what we should be doing in the medical community.”
This bill aims to protect families' personal choice regarding vaccinations. If passed, patients who feel their provider has discriminated against them can pursue recourse.
In Brief…
Protecting Tennessee from foreign powers - The Tennessee Senate passed Senate Bill 263, sponsored by Senator Joey Hensley (R-Hohenwald), to align the state with the federal government's efforts to reduce involvement and reliance on international organizations. This bill prohibits requirements or mandates from the World Health Organization, United Nations, or World Economic Forum from being imposed contrary to Tennessee state law or the state constitution. This effort protects the state from foreign powers by limiting their policy influence. Senate Bill 263 is being considered by the House.
Expanding paid leave for care of family members - Senate Bill 322 was passed by the Tennessee State Senate this week. Sponsored by Senator Becky Massey (R-Knoxville), this bill allows state employees who are taking care of family members to take up to 6 weeks of paid leave. Employees may use this time to care for a parent, child, grandchild, or spouse with a serious illness that involves hospice. This legislation aims to increase employee retention, lowering turnover costs for the state government, by ensuring that employees have the flexibility to care for their family without risking their job. Senate Bill 322 is being considered by the House.
Protecting election integrity - The Tennessee State Senate has passed Senate Bill 1143, a new measure aimed at strengthening the integrity of the state’s elections. Sponsored by Senator Rusty Crowe (R–Johnson City), the bill requires election coordinators to train local election officials on how to recognize temporary identification materials issued to non-U.S. citizens. This training is designed to prevent any accidental allowance of non-citizens voting in Tennessee elections.
This legislation follows the passage of Senate Bill 6002 during this year’s special session, which created a temporary license and permit system for non-citizens residing in Tennessee. These forms of ID allow non-citizens to legally drive and carry identification—while clearly indicating that the holder is not a U.S. citizen.
Senate Bill 1143 ensures election officials are properly trained to recognize and reject these temporary IDs at polling places. According to the Secretary of State, Tennessee currently ranks #1 in the nation for election integrity thanks to legislative efforts like these that uphold the security and trustworthiness of the state’s voting process.
End Childhood Hunger Act - The Senate passed Senate Bill 1239 this week to enact the End Childhood Hunger Act. Sponsored by Senator Ed Jackson (R-Jackson), this Act will create the Childhood Hunger Task Force in an effort to address disparities affecting children in the state. The Task Force will study this issue in the state and develop a plan for the general assembly on addressing childhood hunger. The first report from the committee will be due in July of 2026. Senate Bill 1239 is still being considered by the House.
Support, Training, and Renewing Opportunity for National Guardsmen (STRONG) Act Expansions - The STRONG Act provides tuition support for National Guardsmen across the state. This week, the State Senate passed Senate Bill 1291 to expand the tuition coverage.
Sponsored by Senator Jack Johnson (R-Franklin), this bill will allow the STRONG Act to cover undergraduate and masters program course fees. The legislation also requires the Department of Military to publish the course fees on their website by August 1 to ensure transparency for service members on the costs covered by the program.
Additionally, the STRONG Act will now cover 130 credit hours, up from the 120 previously covered. This change provides more flexibility to students using this program. Tuition reimbursement applications must be submitted within 45 days of course completion to ensure timely processing.
These updates are funded in the 2025-26 budget. Senate Bill 1291 goes to Governor Lee for final action.
Blood Sample Collection - The State Senate passed a bill allowing police officers to assist medical professionals in using reasonable force to collect a blood sample from a person suspected of driving under the influence. Senate Bill 1400, sponsored by Senator Kerry Roberts (R-Springfield), also extends the driver's license revocation for a first implied consent violation from one year to one year and six months.
Support for Constitutional Concealed Carry Reciprocity Act - The Tennessee State Senate passed Senate Joint Resolution 28, sponsored by Senator Adam Lowe (R-Calhoun), in support of the federal Constitutional Concealed Carry Reciprocity Act. The United States House of Representatives has introduced House Resolution 38 to establish a federal statutory framework to regulate the carry or possession of concealed firearms across state lines. Tennessee’s concealed carry permit is not accepted in 14 states including nearby Illinois. While this issue is being addressed at the federal level, Senate Joint Resolution 28 is Tennessee’s way of supporting the effort.
Supporting the repeal of federal income tax - The Senate took up House Joint Resolution 17, voting to support the repeal of the federal income tax. Sponsored by Senator Jack Johnson (R-Franklin), the Resolution urges Congress to pass the Fair Tax Act which will repeal the 16th amendment. If passed, the Fair Tax Act will replace the federal income tax with a federal retail sales tax. This model would look much like Tennessee’s current tax structure and will continue to allow Tennessee to remain the least indebted state in the nation. House Joint Resolution 17 now goes to Governor Lee for further action.
Expanding protections for children who witness domestic abuse - This week, the Senate passed Senate Bill 1241. Sponsored by Senator Ed Jackson (R-Jackson), this bill expands the definition of abuse to include cases where a person under 18 witnesses the abuse of another child or domestic abuse of a family or household member. The bill also establishes that, in cases when a child has been removed from the home in cases of abuse, reunification with the parent cannot occur unless the parent has fulfilled the requirements outlined in the permanency plan and the child has received mental health counseling when necessary. The goal of this legislation is to ensure that children are reunited with their parents whenever it is safe to do so.
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