Recovery from recent tornadoes, the ongoing effects of COVID-19 and a possible recession are rewriting state budget priorities for the coming fiscal year.
The budget presented by Governor Bill Lee today looks different in some significant ways from the proposals he outlined in his annual State of the State address seven weeks ago. It pares back proposed raises for teachers, adds money for disaster relief and puts more money into state reserve coffers.
The proposal sets aside $150 million for specific needs connected to COVID-19 preparedness and response. Acknowledging the broader potential economic effects of the illness, the revised budget released Wednesday scales back predicted economic growth for the remainder of this fiscal year and projects “basically zero” growth in FY 2021.
"We are now likely embarking on a recession," Tennessee Finance Commissioner Stuart McWhorter told a Senate committee. "Clearly, we are in a time of recovery, a time of preparedness and a time of many unknowns."
Lee also wants the General Assembly to approve sending more than $350 million into Tennessee’s reserve “rainy day fund” by June 30, strengthening the pool of money used in tight economic situations. The state does not anticipate dipping into that reserve fund within the next year, but McWhorter cautioned lawmakers that could change as the economic ramifications of COVID-19 become more apparent.
$30 million would be sent to the Tennessee Emergency Management Agency’s disaster relief fund. The money will help TEMA aid tornado recovery in Middle Tennessee.
The budget would also pump $200 million into a program that gives local governments money for infrastructure and capital projects. That’s double the amount Gov. Lee originally envisioned.
Two key planks of Lee’s original budget proposal are drastically different under the revised budget. A $250 million mental health trust fund for school-age children has been eliminated from the proposal, and teacher raises have been scaled back from four percent to two percent.
Lee also dropped plans for a cut in professional privilege taxes, and asked for cuts to a literacy program, a rural grant program and other projects. The reductions add up to a little more than $400 million, compared to the February budget proposal. The budget retains $37 million to pay for Lee’s school voucher program, which is set to go into effect this autumn.
Lawmakers are rushing to vote on the budget proposal and thirty other “critical” bills before adjourning for at least eight weeks. Suspension of legislative business could happen as early as this weekend. Legislative leaders have indicated the General Assembly may return to wrap up its session in June. The new budget year begins July 1.