Governor Lee Delivers State of the State Address Highlighting 2024 Legislative and Budget Priorities

Governor Lee delivered his sixth State of the State address Monday evening to a joint convention of the Tennessee General Assembly where he outlined his legislative and budgetary priorities for the upcoming  legislative session. The governor’s key initiatives center on expanding school choice, advancing rural health care, implementing franchise tax reductions, streamlining state permitting, protecting the Tennessee music industry, and improving conservation efforts statewide. The FY2024-2025 budget proposal totals $52.6 billion, a $9.9 billion reduction from last year’s state budget, due in part to expiring federal funds and one time state funding. The state budget is composed of $25.4 billion from state appropriations, $19.8 billion from federal funding, and $7.4 billion from other sources.

Significant legislative and budgetary priorities addressed include:

Education Policy:

• The Lee administration plans to pursue education policy reform this session through the Tennessee Education Freedom Scholarship Act,  which would establish a $141.5 million voucher option for 20,000 students statewide.
• More than $261 million to strengthen education through the Tennessee Investment in Student Achievement (TISA) formula growth, including teacher pay raises
• $30 million for summer learning programs to support students between school years
• $3.2 million dedicated to AP Access for All, which provides AP courses to students across rural and urban Tennessee
• $2.5 million to strengthen students’ reading and phonics skills
• $577,000 for teacher workforce training
• $15 million to fund charter school facility improvements

Business Tax Relief and Workforce Development:

• The administration has introduced legislation to repeal the state’s alternative measure of the franchise tax in order to address a potential constitutional issue raised in pending litigation with the current structure of the franchise and excise tax paid by Tennessee businesses. Under current law, franchise tax liability is based on the greater of net worth or the book value of real and tangible personal property owned or used in Tennessee.
• If passed, Tennessee businesses will be eligible to apply for refunds for overpayments that occurred during the past three years.
• The business tax cuts will result in $410M recurring expenditures and approximately $1.2B non-recurring expenditures.
• The budget also includes $36 million in ECD grants and services to assist rural communities in distressed counties.

State Permitting and Administrative Rule Reform:

• The administration plans to repeal or streamline 40% of all existing rules across the executive branch, a total of approximately 4,000 rules.
• The administration will propose statewide permitting reform to accelerate building times, lower costs and streamline construction in Tennessee.

Rural Healthcare and Mental Health Support:

• $208 million over five years from TennCare shared savings to strengthen rural health by investing in apprenticeships and skilled training, greater access to specialty care and telemedicine, improved career pathways, hospital and physician practice grants, and a new Center of Excellence to sustain and expand rural health support.
• $100 million over five years from TennCare shared savings to strengthen mental health care by investing in community mental health centers and behavioral health hospitals, expanding substance abuse disorder treatment, intensive in-home supports, primary care training, early childhood training, and children’s hospital infrastructure.
• $26.7 million investment in services for Tennesseans with disabilities
• $8 million to expand the school-based behavioral health liaison program to fund 114 liaisons, giving students across Tennessee schools important resources and mental health support.

Tennessee Music Industry Protection and Youth Social Media Safeguards:

• The administration has introduced the ELVIS Act to protect songwriters from voice impersonations through the use of artificial intelligence.
• The administration has introduced legislation that will give parents tools to oversee their child’s social media activity, and require social media companies to obtain parental consent for minors to create their own accounts in Tennessee.

Conservation Efforts:

• $63 million to create four new Tennessee State Parks
• $20 million to expand blueway trail access
• $20 million to improve water quality at rivers, lakes and streams across the state, and the Bill Dance Signature Lakes Fishing Trail
• $25 million to establish the Farmland Conservation Fund, partnering with farmers to place a conservation easement on their land.
• $5 million to protect and enhance scenic beauty along our major highways
• $3 million for Access 2030 to make Tennessee State Parks accessible to Tennesseans with disabilities

Safety Initiatives:

• $17 million in funding for an additional 60 State Troopers and related support staff
• $750,000 to fund Houses of Worship Security Grants
• Funding for a National Guard recruitment incentive package

Department of Finance and Administration Commissioner Jim Bryson will present the state budget to the Senate Finance Ways and Means Committee and House Finance Ways and Means Committee today, which may be livestreamed here.