Holland Knight: Legislative Update | TN General Assembly Adjousnment / State Budget Overview

From Holland and Knight:

The Tennessee General Assembly adjourned Tuesday following lengthy debate surrounding the passage of DEI related legislation, and the failure to take up key education initiatives which dominated discussion throughout the legislative session. Among the measures passed this week includes a pair of bills sponsored by Senate Majority Leader Jack Johnson and freshman Representative Aron Maberry which aim to eliminate consideration of diversity, equity and inclusion metrics in various units of government. The Dismantle DEI in Employment Act, SB1083/HB622, prohibits a county government, municipal government, metropolitan government, local education agency (LEA), public institution of higher education, and the state from basing an employment decision on any metric that considers an applicant's or employee's race, ethnicity, sex, age, or any other demographic characteristic, rather than on individual merit, qualifications, veteran status, or lawful eligibility criteria. The Dismantling DEI Departments Act, SB1084/HB923, prohibits units of state government, counties, municipalities, metropolitan governments, and public institutions of higher education from using a discriminatory preference in an effort to increase diversity, equity, or inclusion or establishing or maintaining an office, division, or department for such purposes. The Act further prohibits the governor from granting preferential treatment when making appointments to any board, commission, committee, or other governing or advisory entity of the executive branch of state government on the basis of race, and eliminates various DEI initiatives in present law.

Education issues ruled the narrative this session with the passage of Governor Lee’s landmark school choice program during a special called session earlier this year, and the consideration of two controversial proposals relative to immigration and district oversight. While these initiatives appeared to be on the fast track to legislative approval, both bills hit roadblocks prior to adjournment and were not taken up for final passage. SB863/HB793, which authorizes LEAs and public charter schools to refuse to enroll students who are unlawfully present in the United States, passed the Senate chamber, but stalled in the House Finance Subcommittee after issues with the bill’s fiscal note came to fruition. Further, legislation aimed to implement significant oversight and control of the Memphis-Shelby County School Board, SB714/HB662, passed the House and Senate respectively, but was not placed for a final vote after the bill’s sponsors, Rep. Mark White and Sen. Brent Taylor, failed to reconcile competing versions of the legislation in a conference committee.

Last week, lawmakers passed the $59.8 billion state budget as amended to reallocate $180 million from Governor Lee's proposal to account for legislative priorities. The final budget includes funding for a $447 million statewide private school voucher program, new funding for Hurricane Helene relief, and $1 billion in one-time funding for road projects intended to address the state’s extensive backlog of road projects, among other allocations as detailed below.

Notable Legislative Budget Additions:

• $78 million to buy back TennCare services funded through the annual hospital assessment
• $37.5 million for TCAT in Robertson County
• $25 million for Hurricane Helene flood relief
• $20 million in one-time funds to establish an equipment grant pool for volunteer fire departments
• $20 million to replace Erwin sewage treatment plant
• $10.3 million for medical and veterinary equipment at the University of Tennessee
• $5 million in one-time funds to establish an equipment grant pool for rescue squads statewide
• $5.4 million to improve campus safety at the University of Memphis
• $5 million grant for the Tennessee State Museum
• $4 million for equal grants to the Nashville Zoo, Knoxville Zoo, Chattanooga Zoo, and Tennessee Aquarium for capital projects
• $4.5 million for 10 new employees at the Tennessee Attorney General’s office

Administration Budget Highlights:

• $1 billion in one-time funding for road projects
• $244 million funding increase for the state's K-12 TISA formula, which includes $80 million
• in funding rolled from last year, and $164 million in new TISA spending
• $20 million to the School Safety Grant Fund
• $20 million to the Charter School Facilities Fund
• $62.7 million for K-12 infrastructure and facilities funding
• $198.4 million for teacher bonuses
• $10 million to provide paid parental leave for Local Educational Agency employees
• $27.3 million for summer learning programs to support students between school years
• $25 million further investment in the Fast Growth Fund, to support fast-growing districts
• $17 million for Grade A School Grants
• $50 million to create the Small Modular Reactor (SMR) Grant Fund to support Tennessee

Valley Authority’s Clinch River Nuclear SMR project

• $45.8 million for Rural Development Grant Fund to enhance Tennessee’s rural and
• distressed communities
• $25 million in infrastructure funds for the state’s 72 general aviation airports
• $25 million for FastTrack grants
• $17 million to establish a new statewide indigent representation program
• $20 million in one-time funding for victim services through the Victims of Crimes Act
• $35.6 million to the state's rainy day fund, which now sits at nearly $2.2 billion, the largest in state history.
• $28 million in Provider Stability Funds to nursing homes
• $75 million to establish Downtown Public Safety grants to increase public safety in
• downtown areas with businesses and commercial activity
• $130 million investment in the Violent Crime Intervention Fund
• $95.5 million utilizing Shared Savings to enhance long term care services and supports for

older adults and people living with disabilities

• $41.3 million to move and rebuild Memphis Airport TCAT
• $20 million for the Memphis Zoo expansion project
• $52 million to create five new Tennessee State Parks
• $25 million to create a Farmland Conservation Fund
• $25 million to renovate Murphy Center at Middle Tennessee State University
• $4.5 million to various YMCA locations across the state 

The H&K Tennessee Government Relations Team