(NASHVILLE, TN) – Today, the Tennessee House and Senate passed the state’s $58 billion budget for the 2026-27 fiscal year, fulfilling the General Assembly’s only constitutional duty.
This year’s spending plan reflects a continued return to more typical economic growth following several years of record-high revenues. The budget reaffirms the General Assembly’s longstanding commitment to fiscal responsibility while making targeted investments to strengthen Tennessee’s economy, improve education, and support families across the state.
The legislative amendment shifts $282.4 million from the administration’s original proposal to fund $276.4 million in legislative priorities, while maintaining a strong bottom line to account for potential uncertainties.
Lawmakers also repurposed funding to advance key initiatives supporting hospitals statewide and addressing critical community needs.
Grant Pool for Community Services
The General Assembly created a $42 million grant pool with nonrecurring funds for important emergency and community services. These grants are in high demand each year, with applications consistently exceeding available funding. Local communities have repeatedly expressed strong support for the program, reinforcing its value in meeting essential needs and strengthening public services statewide.
- $20 million for Volunteer Fire Departments
- $5 million for Emergency Medical Services
- $5 million for Volunteer Rescue Squads
- $5 million for local museums and capital improvements
- $5 million for senior centers
- $1.5 million for local fairs
- $500,000 for courthouse renovations
Rural Hospital Support and Healthcare Investments
Lawmakers made significant investments in hospitals by providing $137 million from the General Fund to help hospitals, particularly in rural areas, with uncompensated care. By directing General Fund dollars towards this effort, hospitals will have the flexibility to use these resources for critical capital improvements, an option not permitted under the Rural Hospital Transformation Act. This approach not only helps stabilize rural healthcare providers but also strengthens their ability to expand services and meet long-term community needs.
Additional healthcare investments include:
- $205 million utilizing Shared Savings to strengthen healthcare initiatives, including funding Rural Health Transformation Resiliency Grants
- $230 million to TennCare to cover increasing costs associated with medical inflation, including higher prescription drug prices and Medicare payments, and increased utilization and services
- $24.2 million to continue a Department of Health Dental Pilot Program to address unmet dental service needs and increase the number of dentists in Tennessee
- $11 million nonrecurring grant to non-profit partner Live Like Lou Foundation for ALS research, with $10 million of those dollars appropriated by the General Assembly
- $500k recurring grant to non-profit partner The Next Door to assist women in recovery from substance use
- $500k recurring grant to non-profit partner The Jason Foundation, which provides educational and awareness programs related to youth suicide
- $500k recurring grant to non-profit partner Families Free, which provides treatment, education, and intervention services to families, with $250k of those dollars appropriated by the General Assembly
- $7 million for National Cancer Institute designation at UT Medical Center in Knoxville
Infrastructure, Housing and Rural Investment
- $400 million for new and existing transportation projects, bringing TDOTs total General Fund allocations to $5 billion
- $165 million to renovate and replace Tennessee’s rest areas and welcome centers
- $81.2 million to support aviation infrastructure, with $25 million of that added by the General Assembly
- $15 million to the Rural Development Fund for business development and infrastructure
- $20 million to create the Community and Workforce Housing Innovation Pilot Program to support construction of workforce housing
- $20 million for upkeep and infrastructure of shortline railroads
Economic Opportunity and Fiscal Stability
- $20 million investment in the Rainy Day Fund, bringing total reserves to more than $2.2 billion – the largest in state history
- $8 million to expand Tennessee Youth Employment Program
- $25 million to the Tennessee Entertainment Commission for continued support for Tennessee’s music and film industries
- $750,000 for Learning Blade, Career Blade and Ready for Industry programs to improve workforce readiness for STEM/CTE careers
Education
Public Education
- $339 million for public education, including additional TISA funding, summer learning camps, and raising starting teacher pay to $50,000
- $20 million for K-12 facilities maintenance
- $40 million for facilities improvement at public charter schools
- $3 million to expand school-based behavioral health liaison program
Expanding School Choice
- $112 million to expand school choice to more Tennessee families by increasing Education Freedom Scholarships available, to serve a total of 35,000 students
Higher Education
- $350 million to build a new College of Medicine Interdisciplinary Building at the University of Tennessee Health Science Center in Memphis
- $71.7 million for capital maintenance at higher education institutions
- $10 million for the Governor’s Investment in Vocational Education (GIVE) program to support nuclear workforce education, as recommended by the Nuclear Energy Advisory Council
- $3 million for Next-Gen Academics at Tennessee Tech for nuclear and cyber technologies
- $39.4 million to fully fund the outcomes-based funding formula
- $3.5 million for Corrections Education Investment Initiative to prepare incarcerated individuals for reentry success
- $3.7 million to fund specialty units of higher education
- $3.2 million to support the Gatton College of Pharmacy at ETSU
Children and Families
- $34.5 million to Department of Children’s Services (DCS) to assist with reducing caseload ratios
- $10.7 million to enhance staff safety at DCS facilities that accommodate delinquent youth
- $15 million for capital project and maintenance grants to YMCAs across Tennessee
- $500k to nonprofit partner Jonathan’s Path for housing teens in foster care
- $2 million for summer food program for children
Safe Neighborhoods
- $44.2 million to bolster the Governor’s Response and Recovery Fund which provides support to individuals, businesses, and communities after natural disasters
- $3.7 million for grants to continue recovery efforts from Hurricane Helene
- $50 million for public safety grants to enhance crime prevention and increase public safety in Memphis
- $9 million to create the Tennessee Safe Initiative Task Force within TBI
- $83 million to Tennessee Department of the Military for construction of a new Army Aviation Support Facility in Rutherford County
- $37.5 million for salary increases and creation of an additional 50 State Troopers and related support staff positions to improve public safety across the state
- $932k for digital forensics law enforcement training in East Tennessee
- $1 million to establish the Volunteer Firefighter Vehicle Grant Program
- $1.5 million to replace three fire engines lost to Hurricane Helene
- $20 million for capital improvements at the West Tennessee and East Tennessee Regional Juvenile Justice Centers
- $1.7 million recurring grants to non-profit partners that combat human trafficking and support survivors
- $400k to nonprofit partner Thistle Farms for workforce and housing for survivors of human trafficking
- $1 million recurring grant to non-profit partner Men of Valor for faith-based reentry support for incarcerated individuals
- $250k recurring grant to Lipscomb University’s LIFE Program, which provides higher education opportunities for incarcerated individuals
- $500k recurring grant to non-profit partner Tennessee Prison Outreach Ministry, which provides faith-based reentry support for individuals and their families
Conservation and Culture
- $81.6 million to create three new Tennessee State Parks
- $1.6 million for the Subsurface Sewage Disposal Program, reducing waiting times for permitting services and oversight
- $1.1 million to support further enhancement of Tennessee’s electric grid
- $10 million for Clark Center Park for future use as new state park
- $5.5 million for a new Memphis Art Museum
Nuclear Energy and Innovation
- $38 million to continue Tennessee’s efforts to lead the nation in adoption of artificial intelligence technology and make government work more efficiently for Tennesseans
- $25 million further investment in the Nuclear Energy Fund to attract advanced nuclear technology companies, ensuring Tennessee continues leading the nation as the epicenter of America’s nuclear renaissance
- $20 million to complete the relocation of the North Data Center
- $20 million to accelerate Tennessee’s quantum computing industry by attracting substantial federal and private-sector investment and to translate our scientific strengths into durable, high-wage job creation across advanced manufacturing, life sciences and logistics industries
Statements from Legislative Leadership
Lt. Governor Randy McNally (R-Oak Ridge):
“This budget reflects the steady, fiscally responsible approach we’ve taken over the past decade. We’ve kept spending under control while continuing to invest in those areas of paramount importance to our citizens, such as education, healthcare, and public safety. This discipline has resulted in structurally balanced budgets year after year putting Tennessee in a strong position to provide for the people of Tennessee not just today, but in the years to come. I appreciate the work of each of our members to keep us on this path.”
House Speaker Cameron Sexton (R-Crossville):
“Under Republican leadership, Tennessee continues to rank among the most fiscally conservative states in the nation. We’ve continued to cut taxes, reduce spending, and pass a balanced budget that has earned Tennessee a AAA bond rating. Proud of Chairman Hicks, Chairman Williams, and our finance team for setting the standard nationwide.”
Senate Majority Leader Jack Johnson (R-Franklin):
“This budget puts Tennesseans first by investing in the priorities that matter most to families across our state. It strengthens our education system, expands opportunities for school choice, and ensures parents have the freedom to choose the best path for their children. At the same time, it makes meaningful investments in public safety and community development, while staying true to Tennessee’s longstanding tradition of fiscal discipline. By balancing responsible stewardship with targeted investments, we are continuing to build a strong foundation for economic growth and opportunity in every corner of our state.”
House Majority Leader William Lamberth (R-Portland):
“Tennessee’s success story continues because we have refused to follow the path of tax-and-spend policies of other states. Instead, we have committed ourselves to limited government, accountability and creating greater opportunities for our citizens. I’m proud of the House and Senate’s collaborative work to deliver a balanced budget that meets today’s needs while honoring our obligations to future generations. “
Senate Finance Chair Bo Watson (R-Hixson):
“Years of fiscally conservative budgeting have put Tennessee in a strong position to meet today’s needs while planning confidently for the future. Even as revenue growth has leveled, our disciplined approach has kept the state on solid financial footing. This budget makes significant investments in healthcare and hospitals, ensuring providers have the resources to serve patients and strengthen care across our state. We remain committed to improving healthcare in Tennessee and finding innovative ways to support it. This budget delivers on that commitment.”
Finance Chair Gary Hicks (R-Rogersville):
“We can be proud that we have held the line on recurring expenditures, preserved Tennessee’s reputation as one of the lowest-taxed states in the nation and continued investing in our core priorities. This budget reflects our steadfast commitment to fiscal responsibility and demonstrates why Tennessee remains a strong national model of prudent governance.”
