Gov. Lee Outlines Budget, Priorities in Final State of the State Address

In his Weekly Wrap, Sen. Page Walley reports that Governor Bill Lee delivered his eighth and final State of the State address to a joint session of the General Assembly last week, outlining a $57.8 billion budget proposal for the 2026-27 fiscal year. The proposal emphasizes fiscal responsibility while investing in education, infrastructure, healthcare, families, and public safety.

Key allocations include $425 million for transportation projects across the state, $165 million to renovate and replace rest areas and welcome centers, and $56.2 million for aviation infrastructure. The budget also provides $30 million for the Starter Home Revolving Loan Fund to support new affordable housing and $25 million for the Rural Development Fund to support business development and infrastructure.

Education funding includes $339 million for public schools, additional TISA funding, summer learning camps, and an increase in starting teacher pay to $50,000. K-12 facilities maintenance receives $20 million, public charter school improvements receive $40 million, and $3 million is allocated to expand the school-based behavioral health liaison program.

Healthcare and family support initiatives include $205 million through Shared Savings to strengthen healthcare programs, $230 million for TennCare to cover medical inflation and increased utilization, $34.5 million for the Department of Children’s Services to reduce caseload ratios, and $10.7 million to enhance staff safety at DCS facilities. Dental services through the Department of Health will continue with $24.2 million in funding.

Conservation and infrastructure priorities include $81.6 million to create three new state parks, $1.6 million for subsurface sewage permitting, and $1.1 million to enhance the state’s electric grid.

Lee’s budget is part of ongoing legislative discussions in the General Assembly and reflects efforts to protect Tennessee taxpayers while supporting long-term growth.

In addition, Senate Bill 1580, sponsored by Sen. Walley, advanced in the Health and Welfare Committee to protect Tennesseans from misleading claims by AI mental health systems. The measure prohibits claims that AI systems can act as licensed mental health professionals, with a $5,000 fine for violations, and now moves to the Senate Floor for final consideration.