Budget Cycle

Governor Submits Budget
February 1
Fiscal Year Begins
July 1 

Governor Signs Budget 
10 days after legislative signatures

Budget Links

FY2025 (proposed)
FY2024 (enacted)
FY2024 (proposed)
FY2023 (enacted)
FY2022 (enacted)
FY2021 (enacted)
FY2020 (enacted)

Proposed Budget - Fiscal Year 2025
On February 5, Governor Bill Lee proposed a fiscal 2025 total budget of $52.6 billion, a decrease of 15.8 percent, or $9.9 billion, compared to the revised fiscal 2024 level. This lower total budget is a result of one-time state funds and expiring federal funds discontinuing after the current year. State funds total $25.4 billion, a decrease of 20.6 percent, and general fund appropriations total $22.0 billion, a decrease of 19.0 percent. Recurring state general tax revenues are estimated at $19.2 billion in fiscal 2025, an increase of 0.5 percent, or $95.4 million, over revised fiscal 2024. The proposed budget includes a deposit of $20.0 million to the rainy day fund bringing the total to $2.1 billion at the end of fiscal 2025. 

Proposed Budget Highlights 

The governor’s proposed budget includes strategic funding to ensure economic and educational opportunity, protect state voices, preserve natural resources, strengthen families, and more. The budget also addresses challenges and makes key investments using available resources without utilizing reserves or reducing the base budget.

Tax Relief and Business Development

  • Proposes legislation to repeal a portion of the franchise tax, forecasted to reduce tax collections by an estimated $410.0 million recurring in fiscal 2025.
  • $35.8 million non-recurring in grants and services to assist rural communities and distressed counties.


  • Proposes legislation to establish a statewide school choice program, the Education Freedom Scholarship Act, which will fund 20,000 scholarships. A recurring $144.2 million is recommended to fund the legislation.
  • $261.3 million recurring state funding for a cost increase for the K-12 public education funding formula. This accounts for salary increases; group health insurance premiums; retirement contributions for local education employees; and the base, weights, direct funding, and outcomes.
  • $30.7 million recurring for summer learning programs to support students between school years.
  • $3.2 million recurring to expand access to Advanced Placement courses and $2.5 million recurring for a universal reading screener, replacing federal funding.
  • $15.0 million non-recurring for the charter school facilities fund.
  • $2.0 million recurring from the K-12 education mental health trust fund and $6.0 million recurring state appropriation to increase the number of school-based behavioral health liaisons.

Health and Social Services

  • Utilize savings under the current TennCare Medicaid demonstration waiver to fund investments in rural health care, behavioral health supports, and value-based payments over five years.
    • Rural Health: $6.4 million for health care apprenticeships, $5.4 million for health care training, $15.8 million for health care career pathways, $1.1 million for rural specialty care, and $50.0 million for health care resiliency.
    • Behavioral Health: $7.0 million for community mental health center quality payments, $1.0 million for community mental health center workforce development, $15.0 million for behavioral health hospitals, $2.0 million for substance use disorder treatment, and $10.0 million for children’s hospital infrastructure grants. 
    • Value-Based Payments: $2.0 million for TennCare to continue its development of value-based incentive opportunities for providers.
  • $273.7 million ($254.5 recurring and $19.2 million non-recurring) in state appropriations for TennCare.
  • $6.8 million recurring state funding for rate increases in foster care, adoption assistance, guardianship programs, and private provider residential case management.
  • $26.1 million recurring for provider rate increases across TennCare, children’s services, intellectual and development disabilities, and mental health and substance abuse services. 
  • $18.1 million non-recurring to continue a pilot program addressing unmet dental service needs. 

Public Safety

  • $17.4 million to add 60 new highway patrol troopers, supervisor, and support staff positions.

Outdoor Heritage

  • $25.0 million to establish the Farmland Conservation Fund, partnering with farmers to place a conservation easement on their land to preserve it for future generations.
  • $20.0 million to expand blueway trail access and $20.0 million to improve water quality at rivers, lakes, and streams across the state.
  • $63.0 million to create four new state parks, with the goal of funding a total of eight new state parks by the end of the current gubernatorial term.

State Employee Investments

  • $49.0 million to fund a 3.0 percent increase pool for Pay for Performance in executive branch agencies.
  • $15.1 million for salary increases for state employees not covered by the TEAM Act.
  • $5.5 million recurring for changes to state employee benefits.
  • $15.7 million to pay salary increases mandated by state law for certain job classifications including state judges, the Attorney General, assistant district attorneys, and public defenders.