Gov. Bill Lee at the close of the legislative session, April 22, 2025
The Republican supermajority tends to tout its fiscally conservative budget at the end of each legislative session. But this year, they aren’t talking as much about declining revenues, which could affect both the current fiscal year and the 2025 fiscal year budget that legislators just approved.
Tennessee’s vastly outnumbered Democratic lawmakers have been aligned and vocal in their criticisms of the budget, though their concerns often fall on deaf ears.
“This year, what you saw was a governor’s budget that was really disappointing and reflected a lot of misplaced priorities,” House Democratic Caucus Chair John Ray Clemmons (D-Nashville) told reporters at a post-session press conference. “The question we continue to ask is, ‘Where has all the money gone?’ We know where that money’s gone. It’s gone straight out to corporations, and it’s being enjoyed in boardrooms across the world, rather than living rooms here in the state of Tennessee.”
Republicans stay united in passing legislation, blocking Democrats’ efforts
There have been several recent changes to business taxes, which have decreased state revenues — most recently the 2024 legislation that eliminated the property tax provision of the franchise tax. Data from the legislature’s Joint Fiscal Review Committee in March shows an undercollection of franchise and excise taxes by nearly $209.7 million in the FY24 budget year-to-date. The funding the state has collected is almost 11 percent less than what it was targeting. It’s also 22 percent less than the previous year’s collections.
The state is also taking on debt and issuing $1 billion in bonds for the first time under Gov. Bill Lee. Republicans have justified the move, saying the state’s debt will still be less than what it was when Lee came into office.
“This is smart fiscal management from the state budget,” Lee said in a post-session press conference. “I believe the issuance of debt to build capital projects, particularly in a time when we have high inflation and high cost of capital building, is a smart thing to do.”
The Scene asked the governor why it was not then appropriate to utilize debt in the same way for road funding.
“We don’t want to issue too much debt,” said Lee. “We don’t want to issue it for reasons that are not as efficient as capital projects. We think this is the best use of that debt without extending it.”
He touted the $1 billion in nonrecurring funds the state did put toward road infrastructure and the $3 billion from the 2023 Transportation Modernization Act. House Speaker Cameron Sexton also chimed in.
“When you borrow money and you’re doing it for capital projects, that property appreciates in value, right?” Sexton said at the end of the session. “That makes good sense if you’re going to borrow money on an asset that’s going to appreciate. The roads do not appreciate in value; they depreciate. … Democrats stood up and said they want to do $45 billion of road debt. … That will be an albatross around the state, if that’s what will happen. It just does not make sense.”
A study published in February by the Tennessee Association of Intergovernmental Relations pointed out a need for $77.7 billion in infrastructure improvements, including $39 billion specifically for transportation and utilities.
“They put a billion dollars of one-time money in this year as a Band-Aid to cover up a glaring structural problem,” Sen. Jeff Yarbro (D-Nashville) tells the Scene. “Instead of being smart and getting ahead of this, this administration has actually slashed revenue sources for the state, largely to give big corporate tax breaks. The road money, the public schools money, the private school voucher money is all now competing for scarcer and scarcer dollars.”
The good, the bad and the ugly from the 2025 session of the Tennessee General Assembly
