In early February, Governor Lee released his preliminary proposed budget during his State of the State address at War Memorial Auditorium. After an uncommon and unpredictable 2020, where the administration’s primary budget consideration was the effects of the Covid-19 pandemic, the Governor’s 2021 budget seemed like a celebration. The state brought in significantly more revenue than it predicted over the course of a pandemic year, the Federal government was injecting money to states at unprecedented levels and the economic effects of the pandemic appeared to be on the wane. As such, the Governor’s amended budget proposes a number of his Administration’s policy priorities.
The Budget Process
The single constitutional requirement of the General Assembly is to pass a balanced budget to fund state government. The Governor proposes a budget, but only the General Assembly can adopt a budget. After the Governor’s proposed budget in February, the next step, which occurred this week, was for Governor Lee to propose an amended budget.
The Governor’s Amended Budget
In his amended budget, the Governor reintroduced several of his foregone initiatives from the final amended 2020 budget, and funded a number of new legislative efforts. The biggest investment of note is the state’s deposit of $250 million into Tennessee’s Mental Health Trust Fund. The fund is intended to be used to significantly enhance K-12 mental health services, including direct service provision in schools, suicide prevention programs, trauma informed practices and Project Basic, a mental health early intervention for elementary school students.
Other initiatives include a suite of “learning loss” legislation from the General Assembly’s January extraordinary session. These expenditures include the state’s summer learning loss camps, teacher pay raises and a new literacy campaign. Similarly, the state is fully funding the BEP, the state’s complicated funding formula for education, for the 2021-22 school year. In past years, local districts have had to either grow class sizes, reduce staffing or raise their own funds to meet the funding requirements of the BEP. Legislation from the extraordinary session injects $43 million into the formula to help local district cover their costs.
One of Governor Lee’s other legislative priorities has been criminal justice reform. The administration’s latest budget funds a series of bills meant to curb incarceration for drug-related and non-violent offenses, and to support people returning to their communities following their sentences.
TDC Priority Bills
Several of the Coalition’s priority bills have been assigned fiscal notes. A fiscal note is an estimate of the budgetary cost to the state to enact a law. If that estimated cost is not funded in the budget, it cannot pass. There are three ways that a bill is funded, if it has a fiscal note: first, the General Assembly can find an existing revenue stream to cover the cost of the legislation; second, the Governor can propose to fund it in his budget proposals; or third, the General Assembly can choose to fund it using their own amendment process.
A number of the Coalition’s priority bills that contain fiscal notes were not included in Governor Lee’s amended budget. A bill to require universal changing tables (HB0905/SB0602) in newly constructed or renovated buildings was assigned a significant fiscal note, reportedly upwards of $1 billion, that is not reflected in the budget. The bill has been referred to Summer Study in an effort to reduce the fiscal impact of the bill.
A bill to enact a statewide text-to-911 system (HB0173/SB0182) also had a small fiscal note that is not reflected in the budget. This is somewhat surprising, given the support the bill has retained throughout the committee process. We also expected to see a raise to Direct Support Provider (DSP) wages in the budget that is not currently in the revised budget. The bill (HB0130/SB0182), which originally called for $15 wages, is expected to be amended to $12.50 per hour, but will require a budget amendment to be enacted.
Next Steps
The next step in the budget process will be budget amendments. These occur when bill sponsors submit an amendment to the Governor’s proposed budget that includes funding for their bill. When a final budget is negotiated and passed, those bills that are funded in budgeted are addressed on the floor and voted upon.
The Coalition is disappointed several of our priority bills were not funded in the Governor's amended budget, but will look to the state legislature to fund these important initiatives. These include text-to-911 and DSP wage raises legislation. We hope that the sponsors of our priority legislation will propose budget amendments to include these bills in the final budget.
Overall, Governor Lee’s amended budget makes significant investments in K-12 mental health services, criminal justice reform and sales tax holidays. Given the state’s better-than-anticipated tax revenues, the influx of federal dollars, and large rainy-day, TennCare and TANF reserve funds, it is somewhat discouraging to see a lack of focus on supporting Tennesseans with disabilities. We urge the 2021 General Assembly to pass a budget that reflects the Coalition’s legislative priorities. Going forward, we believe that it is important for the Lee administration to take advantage of the state’s strong financial standing and invest in increasing access to health care, funding Home and Community Based Services (HCBS), eliminating gaps in health coverage and creating inclusive and welcoming communities for all.