Tennessee lawmakers pass state budget with $1B for two key bills yet to win approval

House and Senate lawmakers approved a $52.8 billion spending plan for the state of Tennessee that includes nearly $1 billion in funding for two key initiatives that have not yet secured final legislative approval — a massive franchise tax cut and a statewide school voucher program.

During a year of budget constraints due to flattening revenues, House and Senate Republicans included in the state budget $144 million in funding for a statewide school voucher program that faces a steep path to passage this year, and $1.9 billion for a restructure of the state's franchise tax — including three years of retroactive refunds for businesses.

Both are top legislative priorities for Gov. Bill Lee but neither have received final legislative approval. Altogether, the budget appropriates about $944 million that may not be spent this year ― though negotiations continue to unfold over both pieces of legislation.

House and Senate leaders said any appropriated funds not spent this year will revert to next year's budget, or could be used to close out the year in case of unexpectedly low revenues.

“We are facing some economic headwinds, and this budget recognizes a slowdown in economic growth, and utilizes recurring funding set aside in previous years to fund the rise in general cost of government,” Senate Majority Leader Jack Johnson, R-Franklin, said. “This budget remains faithful to top administration and legislative priorities such as education, mental health services, children's services and public safety. This budget again for several years in a row now does not take on any new debt.”

Meanwhile, tempers flared the House during the budget vote, with Rep. Justin Jones, D-Nashville, asking to submit a formal explanation regarding his no vote on the bill.

Though some Democrats voted with Republicans to pass the budget, others in the minority caucus were broadly critical of a spending plan they argued would do little to help working families while funneling more money to private corporations.

Jones said House Speaker Cameron Sexton, R-Crossville, failed to call on him during debate, a frequent point of contention between the two, and Jones wanted it formally recorded. The situation grew chaotic between Jones and Majority Leader William Lamberth, R-Portland, leading Minority Leader Karen Camper, D-Memphis, to step between the two lawmakers.

Jones audibly accused Lamberth of being a "racist," while Lamberth later told media things grew heated after Jones insulted a staff member, which Lamberth said he objected to. Jones denied insulting staff, saying all of his comments were directed at Lamberth and Sexton.

The situation on the floor sparked loud chants from the ticketed public gallery, leading Sexton to signal to waiting troopers to kick protestors out.

Troopers physically removed one woman, Allison Polidor, from the gallery and later escorted her out of the Capitol. The Tennessean has requested further information from Tennessee Highway Patrol regarding potential charges.

Jones and Rep. Justin Pearson, D-Memphis, argued with troopers over Polidor's detention as troopers threatened other protestors with arrest for being in what they said was a "non-public" hallway, an open area in the Capitol, though troopers appeared to later deescalate without additional arrests.

Franchise tax and voucher funding

While House and Senate leaders agree on the franchise tax restructure (estimated to cost $400 million each year moving forward), they remain at an impasse on how much money the state should refund to businesses.

House leadership wants to approve only one year of refunds and include a level of transparency about who gets the money. The House refund plan is estimated to cost the state $700 million. The Senate version does not include the added transparency and would go back three years for refunds at a cost of $1.5 billion.

Citing private tax information, the Lee administration has not disclosed the 80 corporations that demanded a franchise tax refund, which they say sparked the governor's proposal ― his largest budget item this year. It remains unclear how much state funds the governor's family business, the Lee Company, will receive if the refunds move forward.

"We're a middle class family ― that's how we budget," said House Finance Committee Chair Patsy Hazlewood, R-Signal Mountain. "We don't drive a Cadillac, but we get to where we're going in the Chevy."

House Democratic Caucus Chair John Ray Clemmons, D-Nashville, said the chamber's timing to vote on allocating funding for the franchise tax refunds before even appointing a conference committee to hammer out details of the deal is unprecedented. The House later Thursday appointed members to the joint panel.

“We may be trying to budget like a middle class family … We may be driving Fords," Clemmons said. "But we are buying a secret list of CEOs Ferraris."

Rep. Antonio Parkinson, D-Memphis, raised questions about how unallocated funds in the budget set aside for school vouchers could be used in the future, clarifying that an executive order by the governor cannot allocate unspent funds, but that they could be spent during a special legislative session.

Sen. Jeff Yarbro, D-Nashville, also raised questions about funding for the voucher legislation.

“As much as I appreciate that there are sometimes things that are passed in the budget before we work out the details, this is a multi-million dollar project where it’s unclear where the legislature is,” he said.

Republicans vote down reallocating funds

House Republicans voted down an amendment from Rep. Aftyn Behn, D-Nashville, that sought to offer consumers a six-month grocery tax holiday by reallocating funding set aside for franchise tax rebates.

Senate Republicans also voted down a proposal by Sen. Charlane Oliver, D-Nashville, reallocate about $352 million originally put toward franchise tax refunds to offer Tennessee consumers a tax break on food. They also voted down a proposal by Sen. Heidi Campbell, D-Nashville, to reallocate the $144 million for the still non-existent school voucher program toward expanding voluntary pre-kindergarten.

"The price of eggs, the price of milk, the price of bread should matter more than 80-something companies that are going to get a billion dollars," Oliver said. "With this franchise tax handout, we are bending over backwards for corporation ― we don't even know who they are because we want to keep that a secret ― and at least half this room has declared a Rule 13 and are going to benefit personally."

Senate Finance Chair Bo Watson, R-Hixson, said the chamber is obligated to fund legislation that it has already passed, and the Senate has already approved the franchise tax legislation. A conference committee on the bill is expected to meet to hash out details of the deal early next week, according to Senate leaders.

Lee-backed initiatives unfunded

Several spending proposals offered by the Lee administration suffered defeat, as members of his own party reallocated $3 million he had proposed for a Maternal Health Pilot program at the Department of Health toward grants for crisis pregnancy centers. Senate Minority Leader Raumesh Akbari, D-Memphis, offered an amendment to reinstate funding for the Maternal Health pilot program.

"We are leading the nation in mothers dying in child birth, in babies being born at low weights. We cannot say that we are pro-life as a state when we don't support these types of programs ... that give babies and mothers a fair chance when they're pregnant," Akbari said. "These types of services are the ones that make a difference between a mother dying in childbirth or not — between a baby being born healthy or not."

Republicans unanimously tabled Akbari's amendment. In the House, Hazlewood said the reallocation was an effort to fund "entities with a proven track record" whom lawmakers "think do a better job."

Despite funding other currently unapproved bills, lawmakers opted not to fund Lee's proposed $25 million Farmland Preservation Fund ― a bill that would have established the fund stalled in committee.

The House approved the budget in a 78-18 vote. The Senate passed the spending plan 26-4.

Budget highlights

Here are a few funding highlights from the state budget adopted on Thursday:

• $10 million for a Nuclear Development grant

• $15 million for charter school facilities

• $261 million increase for the Tennessee Investment in Student Achievement funding formula, including $125 million for teacher salary increases and retirement contributions

• $3 million for crisis pregnancy care centers, diverted from initial funding of a Department of Health Maternal Health Services Pilot program

• $80 million for rural healthcare initiatives

• $17 million to add 60 new Tennessee Highway Patrol troopers, supervisors, and support staff

• $59 million for capital projects at Tennessee State Parks

• $17 million for Tourist Development for raceway grants

• $6.4 million to the Department of Military for border deployments

• $40 million for ECD for Infrastructure improvements at I-24 industrial site

• $1 million for Davy Crockett Statue on State Capitol grounds

• $10 million to replace the roof of the State Capitol

• $50 million for Rural Health Resiliency grants

• $15.8 million for rural health pathways workforce development program

• $7.2 million in state funding for food banks to support purchases from local farmers, after the state failed to apply for $7.2 million in federal funding to do the same

• $20 million for Blueways Trail developments to build waterway access points across the state, including $5 million designated specifically for a city-owned marina in Savannah, TN

• $10 million to purchase Capitol Towers building adjacent to the Cordell Hull State Legislative Office Building

• $100 million deposit to the state’s Rainy Day Fund, bringing it to well over $2 billion

This article originally appeared on Nashville Tennessean: Tennessee lawmakers approve $52.8B state budget as protests continue