Gov. Bill Lee pledges renewed help for everyday expenses in State of the State address
By: Melissa Brown
In his seventh State of the State address on Monday, Gov. Bill Lee pledged to assist Tennesseans with increasingly unaffordable everyday expenses like child care and housing, though his proposed budget includes no direct tax breaks for consumers.
Lee highlighted 2025 as a year of innovation, saying it’s time to “think bigger and to think boldly about what’s possible.”
“If Tennessee has led the nation as a beacon of opportunity, security and freedom, why can’t we be the nation’s capital of innovation too?” Lee said in his annual address before a joint session of the Tennessee General Assembly. “Somebody is going to determine what the future looks like. That should be Tennessee.”
Still, his budget proposal released Monday maintains much of the status quo in Tennessee. Lee’s budget totals $58.4 billion, a smaller budget than last year amid projections of flattening state revenue and waning federal funding.
Lee has proposed no new tax breaks for everyday Tennesseans after pushing through a massive corporate tax refund in 2024. The governor’s budget does not include funding to repeal the state’s grocery tax, which has been proposed in two bills on both sides of the political aisle, or even offer a temporary holiday from the tax.
In his speech from the Tennessee House chamber, Lee noted a “dramatically” different housing market than when he bought his first home, citing skyrocketing home costs in the last four years and increasing mortgage rates.
“Meanwhile, starter home demand is completely outpacing supply. Today, Tennessee is ranked 5th worst in the nation for the loss of starter homes,” Lee said. “Our state needs a housing plan that makes this key part of the American Dream possible.”
Lee proposed a $60 million Starter Home Revolving Loan Fund, which will provide 0% interest construction loans, in addition to funding a housing tax credit passed in 2024 intended for rural and workforce housing development.
Elsewhere, Lee promised to add “tens of thousands” of new day care spots across Tennessee on the heels of a new report that found the average cost at infant child care centers has outpaced the price of in-state college tuition.
“That is an insurmountable cost for the vast majority of moms and dads who want to be in the workforce,” Lee said. “But hear me clearly – we don’t need to start a new government program to solve the child care problem. We need to empower tried and true community partners who know what they’re doing and are already making a difference.”
It’s not yet clear how exactly the Lee administration could accomplish such a dramatic expansion of day care availability in the state, but Lee pledged to invest $11 million in the Boys and Girls Club to serve 7,500 low-income kids across Tennessee. The organization does not serve children under 5.
Lee also said Tennessee will expand the WAGES program, which supplements child care worker salaries based on certain educational requirements, and cover more middle and low-income working families in an existing state subsidized childcare program.
Democrats walk out
Lee began his speech on Monday by highlighting an immigration enforcement bill and his signature private school voucher proposal passed in last month’s special session. The comments prompted a dozen Democrats to rise from their seats and walk out of the House chamber, an unusual action to take during Lee’s address.
The cadre of progressive Democrats huddled outside the chamber with a few dozen protestors who had booed Lee as he began to speak Monday night. Rep. Bo Mitchell, D-Nashville, said he couldn’t “respect” a governor who turns down federal funding to feed impoverished children, as Lee did last year by dropping a federal program to help families cover grocery bills.
“I refuse to sit in a room and listen to a man who refused a summer food program for children in this state just to make a political statement,” Mitchell said.
Democratic leadership remained in the chamber for the speech, which Sen. Charlane Oliver, D-Nashville, pointed out in an empassioned speech.
“Leadership is standing for people when they are being harmed,” Oliver said. “There is real harm through these laws that we are making. There is real harm. People are committing suicide, people are overdosing, people can’t pay their bills because we won’t raise the minimum wage. God help us. It is wrong.”
More:Why Tennessee is rejecting millions that help families pay for summer groceries
After Lee’s speech, Democratic leaders sharply criticized his policy agenda as not doing enough for Tennessee families.
“This last year, they gave $1.6 billion to property-rich corporations, most of which are out of state. Just recently, they passed the voucher scam that will deplete badly needed funds from our public schools and run up our state deficit,” said House Democratic Chair John Ray Clemmons, D-Nashville. “Those misplaced budgetary priorities are precisely why we cant afford things that Tennesseans need. This governor is bragging about $1 billion for transportation projects. Our state is $40 billion in the hole on road and bridge needs across the state of Tennessee.”
Lee proposes road funding, education increases
The budget includes $80 million in recurring funds and a one-time $1 billion injection for roads improvement, which comes after transportation officials gave Lee a “sobering” financial outlook at a fall budget hearing. Transportation officials, already facing a significant backlog of improvement projects, said state transportation funding revenue was projected to decrease by about $42 million over the next few years.
Lee’s proposal, which will require legislation to accomplish, would divert tax revenue from tire sales to fund the recurring funds.
Lee’s budget calls for a $244-million increase for the state’s K-12 funding structure that includes schedule pay raises for teachers.
The governor on Monday also took a victory lap on school vouchers, which he successfully advanced through a special session last month after failing to pass the proposal in 2024.
“We innovated our approach to education with new, creative investments in public school facilities, andwe have finally brought universal school choice to Tennessee families,’ Lee said. “These pressing issues could not wait, and yet, we still have a lot of work to do in the legislative session before us.”
Lee proposed a new scholarship aimed at covering outstanding costs for things like textbooks, tools and other equipment for students at Tennessee Colleges of Applied Technologies.
“Our current system covers the cost of TCAT tuition for most students, but some are still left out,” Lee said.
Agriculture, conservation high priorities for governor
The governor on Monday also touched on agriculture and conservation. Lee plans to take another swing at his proposal to establish a $25 million state Farmland Conservation Fund, plus another $20 million for two additional funds to assist farmers.
“It’s time that we support family farms like Noble Springs Farm in rural Tennessee, owned by first-generation dairy farmers Dustin and Justyne Noble,” Lee said. “Together, they source food for their local community to make a living and help drive our economy, all while teaching their children the value of agribusiness. Our strategy will ensure farms just like theirs can be preserved well into the future.”
Lee also aims to direct more than $120 million to the Duck River region. The biodiverse, endangered river as been at the heart of a tug-of-war between conservationists and utilities that draw water from the river. Lee last year signed an executive order aimed at protecting the natural resource.
The state will fund $100 million in “seed money” to kickstart a pipeline plan aimed to bring water into the region and take pressure off the Duck River, Finance and Administration Commissioner Jim Bryson said Monday.
Lee also plans to launch an environmental education institute, a “base camp for environmental learning perfectly situated along the main route to the Great Smoky Mountains National Park. The institute will be named in honor of former Tennessee governer and U.S. Sen. Lamar Alexander, who joined Lee in the House chamber on Monday.
“From the Delta to Appalachia, Tennessee is blessed with natural abundance that we have to protect and preserve for future generations,” Lee said. “Yet, we also continue to be one of the fastest-growing states in the nation – in rural and urban areas alike. So, how do we balance record growth with a plan to protect our natural resources? You start by rejecting conventional wisdom that says you cannot do both. To grow Tennessee, we have to conserve Tennessee.”
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