Finance commissioner outlines FY26 budget plan: $58.4 billion, $1 billion for roads and $930 million in proposed bonds

Tennessee Commissioner of Finance and Administration Jim Bryson presented the Lee administration’s FY26 budget overview to the House Finance, Ways and Means Committee, saying the plan relies on an estimated $58.4 billion in total revenues and a 2% tax-growth assumption.

Bryson said the administration expects “some growth in this year's… taxes of about 2% … which will account for about $540,000,000 of new recurring dollars.” Commissioner Jim Bryson, Commissioner of Finance and Administration, introduced the budget and the staff who will answer questions: David Thurman, director of the budget office, and Alex Schumann, assistant director.

The administration framed the FY26 proposal as a smoothing exercise that uses recurring revenue reserved in stronger years to pay nonrecurring needs now. Bryson told lawmakers the state used recurring dollars for one-time projects in recent high-growth years and reserved those nonrecurring outlays so the funds would be available again when growth slowed. “We are in the position we are in today because of the wise stewardship of our funds by the general assembly,” he told the committee.

Most important elements of the FY26 presentation

- Revenues and assumptions: The administration projects modest revenue growth and expects total FY26 revenues near $58.4 billion after a decline in federal COVID-related funding. The 2% tax-growth estimate is the funding board target used in the proposal.

- Use of recurring dollars as smoothing: Bryson described the practice of spending recurring revenue on nonrecurring items (capital and one-time investments) during boom years and then re-using those nonrecurring balances in later budgets. The presentation listed $411 million of recurring revenue planned for nonrecurring purposes in FY26 that would be available again in FY27.

- Education funding: The plan increases K–12 formula (TISA) funding and includes additional special-session appropriations. Bryson said statewide TISA and related K–12 measures together bring roughly $579 million in new state funding for FY26, combining formula growth, last year’s carry-forward adjustments and special session items.

- Higher education and capital: The budget proposes a $780 million increase for higher education overall, with about $649 million for higher-education capital projects and nearly $600 million more allocated across capital needs statewide.

- Public safety and workforce: The proposal adds an additional 100 state troopers (continuing a multiyear expansion) and increases Tennessee Bureau of Investigation staffing by 22 positions.

- Roads and infrastructure: TDOT’s backlog was described as large (Bryson cited an estimate of about $3.03 trillion in needs). The FY26 proposal includes a $1 billion one-time state investment in the state road fund and a policy to redirect tire-sales revenue to transportation, expected to generate about $80 million annually into the transportation fund.

- Bonding: The administration proposed roughly $930 million of new capital to be bonded; Bryson said that package would increase general‑fund debt service by about $87.5 million gross (net increase after expirations of roughly $61.7 million) and would raise debt service to about 1.75% of state tax revenues, well below the funding board’s 6% policy threshold.

- Rainy day/savings: The presentation proposed an additional $35 million deposit to the rainy day fund; Bryson noted the balance is above the statutory 8% goal and closer to about 10% of revenues.

Other program highlights and targeted investments

- Nuclear/fusion and workforce: The FY26 request includes $50 million earmarked toward TVA’s small modular reactor (Clinch River) effort, $10 million to bolster a nuclear‑education workforce pipeline at higher education institutions, and $10 million for related nuclear initiative grants.

- Water and conservation: The proposal includes $24.5 million for planning and protection around the ecologically important Duck River and $100 million proposed as seed money to support a water-distribution project to serve the Duck River watershed and relieve pressure on that basin over time; Bryson said the $100 million would be seed money intended to attract additional investment and would be used only if the larger pipeline project proceeds.

- Child and youth facility capital: The capital plan includes projects to replace or renovate facilities for children, including investments tied to Woodland Hills and Wilder youth facilities and a new emergency operations center for disaster response.

Committee questions and clarifications

Committee members pressed for detail about several points, including whether the state’s retirement systems funding levels had improved, the mechanics of higher-education bond financing, and whether the proposed bond amount represented a cautious re-entry into borrowing. Bryson and budget staff said the plan was deliberately moderate and structured to maintain the state’s AAA ratings while using leverage selectively to address long‑standing capital needs.

Bryson closed by noting the budget “makes investments in services that are core functions of government and better meet the needs of our citizens.” He invited further questions and review of the budget book and related materials.

Ending

Bryson’s presentation opened the committee’s FY26 hearings. Committee members followed with a series of detailed questions; staff said the administration will supply follow-up material on specific items such as teacher‑pay components and the specifics of capital projects upon request.