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Finance officials say Tennessee used one‑time revenue for major capital work and are planning cautiously for FY27
Summary
State budget staff told the committee they used substantial recurring revenue on nonrecurring capital projects during the revenue boom—and that FY27 planning assumes slower but positive growth. David Thurman highlighted recurring-to-nonrecurring moves that created a cushion but require cautious FY27 assumptions.
David Thurman, director of the state budget office, walked the committee through how Tennessee handled unusually large revenue growth tied to pandemic spending shifts and online sales taxes. He said the state used a portion of recurring revenue for one‑time investments—$234 million in the early phase, then larger amounts in following years, including $2.6 billion of recurring dollars layered into nonrecurring projects—that enabled major transports and capital spending without issuing debt.
"When we first started recognizing the accelerated growth in our revenues...we spent $234,000,000 of recurring dollars on nonrecurring things," Thurman told members. He emphasized the objective of preserving structural balance, noting the rainy day fund sits at just over 9% of revenues and that Tennessee has maintained high bond ratings. Thurman said early FY27 planning assumes slower revenue growth and that 1% of revenue equals roughly $180 million—useful for framing budget choices.
Why it matters: Large nonrecurring investments created service and capital upgrades but reduce recurring revenue available for ongoing programs; the FY27 budget must weigh base needs, contract inflators, and entitlement matches against slowed revenue growth.
Committee follow-up: Members requested the budget office's detailed fiscal scenarios once the funding board sets revenue ranges in November.
