Yesterday, Gov. Bill Lee delivered his seventh State of the State address and presented a $59.5 billion budget and legislative priorities for the upcoming year to a joint session of the General Assembly.

Complete details can be found here. A Fiscal Year 2025-26 budget overview can be found here. NFIB will be monitoring the details of many of these proposals in the weeks ahead. Notable highlights include:

Economic Opportunity & Tax Relief

• $35.6 million investment in Tennessee’s Rainy Day Fund, bringing Tennessee reserves to nearly $2.2 billion, the largest in state history
• $7 million to expand the Tennessee Youth Employment Program to operate year-round, double its participation, and reach even more underserved communities
• $45.8 million for the Rural Development Grant Fund to enhance Tennessee’s rural and distressed communities through site development, community asset improvements, strategic planning, and downtown revitalization
• $25 million for FastTrack grants to recruit new businesses to Tennessee and support workforce development
• $6.3 million to create a statewide Micro-Credentialing Program to develop short-term, targeted certifications that equip Tennesseans with high-demand skills identified by industry and state partners
• $25 million to expand the RevV program to connect private companies with Tennessee’s research institutions to drive research and development and job creation
• $5 million to create TN Accelerates, a partnership between Tennessee Economic and Community Development and the Department of Labor and Workforce to create customized workforce training programs tailored to the specific needs of incoming and existing businesses
• $10 million for the Small Business Innovation Research and Small Business Technology Transfer Matching Funds to match federal funds assisting Tennessee startups in securing competitive research and development grants

Housing & Infrastructure

• $1 billion to the Tennessee Department of Transportation to address the state’s infrastructure needs, including expediting existing road projects and funding new projects across rural and urban Tennessee
• $60 million to create the Starter Home Revolving Loan Fund to support the construction of new, affordable starter homes for hardworking Tennesseans, prioritizing rural communities
• $30 million to fund the Rural and Workforce Housing Tax Credit, making it easier to build homes and businesses

Conservation & Agriculture

• $100 million to execute a comprehensive regional water resource plan to ensure long-term water needs are met while protecting the ecological health of the Duck River
• $25 million to create a Farmland Conservation Fund
• $40 million for environmental cleanup, including the creation of a comprehensive water resource management plan in the Duck River region, state water revolving fund projects, and electric grid enhancement
• $20 million in additional funding for the Agricultural Enterprise Fund and Agricultural Enhancement Fund, both of which are utilized to aid Tennesseans in creating and expanding agricultural, food, and forestry businesses and making long-term strategic investments in rural communities