The Tennessee House and Senate on Thursday approved a $42.6 billion annual spending plan, paving a way for a conclusion of the legislative session in the coming days.

Republicans in the supermajority and Republican Gov. Bill Lee celebrated the budget’s passage but Democrats in large part voted against it, straying from the trend in recent years of a budget passing with near-unanimous support.

Senate Finance Chair Bo Watson (R-Hixson) said he was “disappointed” by the Democrats’ opposition, saying they “made it a partisan issue.” But Democrats argued that this year’s process was especially marked by supermajority dominance.

“We all come up here every year expecting to say 'aye' on the budget,” House Minority Leader Karen Camper (D-Memphis) said. “This year our citizens were left out of the process.”

Budget items highlighted by the governor and legislative leaders include nearly $1 billion for capital maintenance and improvements, $100 million for the state’s rainy day fund (now sitting north of $1.5 billion), a week-long sales tax holiday for groceries and prepared food (down from the originally proposed two weeks and in contrast to a failed Democratic proposal to cut the grocery tax for six months) and the establishment of a $250 million mental health trust fund, which some members of both parties said was an inefficient use of such a large sum of money, expected to produce less than $10 million annually for spending on mental health services. The budget also includes a $250 million payment to “shore up” the state’s retirement fund.

A series of Democratic amendments were defeated on the House floor Thursday. One would have converted the one-time $250 million mental health trust fund into a recurring $250 million addition to the state’s general fund for public schools. Another would have stripped several million dollars’ worth of payments to out-of-state nonprofit organizations working on sex trafficking issues. Rep. Bo Mitchell (D-Nashville) questioned the need for granting money to out-of-state groups when Tennessee organizations conduct similar work.

One amendment that was accepted on the floor would about double the allocation for an under-consideration statewide chancery court, designed to take constitutional challenges to state laws out of the hands of the chancery court in Davidson County, where the state has faced some adverse decisions. Budget authors originally allocated a little more than $1 million for the new court, but the amendment bumped the allocation to $2 million after court leaders said it would cost more to set up a court. Senate Minority Leader Jeff Yarbro (D-Nashville) said the last-minute doubling of the cost estimate demonstrated that the proposal was “probably not an idea that’s ready for primetime.”

Democrats from Davidson and Shelby counties also questioned the budget's $100 million in grants to local governments, with minimum and maximum payouts based on population that could result in the largest counties receiving fractions of smaller counties' payouts on a per-resident basis.

The new spending plan, which goes into effect on July 1, follows a year in which the governor and lawmakers drastically cut spending in the early days and weeks of the COVID-19 pandemic, expecting a revenue shortfall that never fully materialized.

“I’m proud that this budget delivers on some of our top promises to Tennesseans and invests in external organizations meeting the needs of our local communities,” Lee said. “Thank you to the General Assembly for their steadfast commitment to our shared goals and establishing Tennessee as a fiscal leader across the nation.”

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