The Tennessee government approved increasing issuance of state bonds to $1.01 billion next fiscal year from the $88 million approved for the current fiscal year.
The $1.01 billion figure is in the state's fiscal 2025-2026 budget.
The bonding authorization is broken down into $925.6 million for the capital outlay program and
The capital outlay
The budget specifies a total of $1.369 billion for capital outlays in the coming fiscal year. Along with the bond funds, the budget allocates $114 million of appropriations, $314.7 million in current services and other revenue and $11 million in federal funding.
The budget has $3.964 billion allocated for the Department of Transportation. Of this $2.405 billion is state funds, $1.497 billion is federal funds and $60.6 million is other funds. Of the state spending, the sources in addition to the $80 million in bonds include $1.125 billion in general fund transfers, $1.059 in highway user taxes, $80 million from the sales tax on tires, $46.4 million in miscellaneous revenue, and $18.3 million from the sales tax revenue in the transportation equity fund.
Currently and excluding the planned bonds, the state government's bond principal and interest payments are scheduled to go from $219 million this fiscal year to $147.1 million in fiscal 2029-2030 to $26.1 million in fiscal 2042-2043.
Tennessee is rated triple-A by Moody's Ratings, S&P Global Ratings and Fitch Ratings.
Republican Gov. Bill Lee, in his recommended budget, said the state has over the years maintained a "relatively low debt burden" using conservative practices including "funding a portion of the state's capital program with surplus cash, cancelling bond authorizations in lieu of issuing debt, creating, and maintaining a rainy-day fund to offset unanticipated revenue shortfalls, and adopting state statutes designed to control the issuance of excessive debt."
The approved budget was for $59.5 billion, which compares to $60.6 billion in fiscal 2024-2025. The decline in spending is due to an expected $4.3 billion reduction in federal aid.
"We passed strategic legislative and budget measures to improve infrastructure, invest in education, strengthen our workforce, and solidify Tennessee's position as a leader in next-generation nuclear energy," Lee said.
