Gov. Lee adds two-week food tax holiday, education funding to proposed budget


NASHVILLE, Tenn. (WATE) — A tax holiday on food and restaurants and infusions to K-12 and postsecondary education are among the additions to Gov. Bill Lee’s amended budget.

The governor announced the new proposed Fiscal Year 2021-2022 budget Tuesday. The amendment includes an additional $580 million in available funds after taxes exceeded expectations.

“This proposal supports Tennesseans by strategically investing in long-term initiatives that will move our state forward,” Lee said. “I’m especially proud to provide tax cuts to get money back to Tennesseans to encourage them to frequent industries that have been disproportionately and negatively impacted this year.”  

The budget amendment includes $100 million for a two-week sales tax holiday on all grocery sales, purchases at restaurants and all prepared food. 

Other investments in broadband, economic development, safety and law enforcement, increasing reserves, and education are also included.  

To view the full budget amendment, click here.

“Due to Tennessee’s strong financial leadership, Tennessee has been ranked number one in fiscal stability by US World News & Report in both 2019 and 2020,” Commissioner of Finance and Administration Butch Eley said. “Our prudent and cautious approach has established Tennessee as a leader in fiscal conservatism, and we thank the General Assembly for their partnership in these efforts.” 

Total reserves as of June 30, 2021, would stand at $1.95 billion according to the proposed budget, including $1.45 billion in rainy day funds and $500 million in TennCare reserves.

Notable investments in the FY 21-22 budget amendment include:   

East Tennessee

  • More than $100 million for capital improvements at East Tennessee State University
  • $15.6 million for capital projects across the entire University of Tennessee system
  • $13.5 million for the Sports Authority of the County of Knox and the City of Knoxville
  • $1.7 million for a science lab at the Roane State Community College Cumberland County campus
  • $400,000 for a mentorship program at the Tennessee School for the Deaf and West Tennessee School for the Deaf
  • $300,000 for agriculture education in Jonesborough
  • $300,000 for the Blount County Senior Center
  • $225,000 for the Boys & Girls Club of the Clinch Valley in Oak Ridge
  • $150,000 for Ross McNabb Center to provide veterans mental health services
  • $50,000 for nonprofit Isaiah 117 House that serves foster children and families

Tax Cuts 

  • $25 million for a two-week sales tax holiday for groceries 
  • $75 million for a two-week sales tax holiday for restaurants and all prepared food 
  • $16 million to reduce the professional privilege tax by 25%

K-12 Education and Mental Health 

  • $250 million trust fund to assist K-12 families who are facing significant mental health issues in the wake of COVID-19 
  • $18.5 million to transportation to students for summer learning  
  • $2 million to provide an additional four high quality, grade-aligned books and resources over the summer for the 88,000 rising first graders in Tennessee 

Higher Education 

  • $79 million to eliminate current TCAT waitlists statewide, currently at 11,400 students 
  • $25 million to Tennessee Promise to permit increases in the Hope Scholarship  
  • $4 million to increase Agriculture Extension Agents at University of Tennessee and Tennessee State University  

Rural & Agriculture  

  • $3 million to provide additional funding for rural projects as part of the Rural Economic Opportunity Fund (in addition to the $21 million in originally proposed budget for total of $24 million)   


  • $500,000 to provide gun safety programming for children  
  • $17 million to replace radios for state troopers   
  • $18 million to improve the statewide disaster communications system  
  • $680,000 to add 4 new Homeland Security Agents  

Economic Development 

  • $5 million to provide grants to restore and preserve historic downtowns across the state  
  • $3 million to increase employment in Tennessee through the Small Business Innovation program 


  • $3 million recurring and an additional $10 million nonrecurring to provide additional direct funding to airports across Tennessee through the Transportation Equity Fund (total $50 million investment in air infrastructure) 

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