- Associated Press - Thursday, January 24, 2019

NASHVILLE, Tenn. (AP) - Tennessee Gov. Bill Lee announced Thursday that he will focus on K-12 education, criminal justice reform, mental health, health care and rural economic development as agency hearings begin on the new governor’s state budget.

The Republican told reporters that spending may increase on the targeted areas but that’s not guaranteed.

“We will make cuts, but we’ll also make increases,” Lee said during his first budget briefing. “We’ll look at where there is an opportunity to reduce spending and then we will obviously increase spending for those things that are priorities with an overall effort to manage the budget in a way that is conservative.”

Lee is asking all 50 state agencies - including the education department - to map out a theoretical 2 percent budget cut but hasn’t decided whether he’ll request that. Budget hearings, where commissioners will present their proposals and priorities to the governor and his staff, will begin Friday.

Lee’s spokeswoman, Laine Arnold, later clarified the governor is not looking to reduce overall K-12 spending but is considering reprioritizing spending inside the education agency.

Tennessee officials are projecting general state revenue growth to range from 2.7 percent to 3.2 percent in the budget year starting in July.

Lee also said he wants to stow away more money in state reserves, adding that remaining conservative in prosperous times is important because it helps prepare for possible future downturns.

“That won’t be one swift move; obviously, that’s driven by the economy,” Lee said.

Tennessee’s rainy day funds currently hover around $861 million.

“If that number had never been depleted previously (during the Great Recession), we would be at $1.1 billion,” the governor said.

The state’s emergency cash reserves reached a high of $750 million in 2008, but were drawn down to as little as $284 million in 2011 as the state sought to fill budget gaps during the Great Recession.

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