Tennessee senators on Thursday approved a revised $39.4-billion budget for the fiscal year that will start July 1 which eliminates previously-promised pay raises for teachers, most state workers and higher education employees.

The spending plan was reduced by a half billion dollars from the initial proposal approved in March.

In approving Gov. Bill Lee’s proposed new budget and making changes to the budget for the fiscal year that will end June 30, the Republican-led Senate also removed restrictions on how cities and counties can spend $200 million in previously-approved infrastructure grants.

The money can now be spent as local governments wish, whereas before, city and county officials had to report to the state how they planned to spend the money, which originally was intended for areas ranging from roads to Internet connectivity.

The budget has yet to be taken up by the House, which has recessed until next week. Senators quickly left the capital after passing the budget.

Senate Majority Leader Jack Johnson, R-Franklin, said the spending plan assumes a $500 billion “hole” in the current year budget and a $1 billion hole in the budget set to take effect July 1.

“Those are dire circumstances,” Johnson said, adding the “good news” is that Tennessee is taking actions to put “us in a really strong fiscal position” and thus is “better positioned to weather the storm than many other states.”

The appropriations bill goes along with Lee’s proposal to slash $283 million in recurring funding and another $63 million in non-recurring funds. Zeroing out planned pay raises for teachers and state workers will save an estimated $150 million. Lee is using $50 million in one-time money to offer state workers buyout packages, details of which have yet to be revealed.

Johnson noted that the state has an estimated $4 billion in various reserve funds.

Minority Leader Jeff Yarbro, D-Nashville, argued that with employees losing pay raises and various other cuts, it was only fair the state scratch its plan to end the remaining portion of the Hall Income Tax on stock and bond income.

“Everybody knows we have to balance the sacrifices here,” Yarbro said, “but the final year tax cut is a significant risk for the state.” He said lawmakers should be “fair in a way that is responsible to the budget and also helps Tennesseans.” It was tabled.

Sen. Raumesh Akbari, D-Memphis, unsuccessfully pushed an amendment to provide $150 million to help public schools.

Sen. Todd Gardenhire, R-Chattanooga, successfully moved to table it.

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