In the midst of the coronavirus pandemic and its associated economic crisis, the Tennessee General Assembly passed a revised spending plan early Friday that implements deep cuts to save more than $1 billion.

“We believe that we are delivering to you a (budget) that is fiscally responsible and addresses the needs of Tennessee as our capacity allows us to address those needs today,” Senate Finance Chair Bo Watson said. “We anticipate that this is setting us up for much better budgets in the future.”

The $39.4 billion budget slashes promised salary raises and bonuses for teachers, as well as postpartum care for women enrolled in TennCare.

The agreement came after the House and the Senate spent hours in a stalemate over multiple sticking points. Among them: how much to budget for the state’s new school voucher program, which is caught up in a legal fight. An initial proposal for $25 million was cut to just $250,000.

Additionally, the new spending proposal that is headed to Gov. Bill Lee’s desk includes a $25 million sales tax holiday. That’s a quarter of what was first proposed by the House.

The tax-free holiday will take place the last weekend of July and the first weekend of August.

Rep. Patsy Hazlewood, R-Signal Mountain, championed the proposal. She said it will help put money back in “taxpayers’ pockets.”

“It’s the people who gave to us who are hurting now,” Hazlewood said. “There are a lot of Tennessee families that are economically distressed.”

One of the issues that state Democrats took offense to was the deposit of $575 million into the state’s rainy day fund. This will grow the fund to $1.5 billion by summer of 2021.

Rep. Mike Stewart, D-Nashville, said the state should be using those funds to help with the economy.

“If the COVID-19 recession … doesn’t justify draining the rainy day fund, what does?” Stewart said. “I doin’t think we should be storing those funds.”

With the passage of the budget, the Tennessee General Assembly adjourned until next year.