Gov. Bill Haslam's $32.8 billion spending plan has passed the Senate.
The proposal carried by Republican Majority Leader Mark Norris of Collierville was unanimously approved 32-0 on Wednesday. The House was to take up the measure later in the day.
The budget includes $77.4 million for a 1.5 percent pay raise for state employees, $22.2 million to reduce the sales tax on food by 0.25 percent, and $18.7 million to continue the elimination of the state's inheritance tax.
The measure also has $100 million to shore up the state's rainy day fund, which is currently $356 million.
Democrats say the budget contains $2.3 million in unaccounted revenue and tried unsuccessfully to restore funding for programs that would benefit the elderly.