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The Associated Press May 16, 2011, 3:35PM ET

Gov: Budget to fund more key services in Tenn.

Increased state revenues will provide millions in extra funding for flood and storm relief, mental health care, and other key projects and services in Tennessee, Gov. Bill Haslam said Monday.

The Republican said he's filed an amendment that adjusts next year's budget proposal to reflect the new estimates.

Items to be funded include $71 million for disaster relief resulting from recent storms and flooding, $8.5 million to restore previously scheduled rate reductions to TennCare mental health providers, and a $6.9 million grant for three programs at Meharry Medical College.

"I am pleased that because of increased revenue collections my administration is able to make strategic investments in valuable programs to assist some of Tennessee's most vulnerable citizens," Haslam said in the news release. "This budget amendment improves our original proposal not only with funds for key projects and services, but we also continue to reduce spending and preserve our savings."

The amendment assumes a reimbursement of approximately $82 million in Medicaid funding errors that the federal government says is owed to the state. Several health care-related investments are contingent on receiving that money, which would include $15.7 million for nursing home funding and $7.9 million for TennCare services, such as labs and dental care.

Tony Garr, policy director for the Tennessee Health Care Campaign, said he'd like to see those services funded now with TennCare reserve funds rather than waiting on the reimbursement.

"There's no need to wait when TennCare has a reserve of $260 million," said Garr, adding that the reserve can be replenished when the reimbursement money comes.

Nevertheless, House Majority Leader Gerald McCormick said he's pleased to see the administration's support for TennCare and Meharry, which has been ranked among the best at producing primary care physicians that serve needy areas.

"We were able to get a lot of that money back, and I think that everyone is pleased that we were able to," the Chattanooga Republican said.

Other items in the governor's budget include $21 million for state building maintenance, $20 million to allow lottery scholarships to be used during summer school and $16.5 million for an undisclosed economic development plan.

Last week, state Finance Commissioner Mark Emkes said April marked the 13th straight month of growth in sales tax collections, which account for two out of every three tax dollars collected by the state.

Lawmakers are expected to take up the budget this week.

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