TCHOA Legislative Updates: March 11, 2025

As this year’s legislative session barrels on, there continue to be several bills impacting county highway departments in some way. Here are a few to watch out for:

• Mineral Severance Cap Increase: The House Finance Committee is expected to take up HB695/SB889 by Representative Baum and Senator Reeves. The bill raises the cap on mineral severance tax by $0.15 over a ten-year period. It was recommended for approval last week by House Finance Subcommittee and Senate State & Local Government.
  
  The current cap is $0.15, so the bill effectively doubles the maximum tax rate. It would take a vote of the county commission to increase their current mineral severance tax to the new cap limits. This bill is a negotiated proposal supported by TCHOA, roadbuilders, and members of the aggregate industry. 
  
• TDOT Funding & Study: HB969/SB144 by Representative Hawk and Senator Walley has begun moving through the General Assembly, recommended for passage by both House and Senate Transportation, as well as Senate Finance. As amended, the bill would shift state general fund dollars into TDOT, a proposal included in the Governor’s budget. As originally filed, the bill would have diverted the sales tax on new and used vehicles as well as the sales tax on tires from the state general fund to the highway fund, a transfer that amounts to more than $1 bill. As amended the bill changes the tire sales tax only and would equate to around $95 million for the department.
  • A study on the future funding of Tennessee transportation was also a part of the bill, but that part was pared out. A separate proposal, SB703/HB736 by Representative Vital and Senator Massey is asking the Tennessee Advisory Commission on Intergovernmental Relations (TACIR) to take on a comprehensive study, which should include state and local funding, as well as statewide infrastructure needs. That legislation is scheduled for House Transportation Subcommittee later today and Senate Transportation tomorrow, March 12.
    
• Local Transportation Surcharge: House Transportation Subcommittee will consider a proposal from the Administration to expand the ability of local governments to levy a surcharge to fund transportation infrastructure. HB127/SB1307 by Representative Lamberth and Senator Johnson would allow local referendums on surcharge revenue for highway and bridge projects, not just mass transit as current statute requires. The bill is assigned to Senate Transportation.
  
• Speed Limits on County Roads: County legislative bodies would be able to delegate its authority to lower speed limits on county roads to the highway chief administrative officer, if the department employes an engineer capable of completing required traffic and engineering studies. HB975/SB954 by Representative Burkhart and Senator Powers is scheduled for a hearing in both House Transportation today and Senate Transportation tomorrow.
  
• Real Estate Transfer Tax: Work continues behind the scenes to build support for TCSA’s major initiative this year, which, if passed, could return half of the real estate transfer tax to the county where the tax was collected. The bill is not yet on notice in either chamber as discussions continue on how the measure could be funded. There is a great deal of support for the proposal, which would create a new shared revenue stream that counties could use for infrastructure investments and other non-recurring expenses. The challenge is finding a way to fund the bill, as it is not covered in the Governor’s proposed budget.
  • Based on an average of the last four years’ collections, the change proposed by this legislation would return $150 million to county governments, but that means it creates a corresponding decrease in state funding. The bill (HB649/HB1080 by Speaker Pro Tem Pat Marsh and Senate Majority Leader Jack Johnson) continues to collect additional co-sponsors in both chambers. County officials are urged to talk to their representatives and senators and ask them to sign the bill.