TCHOA Legislative Updates: March 31, 2025

Several Senate and House committees, including transportation, officials closed last week, and the Administration offered its amended budget proposal. These are the traditional signs that the end of year’s session will likely close sometime in the next few weeks. Behind the scenes, legislative leaders are talking about leaving Capitol Hill before April 17.

With that said, bills being closely watched by TCHOA are coming to a resolution, while others impacting counties in a broader way are filling calendars this week. The association will be meeting May 20-22 in Sevier County and a part of the scheduled program will be a discussion of legislation and potential initiatives for the next session beginning January 2026.

• Speed limits on county roads: Legislation that allows county legislative bodies to delegate their authority for setting speed limits on county roadways is heading to the governor for his signature.
  • SB954/HB975 (Powers, Burkhart) passed the full House this week, having already been approved by the Senate a week earlier. This bill only applies to counties where an engineer capable of completing necessary traffic and engineering studies used to determine those speeds is on staff at the highway department.
• Mineral severance tax: A proposal to raise the cap on mineral severance taxes by $0.15 over a ten-year period is set for April 1 in Senate Finance, Ways & Means. The bill passed the full House on March 17 and is the result of negotiations between TCHOA, road builders and the aggregate industry.
  • SB889/HB695 (Reeves, Baum) effectively doubles the current cap and mandates all proceeds go to the county highway department. Action by the county legislative body will be necessary to take advantage of the increased caps, which phase in beginning this July 1, 2025. Counties with separate private acts dictating mineral severance collections, rather than following general law, will need to update/replace their private act, if they want to use the new cap schedule.
• Local option surcharge: An effort to expand local authority to raise and designate certain taxes for county highway transportation and infrastructure projects has been taken off notice this week in Senate Transportation, despite a continued push by the House sponsor to pass the bill this session. SB1307/HB127 (Johnson, Lamberth) proposes to amend a portion of the IMPROVE Act that let urban and suburban counties hold referenda to raise revenues for mass transit. This bill removes restrictions on which jurisdictions could use his authority, and it allows for the use of those transportation surcharges funds to go to transportation projects generally, rather than just mass transit as stated in current law.
  • To date, only Nashville/Davidson County has passed such a referendum, with voters approving it in 2024. House Finance Subcommittee recommended the bill for passage and sent it to the full finance committee, where it is unscheduled at this time.
• Comprehensive transportation study: The Tennessee Advisory Commission on Intergovernmental Relations (TACIR) is being charged with conducting a comprehensive study on transportation needs and funding, as outlined in SB703/HB736 (Massey, Vital).
  • Passed on March 17 by the full Senate, the bill is scheduled for a hearing April 2 in House Finance Subcommittee. Included in the final report, due by September 30, 2026, would be recommendations for establishing sustainable funding sources that meet the state’s long-term transportation need. TCHOA supports this initiative.
• Real estate transfer tax: Efforts to return a portion of the real estate transfer tax to counties will come down to last-minute budget decisions by legislators, who received the governor’s amended proposal this week. While SB1080/HB649 (Johnson, Marsh) is set for April 1 in Senate State & Local Government, but conversations are ongoing behind the scenes as county associations and lawmakers work to find a way to fund the proposal.
  • Nearly 25 House members and six Senators have signed onto the legislation in hopes to shore up support and build momentum for its passage. This proposal is not in the governor’s budget, so much of the discussion centers on how to identify $125-150 million in recurring state revenue not already in Lee’s spending plan. The fate of this bill will be decided as the Senate and House determine their budget priorities. If you have not already, now is a crucial time to discuss this proposal with your legislators and ask them to signal their support by co-signing the bill.