Tennessee House Bill HB0057

Tennessee 2025-2026 Regular Session

• Introduced: 1/2/25
• Refer: 1/16/25
• Refer: 2/12/25
• Refer: 2/19/25
• Chaptered: 3/21/25
• Passed: 3/21/25

Caption

AN ACT to amend Tennessee Code Annotated, Title 6, Chapter 56, Part 1, relative to audits of municipalities.

Summary

HB0057 amends Tennessee law governing municipal audits. It requires all municipal audits to be completed and submitted to the Comptroller of the Treasury within six months after the end of the municipality’s fiscal year. The bill also requires the audit preparer to provide copies to the mayor, chief executive officer, each member of the governing body, the comptroller, and the press, increasing the public availability of audit information. The bill adds a penalty for municipalities with two or more outstanding late annual audits. In that case, state-distributed sales tax revenue may be reduced by an amount agreed to by the comptroller and the commissioner of revenue, up to 15% of the municipality’s annual sales tax distribution, until the municipality comes back into compliance. The withheld amounts are held in reserve and later returned once the municipality complies, and the comptroller is authorized to waive a penalty under established policies and procedures.

Impact

This bill directly amends Tennessee Code Annotated, Section 6-56-105(e), tightening audit deadlines and creating a new enforcement mechanism for municipalities that repeatedly fail to file audits on time. It affects municipal governments, local officials, audit preparers, the Comptroller of the Treasury, and the Department of Revenue by linking audit compliance to state sales tax distributions and by expanding audit disclosure to the press and governing bodies.

Sentiment

The available voting history shows strong support and no recorded opposition in committee, with unanimous or near-unanimous favorable recommendations in the House subcommittee and House State & Local Government Committee. The bill appears to have been treated as a straightforward government accountability measure, and there is no committee transcript indicating significant debate or controversy.

Contention

No specific committee objections are available in the record provided. The main policy issue inherent in the bill is the use of state sales tax revenue reductions to pressure municipalities with chronic audit delays, which could be seen as necessary enforcement by supporters and as a financial penalty on local governments by critics. Any contention would likely center on the fairness of withholding local revenue, the discretion given to the comptroller and revenue commissioner, and the potential impact on municipalities already facing administrative or fiscal difficulties.