Tennessee House Bill HB0127

Tennessee 2025-2026 Regular Session

• Introduced: 1/13/25
• Refer: 1/16/25
• Refer: 3/11/25
• Refer: 3/18/25
• Refer: 3/26/25

Caption

AN ACT to amend Tennessee Code Annotated, Section 67-3-901 and Title 67, Chapter 4, Part 32, relative to local tax surcharges.

Summary

HB0127 revises Tennessee law governing local tax surcharges used for transportation-related projects. The bill changes terminology in Title 67 from “transit improvement” to “transportation improvement” and broadens the definition of a transportation improvement program to include not only public transit, but also highway and bridge projects. It also expands the definition of the local entities that may act as implementing agencies and clarifies that a surcharge under this part is a tax, or combination of taxes, levied by a local government for transportation purposes. The bill further amends the state’s tax and revenue provisions so that local surcharges levied under this part are treated consistently with other local tax provisions. Most notably, it adds a new requirement tying a local government’s eligibility to collect and administer surcharge proceeds to its own spending on road purposes: beginning July 1, 2025, a local government must appropriate and allocate from local revenue sources an amount for road purposes that is at least equal to the average of the prior five fiscal years, with certain revenues excluded from the calculation. If a local government falls below that benchmark, the amount otherwise allocable to it under the surcharge program is reduced, and the withheld amount is redirected to the state highway fund for state highway improvements within that jurisdiction.

Impact

HB0127 would affect Tennessee Code Annotated Sections 67-3-901 and 67-4-3201 through 67-4-3206, and it adds a new enforcement mechanism in Title 67, Chapter 4, Part 32. In practical terms, it broadens the scope of local transportation surcharge authority beyond transit-only projects, allows those revenues to support highways and bridges, and conditions local access to surcharge proceeds on maintaining a minimum level of local road funding. It also redirects forfeited local proceeds to the state highway fund for use by the Department of Transportation in the same locality.

Sentiment

The available committee votes show strong support and no recorded opposition: the bill received unanimous favorable recommendations in the House Transportation Subcommittee, House Transportation Committee, and House Finance, Ways, and Means Subcommittee. That voting pattern suggests the measure was generally viewed positively by committee members, likely because it links local transportation funding authority with a maintenance-of-effort requirement for road spending and expands the types of projects that can be funded.

Contention

No committee transcript is available, and no recorded nay votes appear in the provided history, so there is no documented floor-level or committee-level opposition in the materials supplied. The most likely point of policy contention is the new requirement that local governments maintain average road spending from local revenues in order to keep full access to surcharge proceeds, since that condition could be seen as limiting local budget flexibility. Another possible issue is the reallocation of reduced local proceeds to the state highway fund, which shifts control of some transportation dollars away from local governments and toward the state.