AN ACT to amend Tennessee Code Annotated, Section 67-4-409, relative to the recordation tax.
Summary
HB0649 amends Tennessee’s recordation tax law to require the state to remit 50% of recordation taxes collected on real property transfers back to the county where the tax was collected. The bill specifies that the state’s share must first cover existing commissions and statutory allocations to designated funds and purposes, and that the county distribution cannot reduce those state-directed allocations.
The county share is restricted to non-salary uses. Counties may spend the money on infrastructure such as roads, bridges, schools, and other public facilities; debt service for capital projects; matching funds for state and federal projects; and other nonrecurring expenses. At least half of the county funds must be dedicated to transportation infrastructure projects, and the bill prohibits using these funds to replace other state or local money already budgeted for county roads and bridges. Counties must also keep these receipts out of the local revenue calculation used for the five-year average under state law.
Impact
The bill would change Tennessee Code Annotated § 67-4-409 by creating a new revenue-sharing formula for recordation taxes on realty transfers and by imposing use restrictions on the county portion. It also exempts these county receipts from being treated as local revenue for purposes of the five-year average calculation under § 67-3-901(d), which may affect how counties are evaluated or funded under related state finance formulas. The act applies prospectively to real property transfers on or after July 1, 2025.
Sentiment
No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or opposition in the supplied materials. Based on the bill text alone, the measure appears designed to support county infrastructure funding, especially transportation, while preserving existing state allocations from the tax. The overall framing suggests a policy focus on local capital needs rather than broad tax relief or revenue reduction.
Contention
The main potential points of contention are the diversion of 50% of recordation tax revenue to counties and the strict limits on how counties may use the money. Counties may favor the new dedicated funding stream, especially for roads and bridges, while state fiscal interests may be concerned about the effect on state-retained revenue and the requirement that state allocations remain whole. Another possible issue is the anti-supplanting rule, which prevents counties from substituting these funds for existing road and bridge spending, limiting local flexibility.