AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 7, Part 2, relative to mineral severance tax.
HB0695 revises Tennessee’s mineral severance tax law for sand, gravel, sandstone, chert, and limestone extracted from the ground in a county. The bill keeps the tax rate set by the county legislative body, but raises the maximum allowable rate on a phased schedule: up to 15 cents per ton before July 1, 2025; 20 cents per ton from July 1, 2025 through June 30, 2030; 25 cents per ton from July 1, 2030 through June 30, 2035; and 30 cents per ton thereafter. It also removes a now-redundant provision in the chapter and adds a new reporting and rate-adjustment framework.
The bill requires counties that collect this tax to submit an annual written report within 30 days after the end of the county fiscal year to the comptroller, the commissioner of transportation, and the transportation committee chairs in both chambers. The report must detail revenue deposited into the county road fund, how much was spent, and how those expenditures were used for construction, maintenance, and repair of the county road system. In addition, a county legislative body that has already authorized the tax may increase the rate by a two-thirds vote, with the new rate taking effect no earlier than 60 days after the Department of Revenue receives a certified copy of the resolution.
The bill’s impact is to expand counties’ future taxing authority over mineral extraction while adding state-level oversight and transparency requirements for the use of severance tax revenue. It amends Tennessee Code Annotated Title 67, Chapter 7, Part 2, and affects county governments, mineral producers, and the Department of Revenue, while tying the revenue more explicitly to county road fund purposes and reporting to transportation officials.
Overall sentiment appears strongly favorable. The bill advanced through subcommittee and committee with broad support and passed the House and Senate floor votes by large margins, indicating general agreement on the need to update the tax cap and improve reporting. The limited opposition suggests some concern about higher costs or local tax increases, but the recorded votes show no sustained controversy during the legislative process.
The main point of contention is likely the higher future tax burden on quarrying and aggregate extraction businesses, since the bill authorizes counties to raise the per-ton severance tax over time. Another possible concern is local discretion: counties can increase the rate by resolution, which may raise questions about economic impact, competitiveness, and whether the revenue will be used consistently for road-related purposes. Supporters, by contrast, appear to have emphasized county road funding, accountability, and local control.
HB0695 amends Tennessee’s mineral severance tax statutes by increasing the maximum county-set tax rate on certain extracted materials in staged increments over time and by allowing counties to raise the rate by a two-thirds vote of the county legislative body. It also adds an annual reporting requirement to the comptroller and transportation officials regarding revenue and expenditures from the county road fund, strengthening oversight of how severance tax proceeds are used. The bill affects county legislative bodies, the Department of Revenue, mineral extraction operators, and county road funding administration.
The bill appears to have been received positively overall, with strong committee and floor support and only limited recorded opposition. The voting history shows near-unanimous committee recommendations and large-margin passage on the floor, suggesting broad acceptance of the policy changes. The general tone indicates support for local revenue authority and transparency in road funding, rather than significant partisan or ideological conflict.
The primary area of contention is the increase in the mineral severance tax cap, which could raise costs for sand, gravel, sandstone, chert, and limestone producers. Opponents may also have concerns about allowing counties to raise the tax by local resolution, even with a two-thirds vote, because it could affect business costs and local economic activity. Supporters likely viewed the measure as a way to better fund county roads and ensure counties report how the money is spent.