AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 6, Part 7, relative to sales and use taxes.
SB0337 authorizes a county with a population over 900,000, based on the 2020 census or later, to raise its local sales tax rate to 3.75% by resolution of the county legislative body. The bill is structured as a targeted local-option tax measure and applies only to the largest county or counties meeting the population threshold. It also creates a temporary higher rate and a later reversion to a lower rate, with specific rules for cities and towns that already have their own operative local sales tax rate.
The bill directs how the additional revenue must be used. During the period when the county tax is increased to 3.75%, the new revenue must be used exclusively for construction of a new county jail or for paying debt service on that project, including principal, interest, and related expenses. After that period ends and the tax rate reverts to 2.75%, the revenue from the county’s 0.5 percentage-point increase must instead be dedicated to the county sheriff’s department for administrative, operational, and capital expenses, and may not be used to replace other funding.
The bill changes Tennessee’s sales and use tax law in Title 67, Chapter 6, Part 7 by creating a new county-specific taxing authority and by overriding conflicting provisions on distribution and use of local sales tax revenue. It also establishes a sunset-like structure: the 3.75% rate lasts for up to eight years from the start of collections or until the jail-related debt is retired, whichever comes first, after which the county rate reverts to 2.75%. The bill further preserves priority for certain city and town tax rates where those rates already exist.
The general sentiment appears cautiously favorable in committee, with the Senate State & Local Government Committee recommending passage by a 7-2 vote and referring the bill onward to Senate Finance, Ways, and Means. That vote suggests majority support for the proposal, likely because it provides a dedicated funding mechanism for jail construction and sheriff’s department needs. At the same time, the split vote indicates some concern or disagreement remained.
The main points of contention are likely the tax increase itself, the narrow earmarking of revenue, and the bill’s impact on local tax structure and municipal revenue priorities. Opponents may object to raising the local sales tax rate, even temporarily, or to limiting the use of the proceeds to a single capital project and later to sheriff’s department operations. The bill also creates a special rule for cities and towns with existing 2.75% rates, which could raise concerns about local fiscal autonomy and how revenues are apportioned among county and municipal governments.
SB0337 amends Tennessee sales and use tax law to authorize a county with more than 900,000 residents to levy a local sales tax rate of 3.75% and to dedicate the resulting incremental revenue to jail construction and related debt service. After the temporary higher-rate period ends, the county rate reverts to 2.75%, and the revenue from the increase must then be distributed to the county sheriff’s department for specified operational and capital purposes. The bill overrides conflicting provisions in existing law regarding tax rates, revenue allocation, and distribution, and it applies only to the qualifying county or counties under the population threshold.
The available voting history suggests the bill has majority support but not unanimous backing. The Senate State & Local Government Committee recommended passage by a 7-2 vote, indicating that most members viewed the bill as a workable funding mechanism for local criminal justice infrastructure and operations. The absence of transcript discussion limits insight into detailed arguments, but the split vote implies at least some reservations about the tax increase, the earmarking of revenue, or the special treatment of the affected county and municipalities.
The likely areas of disagreement are whether a local sales tax increase is the right way to finance a new county jail, whether the revenue should be locked exclusively to that purpose, and whether the later redirection of funds to the sheriff’s department is appropriate. Another point of contention is the bill’s effect on cities and towns that already levy a 2.75% rate, since the measure gives those municipal rates priority over the county’s reversion rate and alters the normal distribution of local tax revenue. These issues would primarily concern taxpayers, county officials, municipal governments, and lawmakers focused on local fiscal control.