Tennessee Senate Bill SB0518

Tennessee 2025-2026 Regular Session

• Introduced: 1/30/25
• Engrossed: 3/10/25
• Enrolled: 4/1/25
• Passed: 4/11/25
• Chaptered: 4/30/25

Caption

AN ACT to amend Tennessee Code Annotated, Section 7-34-111; Section 7-36-113; Section 7-82-501; Section 7-82-702; Section 68-221-1311 and Section 68-221-611, relative to utilities.

Summary

SB 518 makes a series of related changes to Tennessee law governing municipal, metropolitan, county, and utility-authority water and wastewater systems. The bill authorizes these entities to borrow money in anticipation of revenue collections and issue negotiable notes for emergency cash flow, but only by governing-body resolution and only if the notes are secured solely by system revenues. It caps the principal amount of such notes at 60% of projected cash flow over a 12-month period and requires repayment within that same period, unless the comptroller approves a renewal. The bill also applies similar emergency cash-flow borrowing authority to utility districts and authorities under multiple statutory chapters, while adding state oversight conditions. In each case, the comptroller of the treasury or designee must approve the note sale, develop a corrective action plan with the utility entity, and may refer the entity to the Tennessee Board of Utility Regulation for review and possible remedial action. Separately, the bill revises the removal standards for members of a utility system’s governing body, expanding the grounds for removal to include misconduct, failure to exercise reasonable oversight, severe managerial incompetence, and failure to follow board directives, while clarifying that elected officials cannot be removed under that provision.

Impact

SB 518 amends several sections of the Tennessee Code affecting utility financing and oversight, including provisions for municipal and county water/wastewater systems, utility districts, and utility authorities. It creates a new statutory mechanism for short-term emergency borrowing backed only by utility revenues, imposes borrowing limits and repayment deadlines, and increases the role of the comptroller and the Tennessee Board of Utility Regulation in approving and monitoring distressed systems. The bill also broadens the legal basis for removing utility governing-body members, which may affect board governance and accountability across utility systems.

Sentiment

The bill appears to have been broadly supported and noncontroversial in the legislative process. It passed the Senate State & Local Government Committee unanimously 9-0 and later passed the Senate floor 30-0, indicating strong bipartisan agreement. No committee transcript objections or recorded debate were provided, and the final enactment suggests the measure was viewed as a practical response to utility cash-flow and oversight issues.

Contention

No major opposition is reflected in the available record, but the bill’s most notable policy choices are the expanded state oversight and the strengthened removal authority for utility board members. Those provisions could raise concerns for local control advocates because they place the comptroller and the utility regulation board more directly into local utility financial management and governance. The borrowing authority itself is also tightly conditioned, suggesting the legislature balanced emergency liquidity needs against concerns about fiscal risk and accountability.