Tennessee Senate Bill SB1679

Tennessee 2025-2026 Regular Session

• Introduced: 1/14/26
• Engrossed: 2/12/26
• Enrolled: 3/25/26
• Passed: 4/13/26
• Chaptered: 4/27/26

Caption

AN ACT to amend Tennessee Code Annotated, Title 9, Chapter 13, Part 2 and Title 9, Chapter 21, Part 7, relative to local government debt.

Summary

SB1679 revises Tennessee law governing certain forms of local government borrowing and debt issuance. The bill expands the definition of entities covered under the local government debt statutes by adding “utility authority” to the existing reference to utility districts. It also rewrites the rules for when local governments may issue notes that mature after the end of the fiscal year, allowing such notes when approved by the comptroller of the treasury or the comptroller’s designee and, in some cases, backed by the state funding board or justified by economic distress caused by a FEMA-certified natural disaster or another natural disaster reasonably demonstrated to have caused local economic distress. The bill further updates the grant anticipation note provisions for public works projects. Local governments may issue interest-bearing grant anticipation notes only after the related state or federal grant contract has been fully executed and after receiving comptroller approval. These notes must be secured by the expected grant money in at least the principal amount, and local governments may optionally add a general obligation pledge or a revenue pledge from a special revenue or enterprise fund as additional security. The bill also clarifies that interest on these notes may be backed by the local government’s general obligation and paid through ad valorem taxes, while preserving the ability to issue capital outlay notes or bond anticipation notes alongside grant anticipation notes so long as those proceeds are not used to pay the grant anticipation notes.

Impact

SB1679 amends Tennessee Code Annotated Title 9 to broaden and clarify local government financing authority, especially for debt tied to grants and disaster-related fiscal stress. It affects local governments, utility authorities, the comptroller of the treasury, and entities involved in public works financing by setting approval requirements, security requirements, and conditions for issuing notes that extend beyond the fiscal year. The bill also updates statutory language to include utility authorities and provides additional flexibility for local governments facing natural-disaster-related economic distress.

Sentiment

The available voting history suggests strong bipartisan support and little controversy. The Senate State & Local Government Committee recommended passage unanimously, and the floor motion to adopt also passed unanimously. No committee transcript excerpts were provided, but the recorded votes indicate the bill was viewed favorably as a technical or practical financing measure for local governments.

Contention

No significant opposition is reflected in the provided record. The main policy choices in the bill are procedural and financial: requiring comptroller approval, limiting grant anticipation notes to executed grant contracts, and specifying what collateral may secure the notes. Any potential concern would likely center on local debt exposure, the use of ad valorem taxes to support interest payments, or the expansion of borrowing flexibility during disaster-related distress, but no specific objections are documented in the supplied materials.