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SENATE BILL 2064
By Watson
HOUSE BILL 1873
By Zachary
HB1873
011702
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AN ACT to amend Tennessee Code Annotated, Title 48
and Title 67, Chapter 5, relative to real property
taxes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 67, Chapter 5, Part 1, is amended by
adding the following as a new section:
(a) As used in this section:
(1) "Inflation" means the most recent percentage change in the consumer
price index, all cities average, published by the United States department of
labor;
(2) "Local government" means a county, incorporated city or town, or
metropolitan government having the power to levy taxes, or any special taxing
district, including a special school district, on behalf of which ad valorem property
taxes may be levied, for the support of governmental and related activities and
services;
(3) "New construction":
(A) Means an addition to real property, including, but not limited
to, a structure, fixture, or other improvement to real property; and
(B) Includes an improvement or addition to an existing structure
on real property; and
(4) "Total revenue":
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(A) Means the gross revenue collected from ad valorem real
property taxes levied by a local government by category of real property,
as applicable, during the immediately preceding tax year; and
(B) Excludes new gross tax revenue that is collected from new
construction and collected during the immediately preceding tax year.
(b) Except by a referendum election held in accordance with subsection (c), a
local government shall not increase a real property tax rate by an amount that:
(1) Would cause the local government to realize an increase in total
revenue exceeding inflation plus two percent (2%); or
(2) Would cause the local government to realize an increase in total
revenue exceeding inflation plus six percent (6%) over the preceding three (3)
tax years.
(c)
(1) The governing body of a local government shall direct the county
election commission to hold a referendum election to raise a real property tax
rate by an amount that exceeds the limitations set forth under subsection (b)
upon the adoption of a resolution or ordinance by the governing body by a two-
thirds (2/3) vote calling for a referendum election on the question.
(2) The resolution or ordinance adopted by the governing body must
specify the tax rate that is to be voted on by the electorate, the date on which the
tax rate would go into effect, the proposed date of the election, and that the
referendum election is to be held at a general election.
(3) The publication of notice and manner of holding the referendum
election must be as otherwise prescribed by law; provided, that the referendum
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election must be held during a regular November election as set forth in § 2-3-
203.
(4) If a majority of the qualified voters of a local government voting in an
election held under subdivision (c)(1) vote in favor of approving the tax rate
specified in the resolution or ordinance, then the local government may increase
the tax rate on the date specified in the resolution or ordinance.
(d) The limitations provided for in this section do not apply to:
(1) Taxes levied or pledged to pay or secure the payment of the principal
and interest on bonds. Taxes to pay or secure the payment of principal and
interest on bonds may be levied without limitation as to rate or amount,
regardless of whether the bonds are in default or in danger of default;
(2) Actions taken by the comptroller of the treasury pursuant to § 9-21-
403(c); or
(3) A local government's authority to change rates for utilities that the
local government owns or operates.
SECTION 2. Tennessee Code Annotated, Section 67-5-102(a), is amended by deleting
subdivision (2) and substituting instead:
(2) The amount of such tax shall be fixed by the county legislative body of each
county, subject to a referendum if required by Section 1.
SECTION 3. Tennessee Code Annotated, Section 67-5-102(c), is amended by adding
the language "; provided, however, that limitations and restrictions provided in Section 1 relative
to the amount of any county, municipality, metropolitan government, or other tax entity's ad
valorem tax levy must remain in full force and effect in accordance with such laws" immediately
after the language "1973".
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SECTION 4. Tennessee Code Annotated, Section 67-5-103, is amended by adding the
language "; provided, however, that limitations and restrictions provided in Section 1 relative to
the amount of any county, municipality, metropolitan government, or other tax entity's ad
valorem tax levy must remain in full force and effect in accordance with such laws" immediately
after the language "1973".
SECTION 5. Tennessee Code Annotated, Section 67-5-1702, is amended by deleting
the section and substituting instead:
A tax rate in excess of the certified tax rate as provided for in § 67-5-1701 must
not be levied by the governing body of any county, municipality, metropolitan
government, or other tax entity until a resolution or ordinance has been approved by the
governing body; provided, that the governing body shall comply with the rate and levy
limitation provisions of Section 1 in establishing a tax rate that is in excess of the
certified tax rate, and shall further comply with the following procedures:
(1) The governing body shall advertise its intent to exceed the certified
tax rate on the website of the governing body and in a newspaper of general
circulation in the county, and the chief executive officer of the governmental
entity, shall within thirty (30) days after publication furnish the state board of
equalization an affidavit of publication; and
(2) The governing body, after public hearing, may adopt a resolution or
ordinance levying a tax rate in excess of the certified tax rate; provided, that such
increase complies with Section 1.
SECTION 6. This act takes effect July 1, 2026, the public welfare requiring it, and
applies to all tax years beginning on or after that date.