Local Government, General

Plain English Breakdown

The exact impact on local budgets and residents' finances is uncertain.

Local Government Tax Changes

This bill allows counties with metropolitan governments to lower or exempt food sales taxes and removes certain requirements for reducing the size of their councils.

What This Bill Does

• Allows a county with a metropolitan government to set a lower tax rate on food sales than other goods and services, or to exempt food from local sales taxes.
• Requires counties that change their food sales tax rates to send a copy of the new rules to the state revenue department before they take effect.
• Removes specific requirements about how metropolitan councils should reduce their size.

Who It Names or Affects

• Counties with metropolitan governments in Tennessee
• Residents and businesses within those counties

Terms To Know

metropolitan government

A type of local government that combines city and county functions into one unit.

local option sales tax

A tax on goods and services that a local government can choose to impose within its jurisdiction.

Limits and Unknowns

• The bill does not specify how much the food sales tax rate can be lowered or what specific foods are included.
• It is unclear if all counties with metropolitan governments will use this new authority.

Official Summary Text

This bill authorizes a county with a metropolitan form of government to do either of the following:



Levy a tax on the retail sale of food and food ingredients within the county at a rate lower than the local tax rate levied on other privileges, goods, and services.


Exempt from the local tax rate the retail sale of food and food ingredients within the county.

If the county exercises this authority, then this bill requires the county to furnish a certified copy of the adopted resolution authorized to the department of revenue. The reduced tax rate or exemption becomes effective on the first calendar day of th
e month occurring at least 60 days after the department receives the certified copy. The reduced tax rate or exemption applies only to tax periods beginning on or after October 1, 2026.

This bill also authorizes the levying of the reduced tax rate or an exemption as described above to not be subject to the approval of the voters.

METROPOLITAN COUNCILS REDUCING MEMBERSHIP

Present law generally requires the membership of a metropolitan council to not exceed 20 voting members. If the membership of a metropolitan council is required to be reduced in order to comply with present law, then:

(1)
The metropolitan council reduction takes effect as of the next general metropolitan election after March 9, 2023. However, if the metropolitan council fails to take the necessary legislative action prior to the qualifying date for the next general metrop
olitan election after March 9, 2023, as set by the county election commission, then the terms of the current members of the metropolitan council are extended for one year and the county election commission must set a special general metropolitan elect
ion to be held the first Thursday in August 2024 to elect the councilmembers for a term of three years with the terms to begin September 1, 2024. Thereafter, members of the metropolitan council must serve four-year terms.

(2) Within 30 days of March 9, 2023, the metropolitan planning commission must establish district boundaries using the most recent federal census to ensure that a reapportionment maintains substantially equal representation based on population and other
wise complies with state and federal law.

(3) Upon approval of the council districts by the planning commission, the metropolitan council as currently constituted must approve the new council district boundaries by resolution on or before May 1, 2023.

(4) The metropolitan council must take any legislative action required to effectuate this section by resolution receiving an affirmative majority vote of those present and voting, regardless of any provision of a charter or private act to the contrary.

This bill removes requirements (1) through (3) for metropolitan councils who are reducing their membership in order to not exceed 20
voting members.

Current Bill Text

SENATE BILL 2160
By Watson

HOUSE BILL 2186
By Lamberth
HB2186
010861
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 5;
Title 6; Title 7 and Title 67, Chapter 6, relative to
local government.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 67-6-702(a)(1), is amended by
adding the following as a new subdivision (C):
(C)
(i) A county with a metropolitan form of government is authorized to:
(a) Levy a tax on the retail sale of food and food ingredients, as
described in § 67-6-228(a), within the county at a rate lower than the local
tax rate levied on other privileges, goods, and services; or
(b) Exempt from the local tax rate the retail sale of food and food
ingredients, as described in § 67-6-228(a), within the county.
(ii) The county shall furnish a certified copy of the adopted resolution
authorized in subdivision (a)(1)(C)(i) to the department of revenue. The reduced
tax rate or exemption becomes effective on the first calendar day of the month
occurring at least sixty (60) days after the department receives the certified copy.
The reduced tax rate or exemption applies only to tax periods beginning on or
after October 1, 2026.
SECTION 2. Tennessee Code Annotated, Section 67-6-705(d), is amended by adding
the language "or (a)(1)(C)" immediately after the language "§ 67-6-702(a)(1)(B)(ii)".

- 2 - 010861

SECTION 3. Tennessee Code Annotated, Section 7-1-113, is amended by deleting
from subsection (a) all language between the second comma and the period, and by deleting
subdivisions (b)(1)-(3).
SECTION 4. This act takes effect upon becoming a law, the public welfare requiring it.