Tennessee Assembly extends local tax authority for transportation funding statewide

The House Transportation Committee of the Tennessee House of Representatives convened on March 18, 2025, to discuss a significant piece of legislation aimed at enhancing local transportation funding. The proposed bill seeks to extend the authority for local option surcharges on privilege taxes to all cities and counties across the state, building on the framework established by the IMPROVE Act of 2017.

The IMPROVE Act initially allowed the five largest cities and twelve largest counties in Tennessee to levy these surcharges to fund highways, bridges, and mass transit improvements. The current bill aims to broaden this authority, enabling all local governments to implement similar measures to support transportation projects within their jurisdictions.

During the meeting, committee members engaged in discussions about the implications of this extension. Representative Glenn raised a question regarding why certain counties were not included in the original bill, noting that the initial legislation was passed before his tenure. The committee clarified that the bill does not impose a new tax but rather allows local governments to utilize existing tax structures more effectively, contingent upon voter approval through a ballot initiative.

Concerns were also expressed about the potential for confusion regarding the nature of the surcharge. Representative Renoux sought clarification on how the surcharge would interact with existing taxes, particularly in the context of the tourist accommodation tax. The committee emphasized that any new surcharge would be subject to existing caps and would require local voter support.

The committee ultimately moved to pass the bill, with an amendment added to refine its provisions. The legislation represents a significant step toward empowering local governments to address their transportation needs more effectively, with the potential for improved infrastructure and transit options across Tennessee. The next steps will involve further discussions and potential voting in the broader legislative assembly.