Tennessee House Bill HB2151

Tennessee 2023-2024 Regular Session

• Introduced: 1/25/24
• Refer: 1/31/24

Caption

AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 7, Part 2, relative to the severance tax.

Impact

If passed, HB2151 would create a new framework for how severance taxes are administered at the county level in Tennessee. By delegating the authority to set tax rates to county legislative bodies, it allows for greater flexibility and responsiveness to local economic conditions, particularly in counties engaged in resource extraction. Furthermore, the bill includes a provision for adjusting the tax rate annually based on changes in the consumer price index, thereby ensuring that the tax rate reflects inflation and the economic landscape over time.

Summary

House Bill 2151 seeks to amend Tennessee Code Annotated regarding the severance tax. Specifically, it proposes that counties with populations between 7,500 and 7,600 may set their own rates for severance tax on minerals such as sand, gravel, sandstone, chert, or limestone extracted from the ground. This statute empowers local governing bodies to establish a tax rate up to 45 cents per ton, which can be modified through a two-thirds majority resolution. The bill aims to provide more localized control over taxation related to natural resources extraction and aligns local fiscal policies with community needs.

Sentiment

The sentiment concerning HB2151 appears to be cautiously optimistic. Supporters argue that empowering counties to set their own severance tax rates could stimulate local economies and enhance funding for public services. They believe that understanding local contexts and needs will lead to more effective governance of resource extraction. On the other hand, concerns have been raised about potential disparities between different counties, where wealthier counties might set lower rates to attract more business while impoverished areas might struggle to utilize this tax effectively.

Contention

Notable contention around the bill revolves around the implications for equity and fairness in local taxation policies. Critics worry that this level of local control could lead to inconsistencies and competitive downsizing among counties, which may undermine efforts to create a balanced economic environment across the state. Additionally, there may be apprehensions about how this could affect environmental stewardship and resource management, as each county may prioritize economic gain over ecological considerations differently.