HB 543 - SB 1138
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
March 6, 2025
Fiscal Analyst: Justin Billingsley | Email: justin.billingsley@capitol.tn.gov | Phone: 615-741-2564
HB 543 - SB 1138
SUMMARY OF BILL: Prohibits a city, town, utility district, or municipality that has
operated a sewerage system outside of the corporate boundaries of the city or town for 25 years or
more from ceasing the operation of such system outside the corporate boundaries so long as the
system maintains sufficient capacity, as determined by a study conducted by the Tennessee Advisory
Commission on Intergovernmental Relations (TACIR).
FISCAL IMPACT:
STATE GOVERNMENT
EXPENDITURES General Fund
FY25-26 >$1,000,000
OTHER FISCAL IMPACT
Due to multiple unknown variables, any mandatory increases in local revenue or expenditures
cannot be determined with reasonable certainty, but are considered significant.
Article II, Section 24 of the Tennessee Constitution provides that: no law of general application shall impose increased expenditure
requirements on cities or counties unless the General Assembly shall provide that the state share in the cost.
Assumptions:
• This legislation would require TACIR to perform a study on all sewerage systems operated
by municipalities, towns, cities, and utility districts in the state which have provided
sewerage services to areas outside the corporate boundaries of their respective
municipalities for over 25 years to determine the capacity of such systems.
• According to information from TACIR, this study cannot be performed utilizing its existing
resources.
• It’s unknown how many sewerage systems operated by municipalities, towns, cities, and
utility districts in this state have operated outside of their respective corporate boundaries
for 25 years or more.
• The Memphis Public Works Division (MPWD) operates and maintains the city’s sewerage
system and has provided sewerage services outside Memphis’s corporate boundaries for
over 25 years.
HB 543 - SB 1138 2
• It is assumed that any study performed by an entity in contract with TACIR would cost in
excess of $1,000,000, to analyze applicable sewerage systems across the state, including but
not limited to, that of the MPWD.
• It is assumed such study would be performed in FY25-26, therefore, this legislation will
result in a one-time increase in state expenditures in FY25-26 exceeding $1,000,000.
• The city of Memphis has reported a strain on its sewerage system, requiring it to utilize
large septic storage tanks in outlying areas where sewerage capacity is insufficient.
• This legislation would require that Memphis continue service to outlying areas, which, due
to growth in population resulting from additional developments in such areas, is increasing
the strain on the MPWD sewerage system.
• This legislation could reasonably result in significant increases in local expenditures for
Memphis to expand sewerage services in areas outside the corporate boundary of the
municipality, town, and city.
• It is assumed that MPWD would raise utility fees imposed on its customers; however, it is
assumed that any increase in utility fee revenue would not offset all costs incurred by the
city for any expansion of service required by this legislation.
• In the absence of this legislation, areas outside the corporate boundaries of Memphis would
have to find alternative solutions to provide sewerage services in their respective areas,
which would require significant increases in local expenditures.
• Due to multiple unknown variables, any alternative solutions cannot be determined with
specificity; therefore, an increase in such local expenditures cannot be reasonably
determined.
• Due to multiple unknown variables, any mandatory increases in local revenue or
expenditures cannot be determined with reasonable certainty, but are considered significant.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director