Tennessee House Bill HB0561

Tennessee 2025-2026 Regular Session

• Introduced: 1/29/25
• Refer: 2/5/25
• Refer: 2/26/25
• Refer: 3/5/25
• Refer: 3/19/25
• Refer: 3/25/25
• Chaptered: 4/30/25
• Passed: 4/30/25

Caption

AN ACT to amend Tennessee Code Annotated, Section 7-34-111; Section 7-36-113; Section 7-82-501; Section 7-82-702; Section 68-221-1311 and Section 68-221-611, relative to utilities.

Impact

The implementation of HB0561 is expected to enhance the liquidity of public utility systems by providing them with a formal mechanism to manage cash flow shortages. This can be particularly beneficial for utilities that face unexpected expenses or revenue delays. However, the stipulation that all notes must be retired within a twelve-month period ensures that these borrowing practices remain temporary and controlled. Furthermore, the bill outlines the requirement for the comptroller of the treasury to approve note issuance, which adds an additional layer of oversight meant to protect against fiscal mismanagement.

Summary

House Bill 0561 aims to amend various sections of the Tennessee Code Annotated regarding utilities. The bill introduces provisions that enable municipal, metropolitan-government, or county-owned water and wastewater systems to borrow money in anticipation of revenue collection. This borrowing can take the form of issuing negotiable notes, which can be utilized to provide emergency cash flow. The notes must be secured by the revenues of the respective utility systems, with strict limits on the amount that can be borrowed relative to projected cash flows. This is designed to ensure fiscal responsibility and minimize the risk of over-leveraging utility districts.

Sentiment

The sentiment surrounding HB0561 appears to be largely positive among utility operators and fiscal policymakers. Supporters argue that the ability to issue negotiable notes will provide necessary flexibility to utility systems during cash flow emergencies, thereby enhancing operational stability. However, there may be some apprehensions regarding the implications of increased debt levels for municipalities and the stringent oversight measures, which could complicate the borrowing process for some systems. Overall, the bill reflects a pragmatic approach to improving utilities' financial resiliency while balancing oversight considerations.

Contention

Notably, there is some contention regarding the level of control exerted by the state through the comptroller's approval process for borrowing. While proponents of the bill emphasize the need for accountability in the management of public funds, opponents may raise concerns about potential bureaucratic delays and limitations on local governance. Additionally, the requirement for corrective action plans if borrowing occurs could be seen as an imposition on local utility management. Thus, while HB0561 aims to provide essential financial tools for utility systems, it also raises questions about local autonomy in financial decision-making.