HB 695 - SB 889
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 16, 2025
Fiscal Analyst: Justin Billingsley | Email: justin.billingsley@capitol.tn.gov | Phone: 615-741-2564
HB 695 - SB 889
SUMMARY OF BILL: Authorizes any county which imposes a mineral severance tax on
sand, gravel, sandstone, chert, and limestone severed within its boundaries to increase the current
maximum tax rate of $0.15 per ton by $0.05 every five years until FY35-36, beginning in FY25-26.
Removes the current exception applicable to Smith County which allows it to allocate mineral
severance tax revenue to funds other than the county road fund.
Requires each county imposing such tax to prepare an annual report to the Comptroller of the
Treasury (COT), the Tennessee Department of Transportation (TDOT), and the chairs of certain
legislative committees, detailing the amount of revenue deposited into and expenditures from the
county road fund each fiscal year.
FISCAL IMPACT:
LOCAL GOVERNMENT
REVENUE Permissive
FY25-26 each through FY29-30 $2,260,900
FY30-31 each through FY34-35 $4,521,700
FY35-36 & Subsequent Years >$6,782,600
Assumptions:
• Pursuant to Tenn. Code Ann. § 67-7-201(a), any county legislative body may, by resolution,
levy a tax on all sand, gravel, sandstone, chert and limestone severed from the ground
within its jurisdiction. Such tax must be allocated to the county’s road fund.
• Pursuant to Tenn. Code Ann. § 67-7-203(a), the mineral severance tax on sand, gravel,
sandstone, chert, or limestone is $0.15 per ton.
• According to information from the County Technical Assistance Service, 65 counties levy a
mineral severance tax.
• It is assumed that all applicable counties will increase the tax rate to the maximum tax rate,
as authorized by this legislation.
• Adoption of a resolution to increase the tax rate will occur at a regularly scheduled meeting
of the county legislative body; any increase in local expenditures is not significant.
• The following table provides actual mineral severance tax collections at the current tax rate
and at the proposed tax rates for the specified timeframes. The estimated permissive
increase in tax revenue is the difference between the projected collections and the actual
collections which would have been incurred in the absence of this legislation:
HB 695 - SB 889 2
Mineral Severance Tax Revenue
FY24-25
FY25-26 through
FY29-30
FY30-31 through
FY34-35
FY35-36 and
Subsequent Years
Tax Rate $0.15 $0.20 $0.25 $0.30
Collections $6,782,601 $9,043,468 $11,304,335 $13,565,202
Increase in Local Revenue $2,260,867 $4,521,734 >$6,782,601
• Any additional impacts, such as increased costs for governmental entities which purchase
sand, gravel, sandstone, chert, or limestone cannot be determined with specificity, but is
assumed to be not significant.
• Each county can provide the COT, TDOT, and the chairs of certain legislative committees
the report required by this legislation, utilizing existing resources.
• This legislation requires that all collections of the aforementioned tax in Smith County be
allocated to the county road fund, rather than allowing the county to allocate such revenue
at its discretion. Requiring mineral tax revenue to be deposited in the county road fund will
not have any significant impact on the total amount of such revenue collected or expended
by Smith County.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director