SB 191 – HB 1338
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 22, 2025
Fiscal Analyst: Justin Billingsley | Email: justin.billingsley@capitol.tn.gov | Phone: 615-741-2564
SB 191 – HB 1338
SUMMARY OF BILL: Requires the Comptroller of the Treasury (COT) to evaluate any
heightened risk debt before its issuance by a local government, and to provide approval or
disapproval of any such issuance within 15 business days of receipt of request and any requested
supplemental documentation.
Removes put options from under the definition of balloon indebtedness and classifies it as a
heightened risk debt.
Specifies that balloon indebtedness and heightened risk debt approval requirements do not apply to
loans or interim certificates with or purchased by either the state or a department or agency of the
federal government.
Expands the definition of “local government,” as it applies to the Local Government Public Obligations
Act of 1986, to include a water, wastewater, or energy authority, thereby requiring any form of
heightened risk debt or balloon indebtedness, as proposed by any such authority, be reviewed and
approved by the COT prior to issuance.
FISCAL IMPACT:
NOT SIGNIFICANT
Assumptions:
• The proposed legislation defines “heightened risk debt” as any debt obligation containing:
o A variable interest rate or rates;
o An interest rate reset provision, where the interest rate can be changed at certain
intervals during the life of the debt; or
o A put option, where the holder of the debt has the ability to force repayment before
the final maturity date of the debt.
• This legislation requires any incorporated city or town; metropolitan government; county;
water, wastewater, or energy authority; or utility district, to submit a proposed issuance of
balloon indebtedness or heightened risk debt by any such authority to the COT for review
and approval.
• This legislation excludes state or federal loans from the definitions of balloon indebtedness
and heightened risk debt, thereby authorizing local governments to enter into such loans
without first having the COT review and approve the issuance of such indebtedness.
• This legislation will not lead to any significant increase in debt issuances by local
governments which the COT will be required to review and approve.
SB 191 – HB 1338 2
• Based on information provided by the COT, any additional plans can be reviewed and
approved within existing resources of the COT. Any fiscal impact to the COT is estimated
to be not significant.
• Any fiscal impact to local governments associated with additional balloon indebtedness or
heightened risk plan submissions is estimated to be not significant.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director