Senate Bill 2074, known as the "Local Government Revenue Stability Act," aims to establish a stable revenue system for local governments in Tennessee following the elimination of their authority to levy property taxes. The bill creates a dedicated local government sales tax replacement fund, financed by a new statewide surtax of 4% on sales taxable under the Retailers' Sales Tax Act, effective January 1, 2031. This fund is designed to ensure that all counties, municipalities, local education agencies, and special taxing districts receive annual distributions equivalent to their 2028 property tax revenues, adjusted for economic growth.

The bill amends various sections of the Tennessee Code Annotated to prohibit local governments from levying property taxes, with specific exceptions for servicing existing debt incurred before January 1, 2031. It also establishes a framework for the distribution of funds from the local government revenue stability tax fund, ensuring that local governments receive their fair share based on their 2028 property tax revenues. Additionally, the act is contingent upon the approval of a constitutional amendment to remove the requirement for property taxation, and it will take effect only if that amendment is ratified.

Statutes affected:
Introduced: 5-8-101