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SB 2692

Bond Issues - As introduced, authorizes the state to issue and sell bonds. -

114th Regular Session (2025-2026)

Tennessee may issue up to $438 million in bonds to fund capital projects and infrastructure, with grants to local governments and department allocations, plus issuance costs.

Signed by Senate Speaker
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Bill Summary · SB 2692

Summary of Bill: SB 2692 / HB 2630 (Session 114) – Tennessee

Purpose
- Authorizes the state, acting through the State Funding Board, to issue and sell direct general obligation bonds and related bond anticipation notes to finance a broad set of capital projects and infrastructure.
- Allows issuance of debt beyond previously authorized levels to fund acquisition, construction, expansion, improvements, repairs, and related costs; including grants to local governments and development corporations.
- Provides for the allocation of bond proceeds across state departments and for issuance costs.

Key Provisions and Changes
- Bond Authorization and Limits
- Total direct general obligation bonds authorized: up to $438,000,000.
- Additional bonds (up to 2.5% of the authorized amount) may be issued to fund discount and issuance costs.
- Bonds may be issued in one or more installments and sold in public or private offerings.
- Debt terms: maturities up to 20 years; interest rates set by the Funding Board, not to exceed the legal maximum; tax-exempt from state and local taxes (with certain inheritance/estate taxes applicable).
- Bond anticipation notes (BANs) may be issued pending full bond issuance, with provisions ensuring full faith and credit pledged for repayment.

  • Allocation of Proceeds (Section 4)

    • Department of Finance and Administration: $311,000,000 for capital outlay, site acquisition, construction, and equipment; includes grants to counties, metropolitan governments, towns, cities, special districts, or instrumentalities, upon approval by the State Building Commission; identified grants must be for a public purpose.
    • Department of Transportation: $127,000,000 for highway construction and related infrastructure; includes acquisition of equipment and sites, site development, and repair/rehabilitation of bridges.
    • The Funding Board may allocate up to 2.5% of the above totals for discount and issuance costs.

  • Project and Procurement Authority

    • Eligible recipients may hire architects, bid, and contract for project work in accordance with general law and the State Building Commission rules.
    • State Building Commission approval is required for contracts related to projects funded by this act (except for grants, which may be issued after project approval).

  • Special Provisions

    • Bonds may be designated as “college savings bonds” under related education savings provisions, if desired.
    • Provisions are severable; no expenditure may violate Civil Rights Act requirements.
    • Effective date: on becoming law.

  • Governance and Oversight

    • The State Funding Board administers and approves bond issuance, debt terms, and allocation of proceeds.
    • First-year debt service requires appropriation of funds by the General Assembly.

Fiscal and Timeline Highlights (from Supporting Fiscal Note)
- Estimated first-year debt service (example): approximately $48.18 million.
- Total debt service over the life of the bonds (illustrative): about $713.94 million (principal $438M + interest $275.94M).
- Coupon rate assumption used for analysis: about 6% with 20-year maturities.
- The Governor’s FY26-27 budget already contemplates a total authorization of $438M ($311M for capital outlay, $127M for transportation).

Who Is Affected
- State of Tennessee, acting via the Funding Board, and the Department of Finance and Administration.
- Tennessee Department of Transportation (infrastructure and bridges).
- Local governments (counties, metropolitan governments, towns, cities, special districts) and governmental instrumentalities eligible for grants funded by bond proceeds.
- Industrial development organizations may benefit from grants funded through bond proceeds.

Impact Outlook
- Provides a significant, multi-year funding mechanism for capital projects and infrastructure.
- Enables accelerated procurement and development through bond financing, including potential grants to local governments for approved projects.
- Increases near-term debt service obligations funded by state revenues, subject to appropriation and fiscal planning.

Note: This summary focuses on the substantive provisions and potential fiscal effects as described in the bill text and fiscal note.

Compiled from official sources — confirm details with the bill’s official record.

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