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HB 695

Taxes - As enacted, increases, by 15 cents over a 10-year period, and subject to a two-thirds vote of the county legislative body, the maximum mineral severance tax rate that may be levied by a county on all sand, gravel, sandstone, chert, and limestone severed from the ground within its jurisdiction; removes the authorization for Smith County to allocate its mineral severance tax to the county general fund or a fund other than its county road fund. - Amends TCA Title 67, Chapter 7, Part 2.

114th Regular Session (2025-2026) Introduced by Charlie Baum

Increases county mineral severance tax by 15 cents over 10 years and forces Smith County to dedicate its severance tax revenue exclusively to road funds instead of general operating expenses.

Pub. Ch. 285
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Bill Summary · HB 695

Legislative bill overview

HB 695 increases Tennessee's maximum county mineral severance tax rate by 15 cents per unit over 10 years for sand, gravel, sandstone, chert, and limestone extraction, requiring a two-thirds county legislative vote to implement. The bill also restricts Smith County's ability to allocate severance tax revenue by requiring it to go exclusively to the county road fund rather than to the general fund or other designated funds.

Why is this important

Mineral severance taxes fund county infrastructure, particularly roads and bridges, which require ongoing maintenance in extraction-heavy regions. This change allows counties to capture additional revenue from mining operations while Smith County loses budgetary flexibility it previously had, potentially affecting how that county allocates resources across departments.

Potential points of contention

  • Revenue allocation restrictions: Smith County's loss of discretion to direct severance tax funds to non-road purposes limits local control and may disadvantage other county services that previously benefited from this revenue source.
  • Extraction industry impact: A 15-cent increase may affect the competitiveness and profitability of aggregate producers, potentially influencing mining operations, employment, and material costs for construction projects.
  • Two-thirds supermajority requirement: The threshold makes it difficult for counties to implement the tax increase, potentially limiting revenue growth even if counties want to pursue it.

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

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