20-HB2121/SB2371 – Baum/Reeves

This bill creates a special sales tax revenue allocation for a Tennessee rapid growth school district.
Under present law, revenue from state sales and use tax collections is earmarked and allocated as follows:
(1) 29.0141 percent to the general fund;
(2) 65.0970 percent to educational purposes;
(3) 4.6030 percent to the several incorporated municipalities, in the proportion as the population of each municipality bears to the aggregate population of all municipalities within the state. Present law provides several alternative provisions to this allocation for certain municipalities and circumstances;
(4) 0.3674 percent, or so much thereof as may be required, to the department of revenue in addition to its regular appropriation to be expended by it in the administration and enforcement of the sales and use tax laws; and
(5) 0.9185 percent to the sinking fund account to be used by the state funding board for the payment of principal and interest becoming due on state bonds issued by the state.
Under this bill, a local education agency (LEA) with a minimum average growth of 2 percent in average daily membership (ADM) over the immediately preceding five fiscal years ("ADM growth") may elect to be a "Tennessee rapid growth school district" for purposes of sales tax revenue allocations. ADM growth for each LEA will be calculated by the state department of education on an annual basis to determine initial and continuing eligibility. This bill provides that in addition to the allocation prescribed in above in (3), a Tennessee rapid growth school district with 20 percent or greater ADM growth will receive 2 percent of its proportionate share of the tax collected and remitted by dealers within the county. A Tennessee rapid growth school district with an ADM growth of less than 20 percent will receive a percentage of its proportionate share of the tax collected and remitted by dealers within the county equal to 10 percent of the LEA's ADM growth. The proportionate share for each district will be determined in accordance with this bill. The total annual amount distributed to each LEA will be capped at $7 million dollars. Any distribution made to a Tennessee rapid growth school district pursuant to such election will be paid from the general fund.
A qualifying municipal or county LEA may elect Tennessee rapid growth school district status by resolution or ordinance approved by a two-thirds vote of the legislative body of the municipality or county. A special school district LEA may elect Tennessee rapid growth school district status by resolution approved by a two-thirds vote of its school board. Within 30 days of adopting such resolution or ordinance, the presiding officer of the adopting jurisdiction must send a certified copy of the ordinance or resolution to the commissioner of education and the commissioner of revenue.
This bill requires that 100 percent of the revenue received pursuant to the election to become a Tennessee rapid growth school district be used exclusively for either public school-related debt service or public school-related capital improvements.
Prior to adoption of Tennessee rapid growth school district status, the county, municipality, or special school district must have adopted a formal multiyear school capital improvement plan specifying the manner by which additional revenue distributed pursuant to an election is to be incorporated into the funding of the