Tennessee Code Annotated
Tenn. Code Ann. § 5-9-404 (2026)
Agency budgets - Approval - Continuation operating budget
✓ current as of May 2026
- (a) It is the duty of the county legislative bodies in regard to all departments, commissions, institutions, boards, offices, or agencies to adopt a budget and appropriate funds for the ensuing fiscal year.
- (b)
- (1) In the event that the local fiscal body has not adopted a budget by July 1 of any year, and until a final operating budget is adopted, the operating budget for the year just ended and the appropriation resolution for such year shall continue in effect by operation of law without further action of the county legislative body; provided, however, all agencies of the county and other entities receiving appropriated county funds shall not during any month encumber funds in excess of the allotment for a comparable month of the preceding fiscal year, unless specifically authorized to do so by resolution of the county legislative body. The authorizing resolution must identify a corresponding funding source equal to the amount of excess allotment authorized. The excess allotments so authorized shall become a part of the final operating budget. During the time that the continuation operating budget is in effect, the budget may be amended according to the procedures for amending a final operating budget, and amendments shall be made as necessary to provide for debt obligations and court-ordered expenditures.
- (2) The continuing budget, authorized by this subsection (b), may continue in effect for the months of July and August and, upon approval from the comptroller of the treasury or the comptroller's designee after a showing of extraordinary circumstances, may continue for the month of September; provided, however, no such continuation budget may extend beyond September 30 of any fiscal year. The county shall submit justification for extending the continuing budget through the month of September to the comptroller of the treasury or the comptroller's designee for approval by August 15. The comptroller of the treasury or the comptroller's designee may request any additional information as may be required to properly review the continuing budget extension request. The comptroller of the treasury or the comptroller's designee shall report the comptroller's approval or disapproval to the county legislative body within seven (7) business days after receipt of the request and any requested supplemental documentation, upon which the county legislative body may take action to extend the continuing budget for the month of September. The fact that the county is operating under a continuation budget shall not, by itself, be grounds for disapproval of a tax and revenue anticipation note or other comparable financing.
- (c) If the county legislative body and the county school board fail to agree upon a budget for the county department of education by August 31 of any year, then, by operation of law, the budget for the county department of education shall be equal to the minimum budget required to comply with the local match and maintenance of effort provisions of the TISA. However, if for three (3) consecutive years, the county legislative body and school board fail to agree upon a budget and the department of education receives the minimum required funding for that fiscal year by operation of law, then, the budget in the third year shall include a mandatory increase that is equivalent to three percent (3%) of the required funding from local sources for schools; provided, however, this increase shall not be required if during any of those three (3) years the LEA failed to submit its budget proposals in accordance with a timeline provided for in § 5-9-402. This subsection (c) shall not apply in any county having a population of more than three hundred twenty-five thousand (325,000) according to the 2010 federal census or any subsequent federal census.
Amended by 2022 Tenn. Acts, ch. 966, s 87, eff. 7/1/2023.
Amended by 2016 Tenn. Acts, ch. 1080, s 2, eff. 5/20/2016.
Amended by 2015 Tenn. Acts, ch. 170, s 1, eff. 4/16/2015.
Acts 1959, ch. 190, § 4; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A., § 5-927.
Notes of Decisions
Cited in 2
cases, 1988–2006 · leading case: State Ex Rel. Weaver v. Ayers, 756 S.W.2d 217 (Tenn. 1988).
State Ex Rel. Weaver v. Ayers, 756 S.W.2d 217 (Tenn. 1988). “The county legislative body is then required “to adopt a budget and appropriate funds for the ensuing fiscal year,” T.C.A. § 5-9-404(a), but under T.C.A. § 5-9-404(b), “[t]his section shall not be construed as affecting the laws relative to the budget of the county board of…”
Bob Patterson, Tr. of Shelby Cnty., Tennessee v. A.C. Wharton, Jr., Mayor of Shelby Cnty., Tennessee (Tenn. Ct. App. 2006). “§ 5-9-404(a) (2005). By awarding the Trustee his attorney’s fees at a rate of $250 an hour, the County argues that the trial court erred by substituting its judgment for that of the county legislative body, which exercised its budgetary authority under the Tennessee Constitution…”
— Tenn. Code Ann. § 5-9-404(a) — 2 cases
State Ex Rel. Weaver v. Ayers, 756 S.W.2d 217 (Tenn. 1988). “The county legislative body is then required “to adopt a budget and appropriate funds for the ensuing fiscal year,” T.C.A. § 5-9-404(a), but under T.C.A. § 5-9-404(b), “[t]his section shall not be construed as affecting the laws relative to the budget of the county board of…”
Bob Patterson, Tr. of Shelby Cnty., Tennessee v. A.C. Wharton, Jr., Mayor of Shelby Cnty., Tennessee (Tenn. Ct. App. 2006). “§ 5-9-404(a) (2005). By awarding the Trustee his attorney’s fees at a rate of $250 an hour, the County argues that the trial court erred by substituting its judgment for that of the county legislative body, which exercised its budgetary authority under the Tennessee Constitution…”
— Tenn. Code Ann. § 5-9-404(b) — 1 case
State Ex Rel. Weaver v. Ayers, 756 S.W.2d 217 (Tenn. 1988). “The county legislative body is then required “to adopt a budget and appropriate funds for the ensuing fiscal year,” T.C.A. § 5-9-404(a), but under T.C.A. § 5-9-404(b), “[t]his section shall not be construed as affecting the laws relative to the budget of the county board of…”
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