Can a Tennessee city or county add its own fee on top of the state's fee for a state-issued permit or license?

Plain-English summary

Tennessee cities and counties are creatures of the state. They have only the powers the state has handed them, expressly or by necessary implication. So when the state has set a fee for a license or permit, a local government cannot increase it or pile its own fee on top of it unless state law actually authorizes that move.

The AG walked through the layered analysis. A "fee" is a regulatory or service charge, distinct from a tax, and must bear a reasonable relation to the service or regulatory cost. Imposing a license or permit fee is generally an exercise of police power, which belongs to the state. Local governments exercise police power only to the extent the state has delegated it. Even when delegation exists, local governments must stay within any statutory conditions, may not contravene general law, and must keep the fee reasonable and nondiscriminatory.

The AG also flagged the flip side. The legislature can expressly preempt local fees (Tenn. Code Ann. § 62-35-131(a)(1) does exactly that for private protective services), can impliedly preempt by occupying the field, or can implicitly bar local fees when those fees would impede the statute's purpose.

Currency note

This opinion was issued in 2017. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

The question came from a state senator wrestling with a common municipal-fees problem: when the state has set a $X fee for a permit or license, what room does a city or county have to charge its own $Y on top of that? The AG laid out the controlling principles, drawn mostly from a century of Tennessee Supreme Court cases on police power, fees versus taxes, and the limits on local authority.

Fees versus taxes. City of Tullahoma v. Bedford County set the working definition: a fee is a charge for regulating an activity or defraying the cost of a service, and it must bear a reasonable relation to the objective or the expense. Porter v. City of Paris (1947) and S&P Enterprises v. City of Memphis (1983) are older anchors for the reasonable-relation rule. The opinion expressly limited itself to license and permit fees and parked the tax question.

Police power belongs to the state. Nashville Gas & Heating, Harrell v. Speed, and City of Chattanooga v. Veatch established that imposing a license or permit fee is an exercise of police power. Holdredge v. City of Cleveland and Miller v. City of Memphis confirmed that police power, including the authority to impose license and permit fees, belongs to the state. Local governments are political subdivisions; they have only the authority the state has delegated. City of Lebanon v. Baird and Bayless v. Knox County are the touchstones for that "no inherent authority" principle.

Delegation works two ways. Express delegation comes from a specific statute. Implied delegation can come from necessary implication within the powers the state has assigned. Either way, when local governments exercise delegated police power, they must respect any statutory conditions and the limits of general law and the constitution. City of Bartlett v. Hoover (1978) is the citation for "local exercise must not contravene general law." Southern Ry. v. City of Knoxville (1968) reinforces that reasonable, nondiscriminatory local regulation alongside state regulation is permissible if no actual conflict exists.

Preemption cuts the other way. The legislature can preempt local fees by:

• Express preemption: Tenn. Code Ann. § 62-35-131(a)(1) preempts every kind of local fee for private protective services.
• Implied preemption: a local fee that would impede the statute's purpose can be struck down. Town of Middleton v. City of Bolivar (Tenn. Ct. App. 2012) is the cited example.
• Field preemption: when the legislature comprehensively regulates a profession statewide, State ex rel. Beasley v. Mayor of Fayetteville (Tenn. 1954) blocks local "tack on" fees.

The bottom line was a textbook Dillon-rule recital. Local governments may exercise only the express or necessarily implied powers delegated by the state. License and permit fees added on top of state fees require state authorization, must respect statutory limits, must be reasonable, and must not conflict with the general law or constitution.

Common questions

Q: Can a Tennessee city or county add a local fee to a state-issued professional license at its own discretion?
A: According to this opinion, no. The local government would need express or implied authority from state law to do so. Without that delegation, the fee is unauthorized.

Q: What if the state statute setting the fee is silent about local add-ons?
A: Silence is not authorization. The AG read the framework as requiring an affirmative delegation from the state. Local power is the exception, not the default.

Q: What if the state statute does authorize a local fee?
A: Then the local government may impose it, but only if the fee is reasonable, only within any conditions or caps the statute imposes, and only in a way that does not conflict with other general law or the state constitution.

Q: What's an example of express preemption of local fees?
A: Tenn. Code Ann. § 62-35-131(a)(1) for private protective services. It prohibits any municipality, county, or political subdivision from requiring an additional authorization, permit, license, or fee on those licensees.

Q: How does this differ from a local tax?
A: The opinion expressly stopped at fees and did not address taxes. Local taxing authority is governed by a separate set of statutes and constitutional provisions; the analytical framework is different.

Q: What's "field preemption" in this context?
A: When the legislature has comprehensively regulated a profession or activity at the state level, local governments cannot tack on parallel licensing or permitting requirements. State ex rel. Beasley v. Mayor of Fayetteville (1954) is the leading Tennessee case.

Citations and references

Statutes:

• Tenn. Code Ann. § 62-35-131(a)(1) (private protective services local-fee preemption)

Cases:

• City of Tullahoma v. Bedford County, 938 S.W.2d 408 (Tenn. 1997)
• Porter v. City of Paris, 184 Tenn. 555, 201 S.W.2d 688 (1947)
• S&P Enterprises, Inc. v. City of Memphis, 672 S.W.2d 213 (Tenn. Ct. App. 1983)
• Nashville Gas & Heating Co. v. Nashville, 177 Tenn. 590, 152 S.W.2d 229 (Tenn. 1941)
• Lewis v. Nashville Gas & Heating Co., 162 Tenn. 268, 40 S.W.2d 409 (Tenn. 1931)
• Harrell v. Speed, 113 Tenn. 224, 81 S.W. 840 (Tenn. 1904)
• City of Chattanooga v. Veatch, 202 Tenn. 338, 304 S.W.2d 326 (Tenn. 1957)
• Tucker Corp. v. City of Clarksville, No. M2002-00627-COA-R3-CV, 2003 WL 21250811 (Tenn. Ct. App. May 30, 2003)
• City of Lebanon v. Baird, 756 S.W.2d 236 (Tenn. 1988)
• Bayless v. Knox County, 199 Tenn. 268, 286 S.W.2d 579 (1955)
• Holdredge v. City of Cleveland, 218 Tenn. 239, 402 S.W.2d 709 (Tenn. 1966)
• Miller v. City of Memphis, 181 Tenn. 15, 178 S.W.2d 382 (1944)
• Draper v. Haynes, 567 S.W.2d 462 (Tenn. 1978)
• City of Bartlett v. Hoover, 571 S.W.2d 291 (Tenn. 1978)
• Southern Ry. v. City of Knoxville, 223 Tenn. 90, 442 S.W.2d 619 (1968)
• Town of Middleton v. City of Bolivar, No. W2011-01592-COA-R3-CV, 2012 WL 2865960 (Tenn. Ct. App. July 13, 2012)
• State ex rel. Beasley v. Mayor of Fayetteville, 196 Tenn. 407, 268 S.W.2d 330 (Tenn. 1954)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2017/op17-012.pdf

Original opinion text

STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL
February 24, 2017
Opinion No. 17-12
Authority of Local Government to Impose Additional License or Permit Fee

Question
If the state, by law, charges a fee for the issuance of a certain permit or license, does a local government have the authority to increase the state fee or impose a fee additional to the state fee for the issuance of the permit or license to the constituents of the local government?

Opinion
A local government does not have authority to increase the state fee or to impose a local fee in addition to a state fee for the issuance of a permit or license unless the local government is authorized to do so by state law. If explicitly authorized by statute or implicitly authorized within the powers delegated by the state to local governments, a local government may impose a local fee in addition to the state fee, but only if the fee is reasonable and only if imposition of the fee otherwise comports with applicable limitations, restrictions, and conditions.

ANALYSIS

A "fee" is a charge imposed by the state or local government for the purpose of regulating some activity or defraying the cost of providing a service or benefit to the party paying the fee. City of Tullahoma v. Bedford County, 938 S.W.2d 408, 412 (Tenn. 1997). A fee must bear a reasonable relation to the objective to be accomplished or to the expenses involved in providing the service. See Porter v. City of Paris, 184 Tenn. 555, 562, 201 S.W.2d 688, 691 (1947); S&P Enterprises, Inc. v. City of Memphis, 672 S.W.2d 213, 216 (Tenn. Ct. App. 1983).

Imposition by the government, either state or local, of a license or permit fee is generally viewed as an exercise of the government's police power. See Nashville Gas & Heating Co. v. Nashville, 177 Tenn. 590, 152 S.W.2d 229, 233 (Tenn. 1941); Lewis v. Nashville Gas & Heating Co., 162 Tenn. 268, 281, 40 S.W.2d 409 (Tenn. 1931); Harrell v. Speed, 113 Tenn. 224, 229-30, 81 S.W. 840 (Tenn. 1904). This is so because effective exercise of the police power necessarily involves expenditure of resources, which makes it reasonable to require the business, traffic, act, or thing that necessitates policing to bear the expense of regulation. See City of Chattanooga v. Veatch, 202 Tenn. 338, 304 S.W.2d 326 (Tenn. 1957) (upholding annual license fee on passenger vehicles); Tucker Corp. v. City of Clarksville, No. M2002-00627-COA-R3-CV, 2003 WL 21250811 (Tenn. Ct. App. May 30, 2003) (municipality authorized by statute to charge connection fee for new connections to its water and sewer systems).

Sovereignty resides in the state. Local governmental entities, such as counties and municipalities are political subdivisions of the state. They have no authority except the authority expressly delegated to them by the state or necessarily implied from state law and they may exercise only those express or necessarily implied powers delegated to them by the state. City of Lebanon v. Baird, 756 S.W.2d 236, 241 (Tenn. 1988); Bayless v. Knox County, 199 Tenn. 268, 281, 286 S.W.2d 579, 585 (1955). Accordingly, police power, including the authority to impose license and permit fees, belongs to the state and only passes to local governments if and to the extent conveyed by the state. Holdredge v. City of Cleveland, 218 Tenn. 239, 247-48, 402 S.W.2d 709, 712 (Tenn. 1966); see also Miller v. City of Memphis, 181 Tenn. 15, 21, 178 S.W.2d 382, 384 (1944) (generally, "a municipality has no inherent authority to enact ordinances whose validity and enforcement rests upon general police powers . . . but it cannot be doubted that the State may delegate its authority, or some portion of it.").

Thus, local governments may exercise police power, such as imposition of local license fees, if they are expressly or impliedly granted authority to do so by the state. Draper v. Haynes, 567 S.W.2d 462, 465 (Tenn. 1978). But even when police power has been appropriately delegated by the state to local government, local governments may only exercise the authority that has been expressly given or may necessarily be implied from state law. For example, local governments that are authorized to exercise certain police powers — including the imposition of fees — by statute, must comply with any statutory conditions and limitations. See City of Tullahoma, supra, 938 S.W.2d at 413. Moreover, even when counties and municipalities are delegated authority to impose a license fee in addition to a state fee, they may not exercise that authority in contravention of established principles of common law or applicable statutory or constitutional provisions. City of Bartlett v. Hoover, 571 S.W.2d 291, 292 (Tenn. 1978). As long as there is no such conflict, reasonable and nondiscriminatory local regulation of activity is permissible, even if the state regulates the same activity. Southern Ry. v. City of Knoxville, 223 Tenn. 90, 98-99, 442 S.W.2d 619, 622 (1968).

On the other hand, just as the legislature may delegate to local governments the authority to impose fees in addition to or in excess of state fees, the legislature may preempt the authority of local governments to impose fees for licenses and permits, either expressly or impliedly. For example, Tenn. Code Ann. § 62-35-131(a)(1) explicitly preempts local fees: "No licensee or registrant [for private protective services] shall be required to obtain any authorization, permit, or license from, or pay any other fee or post a bond in, any municipality, county, or other political subdivision of this State to engage in any business or activity regulated under this chapter." Similarly, if a local license fee or permit requirement would impede accomplishment of the legislature's objectives, then a court may find that a particular statute implicitly prohibits or preempts imposition of a fee by a local governmental entity in addition to the state fee. See Town of Middleton v. City of Bolivar, No. W2011-01592-COA-R3-CV, 2012 WL 2865960 at *12 (Tenn. Ct. App., July 13, 2012) ("A municipal ordinance may be preempted by state law to preclude the charge of fees in excess of an authorized rate . . . .").

The legislature also may choose to occupy the entire field on an issue, thereby precluding any additional regulation by local government. For instance, when a profession is comprehensively regulated state-wide, local governments may not "tack on" additional licensing fees. See State ex rel. Beasley v. Mayor of Fayetteville, 196 Tenn. 407, 415, 268 S.W.2d 330, 333 (Tenn. 1954) ("[W]here the subject of the legislation is of State-wide concern and the Legislature has appropriated the field and declared the rule, its declaration is binding throughout the State . . . .").

In sum, a local government does not have authority to increase a state fee or to impose a local fee in addition to a state fee for the issuance of a permit or license unless the local government is authorized to do so by state law. If explicitly authorized by statute or implicitly authorized within the powers delegated by the state to local governments, a local government may impose a local fee in addition to the state fee, but only if the fee is reasonable and only if imposition of the fee otherwise comports with applicable limitations, restrictions, and conditions.

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE SOPHIA BLUMSTEIN
Solicitor General

JAMES R. NEWSOM
Special Counsel

Requested by:
The Honorable Ken Yager
State Senator
G19 War Memorial Building
Nashville, Tennessee 37243