In the event the governing body does not pass the budget by June 30, T.C.A. § 6-56-210 takes effect. It states:

If for any reason a budget ordinance is not adopted prior to the beginning of the next fiscal year, the appropriations for the last fiscal year shall become the appropriations for the next fiscal year, until the adoption of the new budget ordinance.

While this provision exists, municipalities are strongly urged to meet the June 30 deadline. If a budget is not submitted to the Division of Local Government Finance within two (2) months of the beginning of the fiscal year, the local government may not issue debt or financing obligations until the Division of Local Government Finance has approved the budget, or as otherwise provided for a manner approved by the Division of Local Government Finance.