Tennessee Code Title 6. Cities and Towns § 6-56-115

(a) If a municipal legislative body has not adopted a budget by the first day of any fiscal year, and until a final operating budget is adopted, the operating budget for the fiscal year just ended and the appropriation ordinance for the fiscal year just ended continues in effect by operation of law without further action of the municipal legislative body, except as required in subsection (b);  provided, however, that all agencies of the municipality and other entities receiving appropriated 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 ordinance of the municipal legislative body.  The authorizing ordinance must identify a corresponding funding source equal to the amount of any excess allotment authorized.  Any excess allotment authorized becomes part of the final operating budget.  During the time that the continuing operating budget is in effect, the budget may be amended in accordance with the procedures for amending a final operating budget, and amendments may be made as necessary to provide for debt obligations and court-ordered expenditures.

(b) The continuing operating budget authorized by this section may continue in effect for the first two (2) months of the fiscal year and, upon approval from the comptroller of the treasury or the comptroller's designee after a showing of extraordinary circumstances, may continue for the third month of the fiscal year;  provided, however, that a continuing operating budget must not extend beyond the last day of the third month of the fiscal year.  The municipality shall submit its justification for extending the continuing operating budget through the third month of the fiscal year to the comptroller of the treasury or the comptroller's designee for approval by the fifteenth day of the second month of the fiscal year.  The comptroller of the treasury or the comptroller's designee may request additional information deemed necessary to properly review the continuing operating budget extension request.  The comptroller of the treasury or the comptroller's designee shall report the comptroller's approval or disapproval to the municipal legislative body within seven (7) business days from the date on which the request was received or the date on which any requested supplemental documentation was received, whichever is later, at which time the municipal legislative body may take action to extend the continuing operating budget for the third month of the fiscal year.