The printers that used the waterproof paper were starting to give out at the end of the previouos contract. Since they no longer made that model, it was difficult to repair and replace. When the new (current) contract was re-bid, at the request of a lot of our license agents, the system moved to a computer based system. Most of the license agents already had a computer on their counter, and didn't want to take up additional counter space with another system like they had been doing.
With the change to the computer based system, the waterproof paper went away. The current vendor for the system runs the same system in a number of states, so it isn't unique to TN to have licenses printed on computer paper. There is the option to get a license like a credit card for a $5.00 surcharge.