As Memphis and Shelby County leaders work to finalize budgets for the next fiscal year, questions about tax rates, employee pay, public transit funding, and future revenue remain at the forefront.
Those issues were the focus of a discussion on the week's WKNO/Channel 10 “Behind the Headlines,” where Shelby County Commissioner Michael Whaley and Memphis City Council Member Janika White joined host Eric Barnes and Daily Memphian reporter Bill Dries.
In Shelby County, one of the key issues is the property tax rate after the countywide reappraisals. Officials face the decision of either adopting the state-certified recapture rate of $2.66 per $100 of assessed value or maintaining the current rate of $2.69. Keeping the current rate would result in nearly $9 million in additional revenue.
“The consideration [is] mainly around the contractual items that we've committed to and certainly the costs that increase as you go over time,” Whaley said. “And I think also, just as importantly, the need to replenish the fund balance to make sure that we have reserves for emergencies as they come up and to manage cash flow throughout the year.”
Whaley addressed concerns about the county's financial status, noting that reserve levels meet state expectations, even though they are below a higher internal target.
“The state actually says that our fund balance is appropriate relative to other fund balances across the state,” he said. “It's just our internal policy that is higher, and we're below that internal policy.”
On the city side, White said there has been little discussion about changing Memphis’ property tax rate. Instead, budget conversations have focused on employee compensation, staffing levels, and council priorities not included in Mayor Paul Young’s proposed spending plan.
The administration has proposed a 2% pay increase for city employees, while the American Federation of State, County, and Municipal Employees (AFSCME) has sought a 5% raise and a $5,000 bonus. At the same time, city leaders are looking for ways to stretch limited resources.
White noted that the mayor’s proposal already includes significant spending reductions.
“The mayor, when he proposed this budget, for one of the first times since I've been on the council, already included about $34 million in cuts, in addition to, I believe, about $17 million in cuts for vacancies,” White said.
Vacancy savings have become an increasingly important budgeting tool for both city and county governments. White mentioned that Memphis evaluated positions that had been unfilled for over 18 months and redirected those funds, resulting in approximately $17 million in savings. Shelby County has taken a similar approach, according to Whaley.
“When you have a large number of vacant positions that carry for years, those are funds that are restricted for those positions that could be redeployed elsewhere,” he said.
Beyond personnel costs, officials are also weighing how major economic development projects could affect future revenues. Both White and Whaley discussed the expected tax implications of data centers and xAI’s operations in Memphis, but warned against assuming those revenues will remain stable over time.
Whaley noted that rapidly changing technology could affect future property valuations.
“I think it'd be important for us to be more conservative in how we look at that,” he said. “The current year or the new fiscal year impact is mainly offsetting the reduction from the recapture rate.”
White said most feedback she hears from residents centers not on revenue but on environmental concerns.
“Their focus is, is the risk worth the reward?” she said.
Public transit funding also emerged as a key concern. White said the Memphis Area Transit Authority (MATA) continues to face significant financial challenges, even with ongoing efforts to improve operations and acquire additional buses.
“I believe that we all can agree that MATA needs a lot more funding for the square miles that it covers in terms of transportation,” White said. “That's just the reality of the situation.”
The officials also discussed the financial impact of the Memphis Safe Task Force. Both said overtime costs for law enforcement increased significantly during the initiative and that reimbursements have not fully covered local expenses.
“It hit the county quite a bit,” Whaley said. “Even if you just look at the sheriff impact of overtime, increased resources, there were some reimbursements that have happened, but not nearly enough to offset the actual costs.”
White said the city has experienced similar challenges as officials continue to evaluate the long-term budget impact and crime rates resulting from the initiative.
