Shelby County Mayor Lee Harris is demanding that the state of Tennessee pay tens of millions of dollars owedto the countyfor housing state prisoners, warning that continued nonpayment could force service cuts or increases in taxes for local residents.
At a Tuesday community briefing, Harris said Shelby County taxpayers have been left covering a bill that “is not theirs,” after the state stopped paying for inmates housed at the Shelby County Division of Corrections nearly a year ago.
“For the last several months, Shelby County has housed individuals for the State of Tennessee while being paid nothing at all,” Harris said. “Housing an incarcerated person is expensive. It requires staffing, medical care, food, security and infrastructure.”
Shelby County declined to renew its contract in July 2025 after failing to reach what officials considered a fair and equitable agreement. When the state did not remove its inmates or pay for their continued housing, the county filed suit.
According to county data presented during the briefing, Shelby County has transferred more than $30 million from its general fund in fiscal year 2025 to cover the cost of housing state inmates — up from $20.1 million in 2023 and $27.5 million in 2024. County officials expect the cost to rise even higher in fiscal year 2026.
“If we can get a fair amount, the vast majority of our budget deficit that we have faced for years will be resolved,” Harris said. “However, if we cannot get the state to pay the bill that it owes, that means we will be left with very few options.”
The dispute is over how much the state pays Shelby County for each inmate it houses on the state’s behalf. Currently, Shelby County is holding 959 inmates for the Tennessee Department of Correction at its penal facility.
Harris said the state has offered to pay $41 per inmate per day, an amount he says falls far below the actual cost of care.
By comparison, Harris said TDOC pays Davidson County (Metro Nashville) $132 per inmate per day under a separate agreement. The U.S. Marshals Service pays Shelby County $120 per day for federal detainees, Harris said.
“Our last submission to the state to substantiate our cost per inmate came in at $110 per inmate per day,” Harris said. “Shelby County government can neither afford to house state inmates for $41 a day, nor can we afford to house them for $0 a day, which is what’s happening right now.”
Shelby County has taken the matter to the Tennessee Claims Commission.
County Attorney Lee Whitwell said state law clearly places responsibility for convicted felons sentenced to more than one year with the state unless a county voluntarily contracts with TDOC.
“If no contract exists, the Department of Correction has two weeks to pick up those inmates,” Whitwell said.
The Claims Commission has ruled that the state breached its contract with Shelby County by failing to remove inmates by the June 30, 2025 deadline. The commission denied the state’s motion to dismiss the claim and found a breach “as a matter of law,” leaving only the amount of damages to be determined.
“That’s significant,” Whitwell said. “The commission didn’t just say a potential claim might exist in the future. It found that the state breached the contract.”
County officials say they are pushing for a trial as soon as possible, though the state has resisted efforts to expedite the case. “Every day that we wait, Shelby County taxpayers are suffering,” Whitwell said.
Asked why the state is paying Metro Nashville significantly more than Shelby County, Harris said state officials have offered little justification.
“The reason given was that they had all the power and we had none,” Harris said, describing a meeting with current corrections officials. “We were told to take it or leave it — and that was it.”
Harris said Shelby County has made multiple compromise offers, including a temporary rate of around $90 per inmate per day, still below the county’s actual costs. Those offers, he said, were rejected.
Harris warned that if the issue remains unresolved, the financial consequences will fall on Shelby County residents.
“When you face a deficit this large as a result of a partner not paying their tab, you have only a couple of options,” he said. “You either cut services — which impacts all residents — or you generate revenue on the backs of Shelby County taxpayers.”
While Harris declined to speculate on a specific tax increase, he said the annual shortfall, now approaching or exceeding $30 million, gives a clear sense of the stakes.
“I’ll leave it to others to do the math,” he said.
For now, county leaders say they hope increased public attention — and the ongoing legislative session in Nashville — will pressure the state to come to the table.
“Paying nothing for services rendered by Shelby County government is inappropriate,” Harris said. “The state has to pay its bills.”
