Shelby County’s property owners are set for an unscheduled tax rate cut after the state comptroller’s office overshot on appeal revenue applied to last year’s appraisals.
Shelby County Assessor of Property Javier Bailey informed the Board of Commissioners of the potential windfall from the $17.5 million “cushion” during the Wednesday, Feb. 18, Budget and Finance Committee meeting.
The current rate of $2.69 is expected to drop between “three and four pennies” in 2027. State law requires property tax revenue to remain revenue-neutral following reappraisals. Tax rates are set every four years after appraisals. The most recent was in 2025.
“The bottom line is you’re going to have to give some of this money back,” Bailey said.
In most years, reappraisals result in higher property values. When that happens, counties are required to lower tax rates to prevent collecting more revenue than the previous year. The appeal funds are made available to reimburse taxpayers whose properties are overvalued during annual assessments.
To date, less than $4 million of the money has been refunded to taxpayers, with projections totaling $6.5 million by the next certification on April 20. Moreover, the overestimates appear to be nearly countywide, with only Millington meeting appeal projections.
The county’s largest city, Memphis, has used 19% of its allowance, while Germantown has reimbursed 37%. Rounding out the estimated refunds are Bartlett at 56%, Collierville at 23% and Lakeland at 5.4%.
“They (Tennessee Comptroller’s Office) are going to come in and say, ‘Shelby County, you’ve got to recapture part of that … whatever that savings is, that quote surplus is, and give that back to the taxpayers,’” Bailey said.
Ironically, the projected windfall was set in motion by the comptroller’s office by creating such a large appeal cushion. A worksheet provided by the office sets the rate, and counties are required to abide by the figure. The 2026 projections were a holdover from the 2021 reappraisal year; officials used that in calculating the trend.
A similar overshoot occurred in 2021.
“I objected to their using that figure. I said that was an anomaly. I don’t think that figure should be used,” Bailey said. “We thought it should be a little more than half that — about $8 million to $8.5 million — based on what we had seen from the trending of appeals.”
However, two groups of lawyers sided with the state, so the larger cushion remained.
Commissioner Michael Whaley also criticized the comptroller’s office. During the 2026 budget season, Shelby County didn’t receive a certified tax rate until June 23 — just over a week before the July 1 budget deadline.
“The earlier we are able to get that back, the better. We didn’t get the certification rate from them until quite late last time, which put us a little behind, I think,” Whaley said. “The earlier we know exactly what we’re dealing with, the easier it is to fit it within the proposal.”
The comptroller’s office will receive updated numbers from the county in 20 days, although officials have already been notified of the issue. Taxpayers will not receive rebates.
Term-limited Mayor Lee Harris is expected to submit his final budget proposal in late April or early May.
