In a change to the proposed FY2026 budget, Memphis Mayor Paul Young and city council members agreed to add a 3% across the board raise for full-time city employees during the Tuesday, June 10 meeting.
Members also agreed to fund $15 million of MATA’s upcoming operations, while holding the second half of its proposed $30 million budget in reserve. Its release would be timed with the presentation of a long-anticipated financial audit of the transit authority.
Young told members he has seen a “draft” of the study.
The figure is significantly short of the estimated $45 million needed to fund next year’s MATA operations. Council members also hope to see a proposed budget from the ailing agency before further funding is doled out. MATA is currently being led by an interim team of internal auditors. Young hired consultants from Transpro to run MATA after he fired former interim CEO Bacarra Mauldin in late March.
According to Young, the first portion of money “keeps things moving as it stands today.” Any plans of expanding route schedules or right-sizing the fleet with smaller buses were pragmatically ignored.
“I want to make sure when we allocate the remaining $15 million, it is not going to pay for a Grizzlies suite or a trip to India but is going to make sure we have mechanics and buses online and drivers to do it,” said council member Jerri Green.
Both Green and council member Philip Spinosa led the effort to fund MATA piece by piece.
Meanwhile, the cost of living adjustment for city employees is a compromise between the council and Young’s team. It replaces a proposed 5% raise for union employees that the council passed in May. However, that original proposal’s estimated $39.1 million cost would have resulted in a budget overrun and likely would have forced layoffs, too.
“We cannot approve an agreement that would produce layoffs, reduce services and further strain public trust. This plan offers a fair raise across the board without compromising the integrity of service delivery,” said council member Pearl Walker.
Young said the wage increase could come at the beginning of the year, around Jan 1. Members agreed to the raise on an 8–2 vote.
The mayor’s proposed $900 million budget is based on a state-certified $2.58 property tax rate for FY2026. The rate is down from $3.19 in FY2025, after increased property valuations. The city’s budget is legally required to balance with the rate to prevent a tax windfall.
Over the weeks, the budget total has grown slightly. Young’s first draft of the budget requested $881 million for FY2026, primarily due to the cost of living adjustment.
To meet the scaled-down goal, the administration and council members found $15.5 million in wiggle room from three line items in the budget. The largest chunk, $7.4 million, was reallocated from the city’s fund balance.
Another $5.5 million is gained by designating property tax revenues from the xAI leased and owned properties. The resolution also requires future xAI property taxes to be placed in the general fund’s unassigned balance.
“That approach gives us flexibility. Tying ongoing operations to project an uncertain revenue would be financially irresponsible,” said Walker. “We don’t have guarantees on that money yet. Putting anticipated funds into core operations could jeopardise our city’s bond rating and financial stability.”
The final $500,000 comes from a reduction to the City of Memphis outlined in the administration’s proposed budget.
Walker, a first-term council member, largely led the discussions with the administration to preserve a raise for city workers.
“In all my years, I don’t think I’ve ever seen a second-year member take this much ownership of a significant budget,” praised Budget Committee Chair Chase Carlisle.
In other council business, members agreed to increase the Memphis Police Department’s current operating budget by $15.3 million during an afternoon executive session.
To free up the cash, $7.9 million will be rerouted to cover other line items, including $6.2 million in overtime pay for MPD personnel. Another $7.9 million will be transferred from the Memphis Fire Department’s budget.
The MFD is currently sitting on $9 million after EMT training classes for 100 firefighters were delayed. The remaining $1.6 million in the freed-up MFD funding is dedicated to a $2.4 million adjustment to the city’s General Services division budget.
