Shelby County Commission held off on a vote setting the FY2026 property tax rate during Wednesday’s Budget and Finance committee meeting after members discovered Mayor Lee Harris’ $1.7 billion budget proposal is $9.5 million above tax projections.
The annual rate is based on forecasted tax collections, which are supposed to balance with the yearly budget. Instead, the Harris administration relied on past revenue projections for the proposal’s overly optimistic collection rate forecast.
“Finance has treated them like they are the same, but it’s not,” said Commissioner Edmund Ford Jr. “You cannot just come up with $9.5 million just because you have hopes and wishes and dreams.”
To come up with the projections, the administration parsed months out of past revenue hauls. One figure exceeded a 100% collection rate. The total contrasted with the monthly projections the Shelby County Trustee’s Office typically crunches.
In years past, the county has struggled to meet its collection rate on a variety of taxes. Newman confirmed the county is on target with its current collection goals as FY2025 winds down. But the FY2026 proposal…
“Including a 98% collection rate for realty and personalty is not going to happen, and you will have a $9.5 million hole in your budget,” quipped Shelby County Trustee Regina Morrison Newman.
Nevertheless, Shelby County Deputy Budget Director Michael Thompson defended the use of the revenue projections. He also pointed out the documents bore Newman’s name on the ledgerhead.
“This is a tremendous budget that I am very proud of,” prefaced Thompson.
But if the administration’s tax collections goals aren’t met, the county could be forced to begin laying off personnel. Budget priorities, such as raises for Shelby County Sheriff’s Office jail employees and for county workers, also could be imperiled.
“I can’t be proud of a proposed budget that has a $9.5 million gap,” shot back Ford.
One option to cover the gap is to increase Harris’ proposed FY2026 property tax rate by three cents. Eliminating TIF (Tax Increment Financing) is another. Cutting the appeals allowance from the tax assessor’s office could work too, provided no one appeals their appraisal.
All three options were given a thumbs up by Thompson.
“I think Trustee Newman just mentioned several great ways that we can reach a number to ensure that all of our Shelby County employees and citizens are serviced appropriately in FY2026,” he replied.
Members agreed with Commissioner Brandon Morrison’s request to kick the item to the next committee meeting on June 18.
The budget overshoot is the latest wrench in the works of a contentious budget season. Harris kicked off the negotiations with a claim that his FY2026 proposal included a 66-cent property tax cut. However, commissioners continue to dispute the claim.
If the rate were to remain at $3.39, increased property tax values would lead to a tax windfall, which is prohibited by the state.
The administration and commissioners are waiting on the state trustee’s office to certify a rate. Thompson confirmed a resolution is “prepped and ready” to include an “appropriate number.”
