Mayor Paul Young’s proposed budget for FY2026 aims to strengthen Memphis’ financial foundation by contributing to the city’s fund balance, a key factor in its credit rating and borrowing power. A city’s “fund balance” is what is left over when you subtract all expenditures from the revenue that is collected. During a presentation to the Memphis City Council, Young outlined a nearly flat $880 million proposal, which would mark a shift after the city did not contribute to its fund balance in FY2025.
“Our goal this year is to make a significant contribution to the fund balance,” Young said. “It will take all of us working together to achieve it.”
The meeting, held Tuesday, April 8, focused on the draft budget’s key priorities, including funding for public safety, blight remediation and staff pay increases. While the budget proposal is nearly identical to last year’s $858 million budget, Young emphasized the importance of fiscal discipline, especially as federal pandemic relief funds have expired.
“In FY2025, we did not contribute to the fund balance. But it is imperative that we do so this year,” he added.
Personnel costs would make up the majority of the draft’s funding. If approved, the city’s payroll for FY2026 would total $631,902,617, with the bulk directed toward staffing the city’s two largest employers: the police and fire departments. Staffing for blight control efforts also remains a priority.
“We’re going to continue to focus on public safety and anti-blight efforts,” Young said.
Nearly 79% of the administration’s proposal is dedicated to public safety and blight remediation. The Memphis Police Department would receive $14.5 million for fleet upgrades, while the fire department would get $5 million for its fleet. Fire department staff will also receive a 5% pay raise agreed to last year.
The priorities outlined in the budget remain consistent with FY2025.
“Over the past year, our administration has worked hand in hand with you all, not just to balance the budget, but to build a strategy that builds on what Memphians want and deserve: a cleaner, safer, stronger and more investable city,” Young said.
Materials and supplies make up 19.5% of the proposal, while 8.2% is allocated for grants and subsidies. “Other” costs account for the final 1.6%.
Despite a slight drop in revenue from a shared sales tax with the state, Young’s proposal calls for no new taxes. As a result, council members were warned that any additional expenditures added during budget negotiations would need to be offset.
The only increases in the budget are for continuity of service, property assessments, the city’s pension fund and inflation. The proposal was trimmed by $30 million after the initial draft was compiled from requests from various city divisions.
“In this environment of uncertainty, with costs rising everywhere, we made the choice to hold the line. That decision came after hundreds of tough choices across our divisions,” Young said.
Several key projects, however, remain in the budget.
The FY2026 Capital Improvement Plan (CIP) allocates $24.6 million for asphalt paving projects throughout the city. Another $8.6 million is earmarked for the planned Southwest Twin multi-use facility in the Westwood community. The Wolf River Greenway would receive $6.4 million, and Smart City projects would get $7.5 million. A new library in Parkway Village and additional public safety cameras are also included.
Transit is also expected to be a topic during budget negotiations. However, any discussion of MATA’s budget will likely take place behind closed doors. During a recent Transportation Committee meeting, City Attorney Alan Wade quickly halted discussions when the transit authority’s budget was brought up.
MATA’s use of credit cards is currently under investigation after an internal audit revealed $144,000 in questionable expenses. Council members’ inquiries about the duration of the practice were also rebuffed.
Charges to the company’s American Express card included $10,000 in purchases from online retailer Amazon, $7,000 from consumer electronics retailer Best Buy, and $5,000 in PayPal and Venmo transactions, along with other miscellaneous expenses.
The credit card has been deactivated, and discussions are ongoing with First Horizon Bank about an e-card program, e-payments and other payment services. Travel has been restricted to mandatory employee safety training.
Interim CEO Bacarra Mauldin was fired Friday, March 28.
“I know we had a robust conversation about MATA earlier,” Young said.
Meanwhile, Young’s decision to prioritize the city’s fund balance aligns with the expiration of millions of dollars in federal funding. Beginning with the FY2022 budget, the city used $100 million in CARES Act funds, followed by $161 million in American Rescue Plan Act (ARPA) funds, to cover deficits in the city’s budget. While the latter expired in 2022, the deadline for APRA fund obligations ended in 2024.
The expiration of federal funds contributed to a $1.9 million deficit in FY2025. Young hopes to turn the shortfall into a $7 million contribution to the fund balance in FY2026.
