Mayor Paul Young officially kicked off the FY2027 budget season with a proposed $897 million to the Memphis City Council on Tuesday, April 21.
The first term mayor’s latest proposal boasts a 2% raise for all city employees, while maintaining property taxes at the current $3.39 rate. The additional pay is projected to increase the budget by $9 million over the current spending plan. More than 70% of the budget is dedicated to personnel costs.
“This is our third budget together and I feel it is a strong budget that you all will appreciate,” said Young. “This budget was really built with a clear focus of delivering for the people of our city.”
Young also said “significant trades” were made during the process to present a “fully-vetted” budget. Priorities include public safety, blight removal, workforce and youth development, and affordable housing. The city also plans to embrace its culture as an “economic driver.”
Increases in salaries, pensions and healthcare were offset by cuts to nonessentials spending, Young said. Room was also made for “some strategic investments.”
Over $150 million “worth of pressures and reduction opportunities” were reviewed alongside another $38 million in division requests. In the end, Young’s budget team frees up $6 million by unfunding vacant slots in the city’s finance department and Office of Community Enhancement. The positions could be funded at a later date, if needed. Significant cuts on supplies and materials were also made.
Auto registration fees were also reset to align with “actual collection levels” too. According to the mayor, overestimations appeared to have occurred in recent years.
“We worked with every single division to get where we are today. This is not a paper exercise. We challenged all of the numbers from every division,” said Young. “We didn’t just use assumptions when we came into this. We based it on hard decisions.”
Meanwhile, Memphis is projected to take in $589 million in property taxes in FY2027, according to estimates provided by the University of Memphis. The current year’s take is $574 million. The new revenue comes from property taxes paid by the xAI, which Young said contributed roughly $26 million to the local coffers. All other revenue streams remain relatively unchanged. However, the city’s population continues to decline at a rapid pace. An estimated 22,000 residents moved out of Memphis between 2020 and 2024.
The persistent exodus coincides with a new state law that went into effect this year that will allocate state tax dollars based on population size. As Memphis continues to shrink demographically, so will its money from the state.
Instead of being alarmist, Young offered a potential temporary silver lining for the dwindling data set. “There are some questions at the state-level whether they are going to maintain a bill to provide dollars to the city based on population annual estimates. There is a bill up there to pause that and I think it may get traction.”
If the proposed pause passes, House Bill 780 wouldn’t go into effect until 2030. As a result, the city would continue to receive a tax allotment based on the 2020 census count. Reliance on the old figure could amount to another $6 million to $10 million in revenue.
A contribution to the city’s fund balance, which is currently set at zero in the new budget, may occur if that does move forward. Memphis’ $96 million “rainy day” fund remains within the state’s recommended margin of 10% of the city’s overall budget.
