Shelby County Mayor Lee Harris says his budget proposal for the new fiscal year will reduce the county property tax rate by 20% and raise the county wheel tax by $5.

But Harris immediately drew fire from Shelby County Commissioners for calling a required lower state-certified tax rate a cut in the tax rate.

In his proposal, the current county property tax rate of $3.39 per $100 of assessed value would drop to $2.73 — a 66-cent dip.

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In a social media post, Harris revealed the budget bottom line without details just ahead of presenting his administration’s budget Wednesday, May 14, during committee sessions before the Shelby County Commission.

Commissioner Amber Mills questioned Harris on the state-certified property tax rate for the county — which is $2.73 for the fiscal year that begins July 1 — and said it does not amount to a tax reduction.

“We have the option to set the tax rate at whatever level we want to,” Harris told her.

Commissioner Brandon Morrison also disputed that Harris is proposing a tax cut.

“This is holding the line on taxes, which is to be commended,” she said. “But it is not a decrease.”

“The facts speak for themselves,” Harris replied. “We have a tax rate now that is $3.39, and we have proposed a lower tax rate. There is no other way to think about it other than it is a lower tax rate.”

This Memphis budget season is all about ‘sacred cows’

The proposal comes after property reappraisals earlier this year showed increased property values. Those higher valuations prompted the state to set a recertified property tax rate lower than the current $3.39 rate.

The state sets a new property tax rate for local governments based on reappraisals. When the property values go up overall, as they did in this year’s reappraisal, the state sets a lower tax rate. State law requires that the reset tax rate based on increased values cannot produce a windfall of more revenue than the county gets with the old property tax rate.

Other highlights of the budget proposal include:

• Upping county funding of the relocation of the Regional One Health campus to $500 million over several years. The commission rejected Harris’ request to up the current $350 million commitment in the 2024 budget season.
• $24 million in county funding to pay for indigent care by Regional One.
• Maintaining the current $427 million in county funding to Memphis-Shelby County Schools and the seven suburban and special school districts within Shelby County.
• Increasing the county’s annual contribution to its pension fund from the current $85 million to $100 million in the new fiscal year.
• $3.4 million to raise the minimum pay of all full-time county employees to $40,000 a year.

Harris also said the commission will probably feel some pressure to increase the tax rate, citing cuts to federal funding from President Donald Trump’s administration.

“This budget proposal allows us to step up in the face of cuts at the federal level, hold the line on spending, doesn’t raise taxes, establishes a $40,000 minimum for our lowest earners, gives all of our employees a raise, and puts more money in the pockets of working families,” Harris told the commission in his later remarks. “We have several critical weeks ahead. And the pressure for more spending is likely going to be substantial.”

Commissioners Erika Sugarmon and Britney Thornton said Harris should have proposed a tax hike and added they cannot support increasing the county wheel tax following a $25 increase approved by the commission in 2023.

They each called the wheel tax a “regressive” tax.

Harris said the $5 increase is “to manage the unexpected drop in revenue we have seen and the sudden and inexplicable reduction in the number of vehicles that are now registered in Shelby County.” The number of registered vehicles in Shelby County whose owners pay the wheel tax now stands at 600,000, which, according to Harris, is a drop of 100,000 vehicles.

“We need to make up that difference in revenue this budget cycle,” he said.

The $25 wheel tax hike approved in 2023 was delayed from taking effect by several months because County Clerk Wanda Halbert claimed she knew nothing of the increase in spite of her objecting to the proposal before the commission approved it.

Halbert’s office also was seven months late in implementing an increase in the city’s vehicle registration fee approved last year, which cost the city an estimated $10 million in revenue.

Harris also noted he did not propose funding to build a new county jail to replace the current facility at 201 Poplar Ave.

“I realize the jail was built in 1980,” he said. “We have many more facilities that are much older.”

He cited Memphis school buildings that, on average, were built in the 1950s and the Shelby County Correction Center that is “significantly older than the jail.”