Budget committee probes Q3 general fund rollforwards, asks staff to footnote fund-balance transfers

Walter Person, chief financial officer for the City of Memphis, told the City Council budget committee on May 12 that the fiscal year 2025 third-quarter general fund report shows revenues and expenditures roughly in line with Q3 pacing but that encumbrances and transfers make the headline gap look larger than the underlying shortfall.

The council chair, Chair Carlisle, and several council members pressed the administration to make the report easier to read for the public. Chair Carlisle asked staff to provide a list of encumbrances rolled forward from FY24 that exceed $200,000 and to footnote transfers in that are effectively fund-balance moves rather than arm’s‑length revenues.

Why it matters: the committee’s review matters because transfers in from other funds and encumbrances carried from the prior fiscal year affect available operating cash and the appearance of whether the city is running a deficit or simply balancing through one‑time moves. Person said those distinctions are “important” to understand at the council and public level.

Person explained that some of the line items creating confusion are encumbrances — “encumbrances are set up by contracts, and they’re basically funds that are earmarked,” he said — and adjustments the administration made after budget passage. He walked council members through several identifiable revenue additions and corrections that changed the year‑to‑date picture, including a $5,000,000 council-approved MATA adjustment; $1,835,000 in FEMA reimbursements from task force deployments; and smaller receipts such as rental fees from Crown Castle for cell‑site leases.

Council members repeatedly asked for clearer annotation about which reported revenues represent transfers in from other funds or from fund balance versus receipts from outside parties. “When we say revenues in this business, we think sales tax, property tax, fines, forfeitures,” Person said. “But we never really think about a revenue as … that fund balance is … it's out there and we treat it as a revenue into the mainstream.”

Other numbers Person cited: a $6,500,000 operating transfer approach tied to street paving reimbursements, a roughly $950,000 payment to Hospitality Hub, $614,000 from the opioid settlement, and a $2,900,000 mayoral blight and youth initiative line that had to be established as a line item after the prior year’s budget. He also noted a $16,500 HR correction that adjusted an encumbrance roll‑forward.

Council members asked staff to prepare two practical changes for future reports: (1) a simple footnote or column identifying transfers in that are reimbursements or fund balance movements, and (2) a short list of encumbrances carried forward above a threshold (the chair suggested $200,000) with brief explanations. No formal motions or votes were taken; the committee treated the requests as information requests/directions to staff.

The committee also discussed timing on statewide remittances and other lumpy revenues, with Person noting that state sales tax remittances typically arrive about 60 days in arrears and that transfers in are often “lumpy” (pilot payments, reimbursements) that may arrive later in the fiscal year. The CFO said the administration will provide the requested detail in future slides and that staff are amenable to adding footnotes where it increases transparency.

Looking ahead: the committee recessed to continue hearings with the first responder divisions. The record shows the budget committee will return with the requested encumbrance list and annotated revenue schedule.