Memphis budget committee backs flat 3% raise for city employees, ties potential XAI property tax to reserves

Memphis — The Memphis City Council budget committee on June 9 voted to recommend a resolution that would amend the fiscal year 2026 operating budget to provide a flat 3% pay increase for all full‑time city employees and to reserve projected property tax revenue from the XAI project in the general fund unassigned fund balance.

Councilwoman Walker introduced the resolution and framed it as a compromise between honoring city employees and protecting essential services. “This resolution reasonably amends the FY26 budget by implementing a flat 3% raise for all full time city employees, both represented and nonrepresented,” she said. The resolution caps the adjustment at $17,500,000 and directs the administration to provide quarterly reports showing how the increase is implemented across divisions.

The resolution, moved by Councilman Ford Senior and seconded by Vice Chair JSW, reduces the mayor’s proposed contribution to the City of Memphis fund balance by $500,000 and allocates $7,400,000 as a revised contribution to the fund balance. It also states the council’s intent that up to $5,500,000 in projected property tax revenues associated with XAI (referred to in the resolution as XAI corporation doing business as XAI) be designated to the general fund unassigned fund balance after the administration reports the final projected revenues.

Why this matters: The committee’s action changes the mayor’s proposed flat budget by creating an across‑the‑board raise for municipal employees while avoiding adoption of larger impasse recommendations the council said would require roughly $39.1 million in additional spending. Council members repeatedly emphasized balancing fiscal prudence with workforce retention concerns; Walker said tying recurring operations to uncertain future revenue would be “financially irresponsible.”

Supporting details and direction: The resolution includes three operative items: 1) reallocating up to $17,500,000 to support the 3% raise, 2) reducing the mayor’s proposed contribution to the fund balance by $500,000, and 3) allocating $7,400,000 as the revised contribution to the fund balance. The administration is directed to provide quarterly implementation reports detailing allocation of the 3% increase across all divisions and, following final cost determination, to report projected property tax revenues expected from the XAI project.

Amendments and related actions: During debate, Councilwoman White proposed two friendly amendments that were accepted by the sponsor: reallocating $400,000 from the Family Safety Center line (appearing in the transcript as a division of grants and subsidies) to LeMoyne‑Owen College as a grant; and adding language requiring the administration to report monthly at committee meetings on revenue collections and expenditures from the finance division. Those accepted amendments were incorporated into the committee recommendation.

Procedure and next steps: The committee recorded the item as a favorable recommendation to be incorporated into the fiscal year 2026 operating budget ordinance upon passage of the resolution. Committee members were clear that the recommendation will be finalized when the full council considers the budget ordinance; the budget ordinance requires seven affirmative votes to pass, and any council member may offer amendments on the floor at that time. The committee chair said the resolution and accompanying language will be refined and published before the next meetings.

Quotes: “The money isn't there. We respect and value our workforce, but we also have a duty to our residents,” Councilwoman Walker said during her remarks. She also said the quarterly reports are intended “to ensure equitable implementation.”

Context and limits: The resolution does not itself change tax rates or formally appropriate projected XAI proceeds into recurring operations; it directs that projected XAI property tax revenues be shown to the council and held in the general fund unassigned fund balance. The amount cited in the resolution as associated with XAI—up to $5,500,000—was described in the meeting as the unaccounted portion of XAI proceeds and the administration said it would clarify that figure in the final language.

Ending: The committee approved the recommendation by voice vote; committee leaders said they will finalize wording and supporting materials for the full council’s consideration at upcoming meetings.