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County administration warns House Bill 306 could force tax increases by removing vacancy-savings flexibility
Summary
County budget staff told the Budget & Finance Committee that House Bill 306, as interpreted by the administration, could require counties to budget full-year pay for vacant positions and thus necessitate new revenue or tax increases to balance FY26 budgets.
Audrey Tipton, Shelby County Director of Administration and Finance, and Gerald Thornton, director of human resources, told the Budget & Finance Committee that county staff are tracking House Bill 306 and that, as currently drafted, the measure could have major fiscal consequences for local budgets.
Tipton said the county is implementing a new enterprise resource planning (ERP) platform for budget submissions this cycle and that the mayor’s office will clearly identify which elected-official requests are included in the proposed budget and which are not. She informed commissioners the annual audit was complete.
On HB306, Tipton and Thornton described a potential fiscal effect they said would stem from limiting or eliminating vacancy-savings assumptions in budgets. Under current practice, county budgets include vacancy savings — a conservative allowance reflecting positions that will remain unfilled for parts of the year — which effectively reduces the net salary obligation counted at adoption. Tipton said the legislation, as the administration interprets it, would require counties to budget for full-year costs of filled and vacant positions, which would need to be covered by new revenue (raising taxes or finding alternate revenue sources) in order to balance the budget.
Thornton added that the bill language could permit certain elected officials to set salaries for their own staff independently, potentially conflicting with a countywide compensation study. He said the bill names five enumerated officials and, as written, could allow those offices to increase personnel pay independently of a county compensation policy, undermining the study’s uniformity.
Tipton and Thornton said county staff are monitoring the bill; Director Thompson (not present) was in Nashville meeting with the comptroller and legislative staff. Commissioners asked for timely updates on HB306 because the bill’s fiscal interpretation could affect FY26 budget planning and possible tax or revenue assumptions.
Ending: County budget staff said they will flag for commissioners which elected-official requests are included in the proposed budget and will provide updates on legislative developments affecting vacancy-savings and compensation authority.
