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New state formula for population counts could cut Memphis shared revenues by about $10M in FY27, budget staff warn
Summary
Tennessee law now requires annually updated certified population estimates (including special‑census integration) for apportioning state shared taxes; city budget staff and MTAS estimates suggest Memphis could see an FY27 apportionment decline in the order of $10 million as higher growth areas receive larger shares.
City budget staff told the council on Tuesday that a recently enacted state law (often called HB780/Act 501) will change how certified population is calculated for apportioning state shared tax revenue — moving from census or special‑census updates to annual population estimates that integrate special census results. That, staff said, will cause apportionments to shift toward faster‑growing counties and cities.
TASER and municipal finance experts briefed the Budget Committee and said the policy change will not affect FY26 allocations already in process, but will most likely alter the FY27 apportionments because the new certified population will inform July 2026 collections distributed in August 2026. Staff noted that Census Bureau estimates show Memphis and Shelby County population estimates have been flat or declining in recent years while Metro Nashville/Davidson County has been growing.
"This means the proportion of funds that communities receive each year is likely to change," the cityfinance summary said. Municipal Technical Advisory Service (MTAS) per‑capita modeling and preliminary forecasts indicate the change could be material; staff gave a working estimate of roughly a $10 million reduction for Memphis in FY27 allocations, contingent on state collections and final methodology.
Budget staff cautioned the council that the change reduces the smoothing that previously buffered cities from year‑to‑year shifts and that the city must treat the FY27 budget with additional caution. The administration signaled it would continue to finalize its executive proposal but council budget leaders used the briefing to warn members about downside revenue risk and the need for disciplined expense prioritization during final budget work.
Council budget leaders urged more frequent updates with numeric scenarios during the coming weeks and said they will consider the estimates as they negotiate priorities in the FY27 cycle.
