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Officials outline how bond timing shrank Memphis ebt "cliff" but warn of revenue shortfalls
Summary
Deputy CFO Andre Walker told the Budget Committee the city's debt "cliff" has fallen from about $63.2 million to roughly $36 million because of new bond issues, refundings and maturing debt, but staff warned of FY26 shortfalls and excluded economic-development and TDZ shortfalls that still strain the debt-service fund.
Deputy Chief Financial Officer Andre Walker told the Memphis City Council Budget Committee on June 1 that a combination of bond issuances, refundings and maturing debt pushed the city's so-called "debt cliff" down from roughly $63.2 million to about $36.1 million.
"We're going to talk about the city's debt cliff," Walker said, explaining that changes in when debt service is paid year to year produce a temporary difference in annual debt-service obligations. Walker said recent GEO bond issues and refundings shifted payments between FY26 and FY27 and that the net effect reduced the headline "cliff".
Walker said the city has about $1.454 billion in GEO debt outstanding and that recent bond maturities will convert a projected FY26 structural shortfall of about $18.5 million into a projected FY27 positive position of roughly $16.3 million. He cautioned that the debt-cliff improvement is driven largely by timing: "Because we got bond issues maturing this fiscal year and we're not we don't have to pay the debt service on those bonds next fiscal year. That's how we got the debt cliff," he said.
Council members pressed staff on limits and exclusions in the presentation. Walker and CFO Walter Pson emphasized that the "debt cliff" metric as presented covers annual GEO bond debt service and does not include economic-development bonds or potential tax-increment/TDZ revenue shortfalls. Walker listed recent economic-development bond service items that were excluded from the cliff calculation and outlined several TDZ shortfalls he projects in FY27 totaling approximately $5.5 million.
Councilwoman Logan asked pointedly about overall fiscal health given the $1.5 billion debt total and population trends; Walker and Pson said rating agencies weigh many factors (unfunded pension liabilities, property-value trends, poverty and median income) and that recent increases in appraised values have helped reduce debt as a percentage of taxable value.
Both staff and members cautioned that the one-time timing benefits should not be treated as ongoing operating revenue. "So it isn't anything that we should like use this surplus of revenue to pay for ongoing expenditures," Councilwoman Cooper Sutton said during the exchange.
Next steps: Councilmembers requested a consolidated list of bond issues tied to the projects they financed and asked staff for a fuller cash-flow and debt-capacity presentation that includes pending items such as the public-works loan once Council authorizes it.
