Shelby County borrows $125M to meet payroll as commission blames Mayor Harris for fiscal troubles

MEMPHIS, Tenn. (WMC) - Shelby County Government is borrowing $125 million, primarily to make payroll for its approximately 4,600 employees. This marks the second time in seven months the county has taken out a loan to cover operating expenses.

In November, the county borrowed $43 million to meet financial obligations. The latest $125 million loan was approved by the Shelby County Commission, which on Monday night directed blame at Mayor Lee Harris and his administration for the county’s financial condition.

Commission confronts mayor’s financial team

Commissioner Mick Wright said the county’s fiscal troubles carry public consequences.

“Because it falls on us... the headlines are going to say that Shelby County doesn’t know up from down because it’s not able to approve a budget that the state can accept,” Wright said.

The Tennessee State Comptroller has rejected Shelby County’s annual budget every year since 2022 for not including pertinent information.

Commissioner Erika Sugarmon sponsored an ordinance that would legally require the mayor’s administration to provide commissioners with the financial data they request. The commission passed it on first reading; it takes three readings for final passage.

“Hopefully going forward when we ask for details we will receive details, because again, this fiscal year budget we did not receive it as requested,” Sugarmon said.

Finance director responds to commission criticism

County Finance Director Audrey Tipton pushed back on commissioners during the meeting.

“When we represent on a monthly basis and a quarterly basis, we would like to see more than four commissioners sitting in the gallery to hear it, and you could possibly get some of the answers that you’re looking for right now,” Tipton said.

Wright responded to Tipton’s remarks:

“Now we’re being told that unless we attend every committee meeting, then not to expect information, you know. I appreciate the director of finance, but that’s just not always possible,” Wright said.

Loan to cost taxpayers millions in interest

The $125 million loan is needed until property taxes are collected. The borrowing is expected to cost taxpayers between $2 million and $3 million in interest and fees.

Commission Chairwoman Shante Avant said the situation carries a clear learning moment.

“This is a very hard lesson that we can’t spend what we don’t have,” Avant said.

The State of Tennessee still has to approve the commission’s request to take out the loan.

Action News 5 reached out to Mayor Harris and his administration Monday night for comment, but did not hear back.

UPDATE: Mayor Harris’ team provided Action News 5 with a statement Tuesday morning:

A tax anticipatory note is not long-term debt to fund new spending. It’s a common financial tool used to bridge the gap as we await property tax revenues, which always come in later in the calendar year. While we manage the rebuild of our reserves, we have passed a balanced budget every year and have emphasized following that adopted budget.

In other commission news: the Shelby County Commission has not yet approved the $1.7 billion budget for Memphis-Shelby County Schools. Classes start next week.

The school budget is typically approved shortly after the county budget, which was approved a month ago.

School board Chairwoman Natalie McKinney declined comment, referring Action News 5 to a school board spokesperson for more information.

That MSCS employee did not return the phone call or message left for her.

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