Is it Time for the State Comptroller to Take Control of Shelby County?

by Rod Williams, July 29, 2026- Shelby County Government plans to borrow $125 million to make payroll for its 4,600 employees. There is nothing inherently wrong with a local government borrowing money for large capital improvement projects, but when a government borrows money to meet payroll, that is a serious problem. This borrowing marks the second time in seven months that the Shelby County Commission has borrowed money to meet payroll for county workers. It says the government has not maintained sufficient fund balances to fund the government until tax revenues are received. This represents poor fiscal management. 

The borrowing is expected to cost taxpayers between $2 million and $3 million in interest and fees. The State has to approve this borrowing by Shelby County. Without the loan, projections show the county could face a cash negative position of over $15 million by August 2026 and a deficit exceeding $100 million by November 2026.  The budget of Shelby County is $1.6 billion. 

Shelby County Mayor Harris issued a statement that said, this is normal, nothing to see here, no problem:

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.

County Technical Assistance Service (CTAS) says this about tax anticipatory notes:

 Whenever cash flow is not sufficient to meet current expenses, which usually occurs as a result of inadequate accumulated fund balances, the county may issue revenue anticipation notes, subject to the approval of the state director of local finance. An important point: These notes must be paid off by June 30th of the fiscal year in which they are issued. This requirement insures against the approval of a deficit budget. T.C.A. §§ 9-21-801 through 9-21-803.

If this was the first time this had happened and Shelby County had a plan to get back on track, I would think this is no big deal. However, that is not the case. Is it time for the State Comptroller to take control of Shelby County?  Shelby County needs to get its financial House in order. 

 

 

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