The City of Memphis closed its 2026 fiscal year with General Fund net revenue of $16.6 million against a balanced adopted budget, according to the city’s fourth-quarter financial update in the City Council’s committee documents for 10 November. The figures are preliminary and unaudited. Local taxes, the city’s largest revenue line, came in at $604.5 million.
By our arithmetic, that is $29.4 million, or 5.1%, more than in FY25, and $27.8 million above the funding budget, more than the $23.8 million by which total revenue beat it. The city’s update does not split local taxes by taxpayer. The Daily Memphian reported that much of the rising property tax revenue is “likely from SpaceX’s Memphis data centers”.
Business Pill · Who Pays for the Grid
A short explainer on who pays for grid upgrades for large loads such as data centers. It teaches the general idea only and does not discuss Memphis.
The key insight: The City of Memphis ended FY26 with $16.6 million in General Fund net revenue against a balanced adopted budget, its preliminary, unaudited fourth-quarter update shows. Local taxes rose to $604.5 million. By our arithmetic, that is $29.4 million more than in FY25 and $27.8 million above the funding budget. The city’s update does not split local taxes by taxpayer.
Chief Financial Officer Art C. Davis II wrote that the city “ended FY26 with preliminary General Fund revenues exceeding expenditures by approximately $10.4 million, compared to our year-end forecast of $7.5 million”. The net revenue line in the update’s General Fund table reads $16,645,521, the figure the Daily Memphian reported; we could not reconcile the two numbers from the document.
Davis wrote that the difference “warrants careful review as we move into FY27”, and that the forecast “was developed before my appointment”. General Fund revenue totalled $933.6 million against a $909.8 million funding budget. The update was listed on the council’s Budget Committee agenda as the “FY26 Q4 & FY27 Q1 Comprehensive Financial Update”.
City of Memphis General Fund local taxes, actual, FY21 to FY26, from the city’s preliminary, unaudited FY26 fourth-quarter update: $604.5 million in FY26 against a $576.7 million funding budget. The city does not split the line by taxpayer. The $29.4 million rise and the $27.8 million gap to budget are our arithmetic.
Where the SpaceX Credit Comes From
Katie Miller posted on X at 20:40 UTC on 11 November: “Thanks to @elonmusk & @SpaceX, the City of Memphis finished its Fiscal Year ahead of budget for the first time in a long time”. Her post carries a Daily Memphian screenshot that reads “it seems much of the revenue increase came from SpaceXAI’s taxes”. She also wrote that the city is “tracking roughly $5.6 million ahead for the current year”.
SpaceXAI is the new name of xAI, Elon Musk’s AI company, which runs its Colossus data centers in Memphis. Mayor Paul Young has put the company’s taxes at $54 million this year between the city and Shelby County, as we reported, $25 million of it to the city, Local 24 reported. Across the state line, Southaven’s mayor says its sites bring in about $63 million a year.
How the Figures Compare
By our arithmetic, the mayor’s $25 million city share equals about 4.1% of FY26 local taxes and about 2.7% of General Fund revenue. Local taxes made up 64.7% of that revenue. The comparison is not like-for-like: the mayor’s “this year” and the city’s fiscal year, 1 July 2025 to 30 June 2026, may not cover the same period.
The Structural Read
As we read it, the city’s own update supports the surplus but not the attribution: the credit to SpaceX comes from the Daily Memphian’s reading that much of the property tax rise is likely from the company’s data centers.
As we read the scale, the mayor’s $25 million city share is a small slice of a $604.5 million local tax line, and the documents we read do not show how much of the year-end result came from the company.
Art C. Davis II, Chief Financial Officer, City of Memphis, Q4 Financial Update, October 2026
“The City of Memphis ended FY26 with preliminary General Fund revenues exceeding expenditures by approximately $10.4 million, compared to our year-end forecast of $7.5 million”
Three Implications
FOR THE CITY The CFO wrote that the gap between forecast and actual results warrants careful review as the city moves into FY27.
FOR SPACEXAI Mayor Paul Young has put the company’s taxes at $54 million this year, $25 million of it to the city, as we reported.
FOR THE DEBATE By our arithmetic, the mayor’s $25 million city share equals about 4.1% of FY26 local taxes, a comparison that may not cover the same period.
The framework argues: “The structural bottleneck isn’t computing, it’s electrons.”
As we read it, Memphis shows where that build-out lands on a city ledger: local taxes rose $29.4 million in FY26, by our arithmetic, though the city’s update does not say how much came from the Colossus data centers. The framework predates this story and does not discuss Memphis.
What Is Not Established
The General Fund section of the city’s update, the part we read, does not name xAI, SpaceX or SpaceXAI, so it does not say how much of the $29.4 million rise in local taxes came from the company. We have not seen the city’s first-quarter FY27 figures behind the $5.6 million in Miller’s post. We did not contact the city or SpaceXAI for this piece.
This Week In The AI Supercycle
The Great Convergence of Capital, Power, and Geopolitics
This week’s issue: for two years the AI build-out was priced as a supply story, and last week as a credit story. This week it was priced as a permission story, and the answer arrived as a cost, not a ban.
Memphis ended FY26 with $16.6 million in General Fund net revenue on a balanced budget, as local taxes rose $29.4 million to $604.5 million. The General Fund section of the city’s update credits no single taxpayer; the link to SpaceXAI rests on the Daily Memphian’s reading and the mayor’s $25 million city figure.
A note on sourcing. The year-end figures are from the City of Memphis’s preliminary, unaudited FY26 fourth-quarter update, published in the City Council’s committee documents for 10 November; we read the General Fund letters and tables. The SpaceXAI link is as the Daily Memphian reported it and as Katie Miller posted it on X. The mayor’s tax figures are from our earlier piece. The change, the gap to budget and the shares are our arithmetic.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
