Marshall County leaders weigh tax options, consider tapping reserves to protect roads amid state cuts

Marshall County commissioners reviewed a county financial snapshot on June 8 and discussed options to protect a planned road program after county staff warned a state reduction in motor‑vehicle/highway funding could cut the county’s highway receipts by roughly $250,000 a month for a limited period.

The county’s presenter told the panel that the general fund now receives a growing share of revenue from local income taxes rather than property taxes and that year‑to‑date balances remain healthy after several years of surpluses. “We have three main revenue sources… property tax, income tax, miscellaneous tax and fees,” the presenter summarized, noting supplemental distributions this year boosted receipts by about $2.2 million across the general and jail funds.

But staff also flagged a near‑term problem for roads: a state move to reduce MBH funding by about 50% starting in August that could create a roughly $1 million shortfall over several months unless offset locally. “You can expect roughly $250,000 less each month for the highway department,” the presenter said, adding the state might reimburse counties later but that any reimbursement would likely occur months after the cut and would require legislative action.

Commissioners discussed several mitigation choices: (1) use some combination of the supplemental distribution and the existing general‑fund balance to keep the road program moving this year; (2) dip into the county’s rainy‑day reserves or create a short‑term loan; or (3) scale back the road plan until state revenues normalize. Commissioner Tim said he favored avoiding a knee‑jerk pullback and urged letting the situation play out while preparing a plan to move ahead if needed. “I would rather make an adjustment with better information next year than to make an adjustment this year,” he said.

The panel also debated local tax decisions tied to jail and court funding. Staff explained that when the jail bond is paid off, the county will face a new statutory framework that limits future jail‑tax revenue to operations and maintenance; that change, plus options for the county income‑tax rate, pushed the county to consider whether to retain the current 0.25 rate or adopt a 0.20 rate for jail operations while converting the remaining 0.05 to other uses. Staff estimated reducing the jail rate to 0.20 would lower receipts by about $800,000 annually but said bond payoff savings would offset part of that.

No formal votes were taken. Commissioners asked staff to prepare a timeline and options for public notice and hearings. Staff recommended beginning public‑notice steps in July and aiming for action in August to meet state filing deadlines, while recognizing the council cannot adopt a final plan without required public hearings and formal resolutions.