Floyd County councilors warn state property-tax bill will shrink local revenue; move to update financial plan and appropriate EMS funds

Floyd County officials and outside advisors said proposed state legislation and rising service costs threaten the county's near-term revenues, and the council asked consultants to update the county's comprehensive financial plan and help model revenue options.

Paige, a financial consultant, told the Floyd County Council that "Senate bill 1 is limiting the levy growth quotient," and described the bill's caps as "0% in 2026, 1% growth in 2027, 2% growth in 2028," with a more complicated formula thereafter. She said the county's unit would face an estimated revenue loss of about $469,000 in 2026, almost $900,000 in 2027 and about $1,200,000 in 2028.

The consultants recommended updating the county's comprehensive financial plan (CFP) to reflect projected legislative outcomes and to model alternatives the council could adopt before budget season. "We would like to update your comprehensive financial plan," Paige said, and offered to send an updated agreement and scope of services that the council would decide at a future meeting.

Why it matters: Council members said the combined effect of the proposed property-tax changes, other bills and new contractual costs could force difficult choices about taxes, bonds and shifting fund responsibilities. Jason, a consultant advising on debt and bond timing, said the county's Series 2022 geobond will mature this year and that "if you do nothing, that tax rate that's in place right now will fall off," noting communities often issue a replacement bond to keep a tax rate level. He added the bond process generally takes "three or four months" and that bond closings to set a tax rate for the next year typically must occur before Dec. 31.

Council members and staff discussed specific revenue tools and deadlines. Paige and Jason outlined options that included reissuing a general obligation bond to pay capital projects, reestablishing a phased-in capital development tax (which the consultants estimated could generate about $700,000), adjusting the local income tax up to the 2.5% ceiling noted by state lawmakers, and reviewing a proposed House bill (House Bill 1461) that could require adoption of a wheel tax to remain eligible for community crossings grant funds.

Council members identified an imminent operational need: EMS service funding. Council discussion put the EMS contract cost at roughly $1.4 million and noted the county is already paying for EMS services but had not yet appropriated the expense to the correct fund. Multiple council members said they did not want to rush a larger reallocation of $2 million from the general fund into the public safety local income tax fund while legislation remains unsettled. Instead, the council agreed to prioritize appropriating EMS contract payments into the appropriate fund and to delay larger movements of reserves until the CFP update and legislative outcomes are clearer. One councilor summarized the approach as "slow down a little bit" while working on individual options.

The council discussed other local revenue items that interplay with the legislative changes: the property tax replacement credit (PRT), the county's phased-in capital tax (CCD/Q Capital Development Fund) and community foundation distributions. Officials said Community Foundation projections provided to the county were about $500,000 lower per year than earlier figures used in the draft forecast, affecting multi-year projections.

Next steps and timing: The consultants will send a revised scope of services for the CFP update. Staff and council members asked the consultants to model scenarios showing the revenue and taxpayer impacts of combinations of options (for example, issuing a bond and reestablishing a capital tax, or raising local income tax). Jason advised the council to consider the calendar: changes to local income tax generally must be set by Oct. 31, while bond closings to set tax rates are typically completed by Dec. 31.

Council members asked that the consultants break the CFP work into discrete "buckets" that can be modeled individually and then combined as the legislative session concludes. The council set an expectation to revisit the scope and decisions at upcoming meetings in spring and summer.

The meeting included debate about how operating expenses have shifted across multiple funds in recent years and repeated requests for clearer, countywide fund summaries. Participants agreed the CFP should present a consolidated, multi-fund view and 5-year projections that incorporate clarified Community Foundation distributions and the new EMS expense.

The council did not take a formal vote on taxes or bonds during the meeting; instead, it directed staff and consultants to provide the updated analysis and to return with options for formal consideration.