Lincoln County staff outline new state tax-authority cap, commissioners discuss creating a sinking fund to protect services

Lincoln County officials spent more than an hour on July 21 reviewing how a state change to local tax rules will affect the countybudget for fiscal 2025-26.

Susan Meline, a CPA with McChesney Martin SAGEHORN who prepares Lincoln County's annual budget, told the Board that the state has replaced the familiar "lid" calculation with a new tax-authority cap calculation. The new process starts with last year's requested property taxes, increases that amount by growth the assessor certifies (typically several percent) plus a state-determined inflation factor (5.17 percent for the 2025 cycle), and then allows the county to add certain statutory exceptions such as bond payments and public-safety costs.

Why it matters: commissioners said the new formula changes how the county can hold unused authority from year to year. Commissioner Kent Weems said the practice the county used under the lid—requesting authority above what it actually levied as a buffer against higher costs laterhelped protect services during periods of inflation. Weems and other commissioners asked Meline and county staff about options to protect county operations without relying on recurring exceptions that reduce future authority.

Meline advised the board on the mechanics of the cap. She showed a worked example in which the county's authority rises with the inflation factor (about $891,000 in the county's case) plus any growth the assessor certifies. She noted unused authority will be capped in future years at a small percentage of the tax request, limiting how much can be carried forward.

Commissioners pressed for practical safeguards. Weems said counties will face pressure during deflationary or flat years and proposed building a formal cash reserve, a "sinking fund," funded now over multiple budget cycles so the county can respond to downturns without cutting services or laying off staff. Meline confirmed such a reserve is feasible but would need to be budgeted and transferred into the general fund, and cautioned the board that adding exceptions to the tax request can compound future constraints.

County clerk and finance staff present said they are already using the state-provided spreadsheet templates for the new system; Meline and staff noted the state auditor's office and the state implementation team have provided training and locked worksheets intended to reduce filing errors.

The county did not adopt any final tax authority or exceptions during the July 21 session; staff said budget worksheets were distributed to department heads and are due July 29 (administrative schedule noted in the meeting). Meline and county staff urged commissioners to consider a formal sinking fund and asked department heads to return budget requests with a clear statement of exceptions they believe are necessary.

Commissioners asked staff to surface scenarios for the board showing the effect of (a) using no exceptions, (b) using selected exceptions (public safety, bond payments), and (c) a plan that directs an annual transfer to a sinking fund.

Several commissioners and staff thanked Meline for the briefing and asked that she remain actively involved as the county converts its drafting process to the new state-prescribed forms. The county will continue budget workshops in the coming weeks before the formal hearings and property-tax certification deadlines.