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Scott County officials warn proposed property tax bills could squeeze reserves, affect bond rating
Summary
County finance staff outlined how three pending state bills — including a 10% general fund limit and a proposed 2% growth cap — could reduce reserves, speed reassessments and affect commercial and new-construction taxes, though administrators said the measures are at an early stage and would not alter this year’s budget.
Budget and Administrative Services Director David Farmer told the Scott County Board of Supervisors on Jan. 29 that three pending state property tax measures could materially affect the county’s finances in coming years.
Farmer summarized House Study Bill 596, which would introduce a 2% growth cap and make changes related to essential bonds, and two governor-backed bills (563 and 3034) that would, among other provisions, impose a 10% limit on general fund growth and shift certain tax credits into exemptions. Farmer said the proposed 10% general fund limit "represents less than one month of reserves" under current balances and "may negatively impact the county’s bond rating." He also said proposed changes to reassessment timelines—from three years to two—would change when property values are updated, with potential effects on commercial properties and new construction.
Farmer highlighted inflationary pressures on major county expenses, specifically wages, health insurance, ambulance and squad car costs, time-and-attendance software and grocery costs for the Jail and Youth Justice and Rehabilitation Center. He compared the proposed general fund limit against the Government Finance Officers Association recommendation to maintain at least a two-month fund balance.
County Administrator Mahesh Sharma said the bills are still in early stages and "would not have an impact on this year’s upcoming budget sessions," adding that with preparation the county would manage through prior fiscal challenges. Supervisors noted they would need to consider possible spending reductions as the bills progress.
The board did not take formal action on the bills during the meeting. Farmer’s summary and the county’s dashboard presentation will inform upcoming budget planning as the legislature considers the measures.
