The smart plays, explained

The smart plays, explained

Facing the same squeeze, counties reach for the same handful of moves, and a few run them better than the rest. None of these are obvious, and most counties don't invent them. They come from two places: nearly every county hires a financial adviser — Baker Tilly alone advises 34 of the 92 — who models what the cap and SEA 1 will do to that specific county and recommends the fix, and counties copy each other, so a move that works in one shows up in its neighbors within months. The ones who did well usually ran that model early, in 2024 or 2025, instead of waiting for the first short budget. Every county works the same four levers — the property-tax levy, the local income tax, its cash reserves, and the timing of its debt. Here is how the best of them used each, and why it worked.

Led by: Hendricks · Bartholomew · Whitley

Why it works: property-tax revenue is now unpredictable — a county can lose millions to the cap in a year it never planned for. A written floor under each fund's cash forces saving in the good years, so a bad year means dipping into the cushion instead of cutting services or borrowing at a worse rate. Hendricks adopted one and pushed its general-fund cash to 338 days, close to a full year of operating money in the bank. Whitley and Bartholomew each built reserves above $6 million. When the cut landed, they had room to move; counties living hand-to-mouth, like Knox, were taking emergency loans from their own Rainy Day funds.

Led by: Howard (with Kokomo)

Why it works: the local income tax a county collects is split with its cities by a formula tied to their property-tax levies, so a city normally takes a big share. A jail, though, serves the whole county, city residents included. Howard County got Kokomo to voluntarily give up its income-tax share for two years, sending the entire jail tax to the county — so the county funded the jail with a 0.4% income tax instead of the roughly 1.2% it would have needed alone. Same building, a third of the tax. It only works with real political cooperation, which is why it's the only signed county–city deal in the state, out of 35 that are talking.

Led by: Marshall · Randolph

Why it works: when a county finishes paying off a bond, the property-tax rate that was covering that debt is set to expire. Marshall County had a jail-bond rate about to drop off and, instead of letting it lapse, redirected the same rate to jail operations by a 7–0 vote, inside the narrow legal window to do it. The taxpayer sees no increase — they were already paying that rate — and the county keeps about $7.1 million a year it would otherwise have lost. Randolph played the clock the other way, issuing its jail and morgue bonds before the new rules took effect to lock in cheaper borrowing. Both moves live or die on timing: a window that's open briefly, then closes.

Used by: Floyd · Dubois · 11 others

Why it works, and where it stops: the squeeze is on the property-tax levy specifically, and the levy has a growth cap. Local income tax does not. So a county can take costs it used to pay from its property-tax-funded general fund — jail medical, dispatch, EMS, employee health insurance — and pay them from income-tax funds instead, lowering what it needs from the capped levy. Dubois moved $4.2 million of health insurance this way "to meet the levy limit"; Floyd shifted jail and public-safety costs into a public-safety income tax. Thirteen counties did some version of it. But it has a floor: the money still comes from taxpayers, through a different tax, and once you've moved everything you can, there's nothing left to shift. It also makes the general fund look nearly empty — the trap in the next line.