Strong Sales Tax Can't Offset Healthcare Costs in 2027 Budget

Franklin County is heading into its 2027 budget cycle with one piece of good news and one significant challenge. 

The good news: sales tax revenue, which makes up between 60% and two-thirds of the county's general fund, is tracking ahead of projections through the first six months of 2026. Investment earnings are also running ahead of last year's pace. 

The challenge: healthcare costs are projected to increase 13% for the coming year, and salary and wage increases of 3% to 4% under collective bargaining agreements are expected on top of that. Revenue growth at the projected level will not keep pace with those increases. As a result, county agencies have been asked to reduce their 2027 budget requests by 2.5% from currently allocated levels. 

The Board voted unanimously June 30 to approve Resolution 455-26, adopting the Fiscal Year 2027 Tax Budget. The tax budget is the county's core financial planning document, identifying anticipated revenue from local, state, and federal sources and setting the guidelines county departments use as they build their annual spending requests. Those requests will be incorporated into the full appropriations measure the Board will consider in December. 

Zak Talarek, Director of the Office of Management and Budget, presented the item and told the Board that Moody's Analytics is projecting roughly 3% growth in retail sales heading into next year. That serves as the foundation for sales tax forecasting. But with healthcare and wage cost pressures running higher than revenue growth, the county is asking agencies to tighten heading into 2027, consistent with the approach taken last year. 

Commissioner Kevin L. Boyce asked Talarek for a read on what might change the picture in the second half of the year. Talarek pointed to the sales tax outperformance through six months as a possible indicator. If that trend holds into the third quarter, the county may be able to revise revenue estimates upward before December. On interest rates, Talarek noted that current forecasts lean toward holding or potentially increasing, which could benefit the county's shorter-term investment portfolio. 

The Investment Advisory Committee meets next month with Meter Investments and the County Treasurer's Office to finalize rate and investment projections for the budget cycle.