When you hit a deep pothole and feel the thump, you may wonder: why can’t the county or city keep up with the roads?
In part, it’s because of a $2.5 million shortfall in 2021 between what the county highway department needed to keep roads where they should be and what the county could afford. At the July 14, 2026, Montgomery County Council Meeting, Highway Director Jake Lough overviewed the circumstances. In recent years, the county enacted policy changes to chisel down the gap. The county raised the wheel tax in 2022–2023 and maxed it out in 2025, and the commissioners stepped in with roughly $700,000 a year from the general fund for the highway department.
These steps have worked: the department has improved pavement around the county. But even after all that, Lough told the council that the highway budget is still about $830,000 short of the original target and about $350,000 short of the ideal “direct lane mile” funding for pavement preservation. On top of that, he’s looking at a $15 million backlog in big road projects, including a “top 30” list that has lingered for close to two decades.
And now, Montgomery County, like all in the state, is facing a funding crisis that will touch roads, emergency services, and other government services. The crisis is due to SEA 1, a property tax reform bill passed in 2024 based on an unproven formula now scrambling how local leaders will pay for county services.
This year, Lough expressed concern about some immediate problems, which include:
Basic maintenance versus backlog
If the county can sustain that $700,000 general-fund transfer and receive full lane‑mile distributions from the state, Lough believes he can “sit comfortably” on day‑to‑day maintenance—patching, overlays, and keeping improved roads from sliding backward. What he cannot do, at current funding levels, is erase the $15 million of postponed projects.
Aging equipment
A 1965 pug mill—older than many of the people who were in the council meeting room—is still central to local asphalt production. Lough told councilors that a new unit would double daily output (from about three loads a day to six) and free up two workers’ worth of time, but it has to be custom‑built and could take about a year from bid to installation. He also pointed to the need for tractors and other machines that are currently broken or in the shop, which directly constrains mowing, shoulder work, and routine maintenance.
Manpower and capacity
Even if the money for the “top 30” roads showed up tomorrow, the department doesn’t have the in‑house labor to rebuild every mile in a short window. Much of that work would need to be contracted out and staged over several years, which makes timing and funding decisions even more critical.
The council’s fiscal advisor, attorney Dan Taylor, then contextualized the broader picture. He told the council they could make some strategic moves now, but the long‑term rules of the game are not settled.
Taylor walked through two big sources of uncertainty:
Future income‑tax authority
Taylor’s fiscal plan assumes the county will eventually be able to impose an additional 1.2% income tax starting in 2029, which could leave the general fund $900,000 to $2 million a year in the black. But that authority depends on two more state legislative sessions, and the revenue estimates themselves vary widely because of how the state will reset local income‑tax trust accounts and hold back 5% annually for three years to build a reserve.
Property‑tax caps and fixed rates
Under SEA 1 and related changes, lawmakers want to assign each unit of government a fixed property‑tax rate and make them all fit under the constitutional 1%, 2%, and 3% tax caps. Taylor told the council that the county’s current rate is about 50 cents per 100 of assessed value and could drift north of 60 cents as assessments fall, but no one knows yet what the legislature will ultimately require—40 cents, 50, 80. If the county is forced down to a fixed rate below what its current “maximum levy” would support, it could lose legal capacity to raise the property‑tax revenue that underpins everything from highway to public safety.
Against that backdrop, Taylor said it is technically possible, but risky, to lean harder on property‑tax‑backed debt for roads and equipment today. Public works loans for roads are capped at $2 million per project and must be paid off in 10 years. Furthermore, any new debt consumes part of the county’s $7.1 million general‑obligation bond capacity.
After Taylor answered questions, the council’s conversation was thick with what‑ifs. Several themes run through the uncertainties that the 2027 and 2028 legislative sessions could clarify—or worsen:
How high can local income taxes really go?
On paper, the county could move its overall local income tax (LIT) rate from 1.95% up to around 2.5%, which Taylor said could produce almost $3 million a year in new revenue in 2027–2028. But the new law splits that potential into categories:
- ●Up to 1.2% for county services.
- ●Up to 0.4% strictly for Fire/EMS.
- ●Up to 1.2% for municipal needs, with incentives for cities and towns to join a shared pool.
And, local leaders don’t know what the actual future looks like. Legislators need to lock down long‑term rules for each category, the formulas for distributing those funds, and how existing balances will be unwound.
Taylor described a likely “runway” of five to six years for units to adjust down to their new fixed rates, but there’s no firm number yet. Until counties know that rate, they cannot responsibly plan multi‑year property‑tax‑backed debt or long‑term operating commitments.
Beginning in 2029, the state will move local income taxes into a new trust account and distribute only 95% of estimated collections for three years to build a 15% reserve. Taylor expects that the state will eventually return unspent balances from the current system, but there is no clear statutory roadmap for how or when.
Listening to the July 14 meeting discussion, it was clear that SEA 1 has sown uncertainty in how local governments can serve their communities well, planning ahead and ensuring budgets are balanced, services remain intact, and rainy-day funds can be set aside responsibly. Until the General Assembly fixes what it broke, county and city leaders will be planning blind. Without fixing the flaws of 2024’s SEA 1, it remains difficult for local officials to commit to big, multi‑year investments in better roads, fleets, or public‑safety staffing.
Note: Citizens can view the meetings on the county’s YouTube channel, though volume and sound do remain barriers for many in following the entire proceedings.