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Challenges ahead

Keweenaw County facing financial issues

EAGLE RIVER -- Keweenaw County faces significant financial challenges heading into 2027 due to expiring COVID-related relief funds and increasing operational costs, a reality that county officials warn could lead to impending budget cuts.

County Treasurer Eric Hermanson presented the stark financial outlook to the Keweenaw County Board of Commissioners at its regular monthly meeting on Wednesday. According to Hermanson, funding for a sheriff's deputy position will become uncertain by 2027, and anticipated revenues from a recent county zoning initiative did not materialize as expected.

While unexpected public safety and court grants temporarily plugged a 2025 budget gap, county officials continue to grapple with unrepeatable revenue streams, rising operational expenses, and significant unknown legal liabilities. To address the long-term outlook, the county formed a dedicated finance committee earlier this year.

"We had our first finance committee meeting," Hermanson told the board. "My concern is we can't go issue to issue over time… We don't think about all the other things going on in the long term, and I want that discussed more."

Hermanson noted that the county added a much-needed deputy position a few years ago using temporary American Rescue Plan Act (ARPA) funds. "The end is coming at the end of this year," Hermanson said. "All else being equal in 2027, we cannot afford to keep that deputy. We simply can't. We don't have the funding."

The original plan was to tighten county spending so the general fund could absorb the deputy’s salary. However, the county’s financial strategy shifted when the board decided to overhaul its zoning operations, hoping updates to the ordinance would generate offsetting revenue. Instead, the returns fell short.

"I have some real concerns. I think some of those revenues aren’t repeatable," Hermanson explained. "We got a fraction of what we were hoping it would be."

The county avoided a deficit in 2025 only because of an unforeseen $77,000 influx of state public safety and court grants, which covered a $60,000 budget amendment required for the zoning changes. However, Hermanson warned that relying on fluctuating state grants is dangerous, especially as funding requests rise for the Health Department and IT infrastructure.

"Where we sit now, we are faced with cuts for 2027," Hermanson said. "I'm hoping we can avoid last-minute, drastic cuts."

Beyond regular line-item expenses, Hermanson expressed deep concern over ongoing litigation and potential payouts looming over the county.

"What was the big concern is the liabilities. We can't have unknown, big liabilities over our head," Hermanson said, referencing ongoing lawsuits. "Right now, insurance will cover that--until they don't. It might play out and go away. It might ruin the county."

Board Vice Chair Del Rajala noted the county is back to a familiar crossroads. "Trying to decide what to spend the money on… We find the money to keep the deputy on. We're at the end of that road."

Board Chairman Don Piche agreed core county functions must take precedence in upcoming budget sessions. "We've got to consider essential services," Piche said. "I mean, that's the most important part."