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Thursday, May 5, 2016

County tables decision on local income tax

Wednesday, September 19, 2007

It may not get any easier next month to make a decision, but after hearing from the public Tuesday, the Putnam County Council voted unanimously to table adoption of the Local Option Income Tax until October.

More than 25 citizens turned out to hear the seven-member council discuss the tax, which has been promoted by state leaders as a way to lower property taxes by offsetting the loss with an income tax.

As the council discussed it in August, the local option income tax would amount to $1.55 for every $100 of adjusted gross income earned by county residents.

The tax has three parts -- Option A freezes the tax levies, and would allow Putnam County to assess a .3 percent income tax on residents to make up the difference for future increases in taxes. That rate would drop to a little more than .1 percent after two years, allowing a build-up of funds in case of a shortfall in the future.

Option B is dollar-for-dollar property tax relief with a 1 percent cap. That option can be applied one of three ways -- to homesteads only, to homesteads and rental property, or to property tax replacement credit, which includes commercial and agricultural interests.

Option C combines Options A and B, but also sets a .25 percent income tax to use on the broadly defined area of "public safety."

Adding that new tax to the income taxes already collected by the county -- the $1 County Adjusted Gross Income Tax and the 50-cent County Economic Development Income Tax -- Putnam County income earners would pay $3.05 for every $100 of adjusted gross income.

It was that doubling of local income tax that most of the audience disagreed with.

Resident Bette Bertram told the council she feels like a "peasant."

"I feel like I'm just working to turn over my money to the government," she said.

Bob Albright, himself a former member of the county council and one-time mayor of Greencastle, urged the council to serve the people.

"If you pass the tax tonight, you're taking food away from children in their homes," he said.

Barry Taylor warned of an ever expanding government that keeps taking from the public with little in return.

"I've never heard of a tax that once it was enacted ever went away," Taylor said.

Jeremy Carver stood up for renters, pointing out that the costs of property taxes are figured into a renter's monthly payment, so while people say renters do not pay property taxes, they pay it indirectly through their landlords.

Some county residents did speak in favor of the tax, however.

Chris Mann, a farmer and president of Putnam County Farm Bureau, said the shifting of some of the property tax burden to an income tax, which is in part what the LOIT can do, provides another revenue stream for the county.

Mann gave the council four reasons to adopt the tax.

* It will provide relief to homeowners, business owners and agriculture.

* It created more fairness and is more equitable on how things are funded. It is not fair if someone owns no property and does not pay for public services, he said.

* The tax reflects a person's ability to pay, since it is based on income.

* And it diversifies how government is funded in this county. Property taxes will still fund a majority of local government.

Farm Bureau has long felt that property taxes are very burdensome to agriculture, Mann said.

"We're not trying to get out of paying our fair share of taxes," he emphasized. "We want to pay more tax when we have more income, and less tax when we have less income."

Mark Legan, a farmer from Marion Township, said he feels the LOIT would be a first step in negotiating the future of taxes. He agreed that while the property tax system is archaic, it is likely to be around for a long time. And he did not suggest relying on state legislators to correct the ever-growing problem with property taxes.

"Who knows what the legislature will do in the future? But it seems to me you have the ability to bring some relief in property taxes with the dollar for dollar replacement," Legan said. "The problem in the taxing structure is with the schools because it is such a large part. But here is an opportunity to replace some of the property tax with the income tax."

Many of those at the council meeting have spoken out against rising property taxes in the past.

Kenneth Gibson urged everyone to go to the Indiana Statehouse during the next legislative session to let representatives know the public wants property tax reform.

But Gibson noted that while the Local Option Income Tax looks like it shifts some of the burden from property taxpayers, it is just taking money from one pocket and putting it into another.

Council member Keith Berry said it would be easy to blame state legislators for the high taxation mess, but he repeatedly emphasized that LOIT is the tool the state has given local government to help itself.

And he stated that it will not be farmers who benefit the most from LOIT.

"When I look at all the contributions by taxpayers in Putnam County, residential is going to be the biggest decrease," Berry said.

Of the $22.7 million paid in property taxes in Putnam County in 2003, 40 percent of that -- or $9.2 million -- comes from residential owners. That is, people who own their homes, and no other land.

The next largest amount -- $4.8 million, or 21 percent -- comes from agriculture.

Commercial and industrial interests both pay in around $4 million each -- around 17-18 percent.

"We've asked for property tax reduction," Berry said. "This is the tool the state has given us. We can wait, I guess, but that's not in my makeup to wait. If you've got a tool to fix a problem, I guess as a businessman I'd rather fix the problem myself."

Council member Darrel Thomas made a point of clarifying semantics in the decision.

"We don't want to get the words 'replacement' and 'reduction' mixed up," he said. "This is not property tax reduction, this is replacement, from my billfold to my property tax bill."

"I can't argue with that," Berry replied.

"And you're right," Thomas agreed. "This is the only tool we have at the moment to fix the big issue of property taxes."

Council president Mitch Proctor agreed with the pocket to pocket analogy.

"We are basically shifting where the funds come from," Proctor said. "If it's not going to come out of property taxes, it's going to come out of income."

Council member Jay Fogle openly voted his opposition to the income tax, and said property taxes in the state have long needed to be reformed. The state's most recent attempt at reform, however, did not work.

"The legislature didn't fix it," Fogle declared. "They put it in a Pamper and threw it over the wall. And they didn't tie it up very good. It went splat. And now we have to clean it up."

Fogle urged the voters to make legislators responsible for fixing the taxation dilemma.

"Two or three years from now, I think I'll be paying more in property taxes and income taxes," he said.

Berry said he knows the county has faced tough financial times recently.

Just two years ago, the council had to cut $850,000 out of the budget and lay off county employees. They do not want to get in that situation again, he said.

Council member Roger Deck said that unlike property taxes, which hit twice a year, an income tax comes out with each paycheck. But he too, felt frustrated with the property tax situation.

"We're trying to do brain surgery with a hammer," he said.

Council member Don Walton said he has talked to people who are for and against the tax.

"I can see how it will help some and hurt others. I feel like in the long run it will help us," Walton said. "Who knows what the state will do? It's a tough decision."

Council member Larry Parker said he, too, is worried about the state legislators action, or inaction, in the future.

"They're awfully good about coming down and changing the rules on it," Parker said of Statehouse decisions.

The county commissioners were also given an opportunity to weigh in on the new tax.

Kristina Warren said she agrees property taxes are unjust but did not know if the new tax was the best way to fix the current situation.

Gene Beck agreed about the pocket-to-pocket transfer of tax burden.

But he also cautioned about empty state promises from the past.

"I still think about when we passed the Wheel Tax and the Excise Tax," he said. "The state said those counties that pass it will get more money from the state for roads. It has never changed a bit. If it's done anything, it's going down."

Beck continued, "Nobody has proven to me that we're going to save any money by doing this."

Greencastle Mayor Nancy Michael represented the city's interests when she said she is concerned how the public safety money in the new tax would be distributed.

The city lost money when the county increased its CEDIT funds to make up for the inventory tax money lost from businesses last year. When the county council decided to distribute that new CEDIT money, it was distributed so that some communities gained more than they had ever collected with the inventory tax. But the city of Greencastle lost $404,000 in the change.

Council President Proctor agreed he is concerned because the county council is setting the policy for every taxing district in the county by passing LOIT.

City resident Mark Hammer, who is also an accountant, distributed a worksheet based on some of his clients that show while some people will see a property tax savings, many will see increases in income tax that outpace the savings.

"Overall, what I think you're going to experience is people who only own their own home, it will end up costing them more," Hammer said.

He pointed out that the new tax would send the county income tax from 1.5 percent to more than 3 percent. It is doubled.

"Again, individuals are the only ones who pay income tax," he said.

Attorney Laurie Hardwick asked the council to take more time to educate the taxpayers about the new income tax.

"This is so big and affects far more than 50 percent of your constituents," she said.

Some reform for property taxes are almost certain to come from the state, she said, or the legislature knows there will be a lot of people losing their next elections.

Hardwick said she would also like for the local real estate market to be educated on the issue and to have input.

Proctor commended the public at the meeting for their input, and after a brief recess from the discussion, the council regrouped and voted to table the issue.

Council member Fogle urged everyone at the meeting to discuss the Local Option Income Tax with others so the public can let the council know whether they are in favor or opposed to the tax.

The next meeting of the county council will be at 6:30 p.m. Tuesday, Oct. 16 in the courthouse annex, located at 209 W. Liberty St., Greencastle. The meeting is open to the public.

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-- Posted by Hurricane on Wed, Sep 19, 2007, at 8:09 PM

Where are the teabags!

-- Posted by Hurricane on Wed, Sep 19, 2007, at 8:11 PM

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