New income tax rate takes effect in Putnam

The subject of extensive conversation by county officials throughout the spring and summer, a new local income tax rate is now in effect in Putnam County.

As of Oct. 1, the county's resident income tax rate went up from .015 to .0175, the result of the Putnam County Council adding a Local Option Income Tax (LOIT) to fund public safety at a rate of .0025.

The Public Safety LOIT means taxpayers will owe about $75 more annually per $30,000 of income.

The county's non-resident income tax rate of .0075 remains unchanged.

The need for the additional funds came before the council and commissioners back in March, when officials learned of the need for a software upgrade for 911 Dispatch. The upgrade will cost the county $960,000.

In searching for the solution, the possibility of adding a LOIT for public safety came to light. The county also pursued financing options.

The Putnam County Commissioners ultimately chose to finance the project through North Salem State Bank while the County Council continued to grapple with the exactly how to distribute the new tax funds.

Local income taxes such as the County Adjusted Gross Income Tax (CAGIT) and County Economic Development Income Tax (EDIT) are normally distributed by a formula prescribed by the state. While the county gets the lion's share in this formula, incorporated cities and towns within the county also receive a piece of the pie.

This means these taxes also benefit Bainbridge, Cloverdale, Fillmore, Greencastle, Roachdale and Russellville.

The council seriously considered the idea of specifying that all money raised or at least a higher-than-normal rate go to the county.

One drawback of this plan would have been that all the money would have to go to the 911 project, leaving nothing to fund other public safety projects.

Ultimately, the council chose not to specify the distribution, meaning that the county gets a little less, but can use the money for multiple public safety purposes, which could additionally include police, fire and rescue and emergency medical service.

With no penalty for early repayment on the loan from North Salem State Bank, other projects could be funded even as the county is repaying the loan. Officials have expressed their interest in repaying the loan well ahead of its 10-year term.

The council's choice could also be a boon to local municipalities in funding their public safety projects..

Putnam County is one of six Indiana counties with new income tax rates commencing this month. The others are Blackford, Greene, Hendricks, Howard and Tipton.