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October 5, 2015

Commissioners explain decision to fast track local option income tax

In recent weeks there have been many comments made by city and town officials regarding the Local Option Income Tax (LOIT) recently passed by the County Commissioners. This would begin in 2016. We would like to clarify that it is not our intent to bypass any city or town officials. In the past, we have had a good working relationship with all of our cities and towns and we trust that this good relationship will continue.
One might ask, "Why is this tax needed at this time?" The answer is simply due to the fact that within the past four to five years our state has made financial decisions that seriously affect Indiana's county budgets.
In 2010, the State Legislature implemented a tax cap on propertytaxes that provides 1% tax cap on residential, 2% tax cap on agriculture, and 3% tax cap on business. This means that property taxes can only be collected up to 1% of net value of a homestead. This resulted in a loss for counties making it necessary for budget reductions to makeup for the loss. In addition to the tax cap, a Homestead Credit was implemented along with a Veteran's Credit which covered for the losses in tax collection of over 40%.In 2012, the State eliminated the State Inheritance Tax. On the surface this was a great idea, but it was also a loss in our County funds of over $150,000.00 per year and in no provision was the State to replace this.
Also in 2012, the 911 Fund (which for years had been administrated by Counties through the Auditor's office) had no additional employees that were needed. The State decided that they could run the system better and took over the administration using over 7 million dollars per yearto fund the new State department. Also, they recently raised the 911 month fees on our phone bills from 70 cents to 90 cents rather than funding the shortfall of the Counties in their 911 systems used the additional funds for State Administrative costs.Within the past year, the State of Indiana made the decision to stop building prisons and to transfer all "low level" felons back to the county level with, once again, no additional funding was provided.
County Officials did not consult with our municipal partners throughout the year that we had recently hired Umbaugh & Associates to complete an audit and verify our concerns regarding additional taxes. This audit was not complete until early September. The result of the audit was that the Public Safety Tax must be implemented before October 31, to be effective January 1, 2016. The various municipalities were then notified that it was necessary for them to approve or disapprove the tax as soon as possible. We felt this was not an issue due to the fact that most council meetings occur only once a month, which made it difficult to reach out to the different entities in reasonable amount of time. Looking back, we as County Officials should have walked the entities through the reasoning and advised them to the additional funding that the city would receive as a result of this tax.

Whitley County Commissioners

Tom Rethlake
George Schrumpf
Don Amber