Knox Council Reestablishes Cumulative Capital Development Fund

Knox residents will soon see a slight increase in their tax bills after the city council voted last week to reestablish a cumulative capital development fund. Clerk-Treasurer Jeff Houston explained the city collected such a tax until recently. The rate goes down over time and is at zero again, so the fund had to be reestablished.

He says the circuit breaker property tax caps are quite costly in terms of general fund revenue.

“Last year was about $261,000 that were billed that we do not collect because there is a cap on your property taxes of 1, 2 or 3 percent, depending on what type of property it is. And that could be estimated this year as high as $700,000.”

Houston adds the tax increase for the cumulative capital development fund is not significant.

“For an average home of about $59,000 assessment with a mortgage and a homestead deduction, the amount of this tax, if we had none before, is about $22.50 a year. And again I want to point out that the taxpayers have been paying this all along until the rate dropped.”

Houston adds money that goes into the cumulative capital development fund can be used for a number of needs within the city.

“We have bought police patrol cars. We bought a front-end loader for the utilities. Every year part of the money for the street paving and the 50/50 sidewalk program also comes out of the cumulative capital development fund.”

Houston says the money can be used for any purpose for which property tax funds can be used. He adds the city normally allocates 50-percent to streets and sidewalks annually and puts the rest toward what he calls “hard capital projects.” The fund will bring in roughly $45,000 annually, according to Houston.

Starke County and the towns of Hamlet and North Judson also have cumulative capital development funds.

The reestablished Knox fund will be good for three years before council action is required to collect additional taxes. The rate will go down gradually each year until it hits zero again. The council last week approved the resolution to reestablish the cumulative capital development fund as per state law, with no dissenting votes recorded.