Tax adjustments are still on the table in Pulaski County. The county council voted five-to-two Monday to pursue an option that would reduce the local income tax rate by 0.08 percent for 2020, while increasing property taxes on non-homestead property.
The way it would work is that the local income tax earmarked for property tax relief would go down, while the “levy freeze” portion would go up. The changes are expected to create more than $900,000 in new revenue for the county, while a few hundred thousand on top of that would be split among the county’s other taxing units, such as towns, libraries, and townships. The income tax rate is already set to go down by another 0.3 percent at end of 2020, when the jail tax expires.
Council Member Ken Boswell said the option deserves to be considered, as a way to balance the county’s high income taxes with its low property taxes. “There’s lots of businesses within the Town of Winamac and I’m sure Francesville’s the same way and within Pulaski County, lots of land and stuff, that are owned by organizations outside of Pulaski County,” he explained. “So we get no income tax from them, and they get one of the cheapest land tax rates in the State of Indiana.”
Council President Jay Sullivan and Vice-President Mike Tiede cast the two opposing votes. While they seemed open to the idea, they thought the proposed property tax increase was too high and felt that the county should wait until next year.
But representatives from some of the other taxing entities that would be impacted said that won’t be an option. Sean McGill with accounting firm Baker Tilly explained that because the council has voted to “thaw” the property tax levy freeze, the ability to make this sort of adjustment is going away. “So this is your last opportunity to make any adjustments to that rate before that rate is stamped and you cannot change it forever,” McGill said.
“So we can’t do this next year?” Council President Jay Sullivan replied. “My bad. I thought by freezing the levy, that have us the opportunity to change the levy on the property taxes.”
“On property taxes,”McGill responded. “This would be your last chance to make an adjustment to the LIT rate that is going to be cemented in stone.”
The idea that a portion of the local income tax rate would technically go up, even though the overall local income tax rate would go down, seemed to create some confusion. Still, McGill felt the option would be good for the county’s taxing units. “You have local units dying for revenue, every last penny they can get, and this will get the vast majority of them substantially more revenue by June 30 of next year,” he said. “I mean, why would you wait a year when you’re cutting jobs left and right when you have this option?”
Members of the public will have a chance to weigh in on the proposed changes during a hearing on October 21. As part of Monday’s action, council members authorized the drafting of an ordinance and the publication of a notice for the public hearing. Any changes have to be approved and turned in to the Indiana Department of Local Government Finance by October 31.