INDIANAPOLIS | State Sen. Luke Kenley, a co-architect of the income tax mandate the Legislature handed down this spring, is giving the Lake County Council a chance to air its grievances.
Kenley, a Republican from Noblesville, teamed with former Rep. Bob Kuzman, D-Crown Point, to craft legislation that will freeze most property tax revenues if the Lake County Council doesn't adopt a 1 percent income tax dedicated to property tax relief.
The council will have 30 minutes to make a presentation to the Kenley-led Commission on State Tax and Financing Policy at its Sept. 17 meeting in Indianapolis.
Council members say the state formula for distributing the $80 million in income tax proceeds unfairly would force suburban taxpayers to subsidize unchecked spending in East Chicago, Gary and Hammond. To back up that contention, the council paid $64,500 for a study by the accounting firm Crowe Chizek.
"They spent a lot of money with Crowe Chizek kind of analyzing their situation. And I think, in fairness, we ought to give them a chance to discuss what the situation is," Kenley said. "Maybe that will help us to evaluate a little bit too."
Aside from the distribution dispute, Lake County Councilman Larry Blanchard, R-Crown Point, said an income tax for property tax relief would force taxpayers to pay more for benefits already guaranteed through the property tax circuit breaker.
The circuit breaker caps bills at 2 percent of a property's assessed value, meaning the owner of a $100,000 home pays no more than $2,000 in annual taxes. In doing so, the cap forces local governments to trim spending.
But adding an income tax to the mix would reduce the impact of the circuit breaker, meaning taxpayers would get the same overall level of property tax relief but would pay more in taxes -- and give local governments more money to spend.
"They want us to give people a break with the 2 percent credit and then turn around and tax them with an income tax," Blanchard said. "I don't think (legislators) know that is what they accomplished."
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