By John Byrne, Post-Tribune staff writer
Lake County is about to lose its last, diminutive ally in the fight against the income tax.
Pastoral Sullivan County has for years held the line against income taxes alongside Lake County.
But that kinship is about to end.
The Sullivan County Council has passed a 0.3 percent economic development income tax, leaving Lake as the only county among 92 in Indiana without some kind of local income tax.
Sullivan County's income tax was supposed to take effect this month, until Gov. Mitch Daniels extended all deadlines for new taxes until Oct. 1.
A rural county southwest of Indianapolis on the Illinois border, Sullivan has largely escaped the ire of state legislators, many of whom see income taxes as a more equitable way to raise revenues locally than property taxes.
Lake County, with its large population and well-documented history of property tax conflagrations, has found itself front and center in state attempts to reform the tax system.
The General Assembly has put Lake County on notice: Pass an income tax by Oct. 1, or we're freezing your property tax levies.
Officials in Sullivan County said they felt the pressure to pony up income tax proceeds.
"When we've had projects we wanted to finish, we definitely heard from the state. 'We won't help you until you help yourselves,' " said Sullivan County Council member Marilyn Salesman.
Still, county commissioner Carter Phegley said it was with difficulty the county agreed to adopt the new tax.
"We have a lot of independent people down here," Phegley said. "People didn't want to give in, but we're a small county, and we need more revenue."
Lake County should have a better chance of holding out, Phegley said.
"With all the business and manufacturing up there, Lake County might be able to make a go of it," he said. "I wish them luck."
But State Rep. Bruce Borders, R-Jasonville, an avowed "small government guy" who represents Sullivan County in Indianapolis, said he believes the county jumped the gun with the new income tax.
"I'm sure the county has found some projects they would like to pay for now, but at the time they adopted it, the main argument seemed to be that they were losing out on some revenue they could be getting," Borders said.
Lake County could be a different matter, Borders conceded.
"Lake County has, let's face it, had its own set of well-publicized problems with property taxes and other things that have put it on the General Assembly's radar a little more," he said.
Yet five of the seven members of the Lake County Council said Monday they would vote against a new income tax if the vote was taken this week.
Only Christine Cid, D-East Chicago, said she would vote for a income tax to be used for property tax relief. Council President Elsie Franklin was not available to comment.
Cid cited a county-funded report by Crowe Chizek, showing East Chicago residents would receive back nearly three times the money in property tax relief that they contributed in income tax.
"I have to support a proposal that benefits my constituents," Cid said.
Council member Tom O'Donnell, D-Dyer, has constituents who will likely see their income tax payments flow disproportionately to other parts of the county.
"People in my district don't expect dollar for dollar property tax relief," O'Donnell said. "But they would like to do better than 40 cents on the dollar."
Porter County has had an income tax on the books since 2003. Porter County Commissioner Bob Harper said he believes Lake County should continue to hold out.
"With all the changes in the property tax code currently in the works, chances are in a few years things will be decidedly different," Harper said. "They pass an income tax today for property tax relief, and tomorrow the state will tell them to use the revenue for something else. They should wait until the dust settles before doing anything."