INDIANAPOLIS | A looming vote on a local income tax has intensified a high-stakes game of chicken between the Lake County Council and state lawmakers.
With the council set to take an initial vote on the 1 percent tax as early as Monday, the months-long test of wills has reached a tipping point.
Key legislators have seized on that momentum, pledging to remedy local officials' main gripe about the tax: the seemingly uneven formula for splitting up the roughly $80 million the tax would raise.
But the deadline to pass the tax is Dec. 31, and the Indiana General Assembly doesn't return to work until Jan. 8 -- meaning county officials must decide whether to take a leap of faith.
"If I was on the (Lake County) Council, I'd be a little leery of that," said Rep. Dan Stevenson, D-Highland. "There's no guarantee that it (the distribution formula) would get straightened out when session starts."
The standoff further illustrates the mistrust that permeates discourse between Lake County -- the only county without an income tax -- and the Legislature.
In April, lawmakers passed legislation that will freeze most local government budgets -- denying $15 million next year -- if Lake County doesn't adopt a 1 percent income tax dedicated solely to property-tax relief. The 91 other counties, including Porter, were given the option of passing such a tax, but only 11 took the plunge.
While it's not their only complaint, local leaders have taken aim at the state formula for distributing the income tax proceeds, which favors the property-tax heavy northern cities of East Chicago, Gary and Hammond at the expense of higher income suburbs, including Crown Point, Highland and Hobart.
Sen. Luke Kenley, a co-architect of the spring income tax mandate, rebuffed initial requests to rework the distribution scheme, which is the same for all 92 counties.
"Upon further reflection, I think that if there is a fairer distribution formula that works for Lake County, (without creating) some other type of problem, I'd be more than happy to take a look," Kenley, R-Noblesville, said this week.
Several region lawmakers, including Rep. Earl Harris, D-East Chicago, say they will address the formula during next year's legislative session. But they're urging the Lake County Council to pass the tax now.
"Under the current distribution formula, you'd be substituting one form of (tax) unfairness for another," said Highland Clerk-Treasurer Michael Griffin.
Highland residents currently would pay $1.5 million more in income tax than they'd get back in property-tax relief, while East Chicagoans would see a $2.91 return on every dollar taken from their paychecks.
Griffin is offering a pair of potential solutions. One would use all income-tax proceeds to cut Lake County government's property tax budget by roughly a third, a move that would benefit equally all county property owners.
The other proposal, which Griffin calls a more "just formula," would split the proceeds, with 60 percent of the money distributed based on how much the taxpayers of each community pay in income tax. The remaining 40 percent would be dispersed by population, which Griffin says would ensure a fair share for lower income communities.
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