Starting Oct. 1, Montgomery County taxpayers may see a decrease in their paychecks.
A resolution proposing to the County Income Tax Council adoption of a local option income tax to provide property tax relief was passed Tuesday at a Montgomery County Council public hearing. However, it didn't pass easily.
County councilmen Terry Hockersmith, Richard Chastain and Doug Mills voted against the resolution while councilmen Don Peterson, Brian Keim, John Frey and Jim Fulwider voted for the resolution.
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House Enrolled Act 1478 authorizes counties to impose additional rates of County Option Income Tax to fund property tax relief and require that the County Income Tax Council adopt the local option income tax to fund property tax relief on or before July 31, the resolution says.
The resolution states that an additional local option income tax at a rate of one-tenth of one percent be placed on the county taxpayers of Montgomery County in order to provide property tax relief in the form of additional homestead credits to owners of real estate in Montgomery County.
Since the county voted to adopt the resolution, it will be forwarded to all other fiscal bodies in Montgomery County so they can conduct public hearings and vote on the proposed ordinance.
Representative Tim Brown was present at the hearing to answer questions and share some insight from a state perspective. He said that from what he knows, no other county has decided to move forward with the local option income tax.
"Montgomery County would be the visionary leader," Brown said.
The tax would give Montgomery County homeowners relief in the form of homestead credits.
"Renters are taking a hit because they can't take homestead credits," Mills said. "I suppose it would be a start, but it's just not enough of time to run the numbers on the various scenarios on who's helped, who's hurts and how it really works."
County attorney Dan Taylor added that some of the people who experience the benefit of homestead exemption won't pay the income tax at all. "Mainly the elderly people on fixed incomes," he said.
Hockersmith feels that the it is just "opening up another pocket to pick."
"Taxpayers are screaming enough as it is. I'm all for relieving property taxies. I wish they would go away completely," he said.
The council discussed other ways to relieve the taxes, such as sales tax, but it would be up to the Legislature to make those decisions.
"I would just say these are some very dire circumstances," Crawfordsville Mayor John Zumer said. "I'm not kidding, unless something is done in a hurry ... I don't think you can run far enough or fast enough. These people are not going to take some of this hogwash for much longer, those are just the facts.
"What we got now is not substantial ... this might be a step but certainly is not going to alleviate the individual perception that my load is going to be decreased next year and each year ... people feel like they are taken advantage of," Zumer said. "These are some real issues."
There are three reasons why property taxes increased significantly, Dossett said at a press conference in June. Those being: changes in assessment now caused by trending; property tax rate for government units has increased; and, there was a considerable decrease in the property tax replacement credit.
Property tax bills are due Friday.
"If things continue on the trend they are now, people are going to be leaving Crawfordsville and Montgomery County," Crawfordsville Councilman Dennis Cook said.
"We're not talking about eliminating property tax, we're talking about adding income tax," he added.
"It's a Band-Aid is what it is," Hockersmith said.
The resolution says the council believes it is in the best interest of the citizens of Montgomery County that the .10 percent rate on county taxpayers be adopted.
The Crawfordsville City Council will meet noon Friday for a public hearing on the local option income tax.