By Keith Rhoades, Reporter-Times
krhoades@reportert.com
Morgan County property owners will be getting a break on their property taxes but that break will come will be accompanied by more than a 100 percent increase in the county income tax rate.
During a special meeting Tuesday night, the Morgan County Council took advantage of state House Enrolled Act 1478 and approved increasing the county income tax from 1.27 percent to 2.72 percent for the six elements that will make up the county income tax.
The increases include new local option income, property tax relief income and new public safety income taxes.
By law, the council had to decide on increasing the local income tax by Aug. 1. The new tax rate will go into effect Oct. 1.
Beginning in 2008, residential and commercial real property owners in Morgan County could see as much as a 30 percent property tax replacement credit on their tax bills. That replacement credit will be paid for with an increase in the county's income tax.
Council members Bryan Collier and Tony Ross said their actions will help people on fixed incomes deal with the problem of property taxes. Collier said many older residents have incomes that are not subject to income taxes and therefore will not be affected by the increase. Ross said many of those people would be affected by an increase in their property taxes.
The six council members at the meeting said while their actions don't relieve property owners of their burden of paying for services, it does help spread that burden over a larger segment of the population, mainly those who rent or don't own real property. Council member Bob O'Neal was absent.
For a person earning $1,000 a week, the county income tax will go from $12.70 to $27.20.
Council members had previously discussed the increase in property taxes and how HEA 1478 could benefit the county.
County attorney Pete Foley said while some property owners did see increases in their property taxes, there appeared to be no major problems such as what occurred in Marion County, where businesses weren't facing the same increases as residents.
Foley said the lack of a major increase in county property taxes could be because of the council enacting the .07 percent inventory replacement income tax that took effect about three years ago. That spared property owners the increase in property taxes that were needed when the inventory tax was removed this year he said.
A recent county reassessment, Foley said, helped with determining the property tax rate.
HEA 1478 gives county councils a way to offset future increases in property taxes, a way to give a property tax replacement credit to property owners, and a way to raise money for public safety items.
According to figures given to the county by the Indiana Department of Local Government Finance and the Indiana Department of Revenue, the county should receive about $2 million that can be used in 2008 to help offset any increase in the levy.
The money raised by that tax will be used by all taxing agencies in the county.
The second option under HEA 1478 allows the county to impose an income tax of up to 1 percent, money from which will be used to provide a property tax replacement credit.
The council approved the 1 percent rate and designated the money to be used as a tax replacement credit for all real property owners, both residential and commercial.
The state estimates that in 2008, the county will receive about $13 million in property tax replacement money.
Foley said the third tax, to be used for public safety, had a long list of items that could be funded.
Some of those items include, adding personal to the court system, adding on to the jail, a work release center, more jail staff and deputies, funding for police and fire pensions and emergency medical services.
A .25 percent tax rate will raise about $3.3 million according to the state.
The council approved the .25 tax rate. According to Foley, the money raised from the tax will be divided among the cities, towns, and the county. The townships will not receive money from that tax he said.
The county is currently conducting a study to determine the best direction to take on improvements to the jail. Council members said they felt the income tax increase would be the best way to fund any improvements needed at the jail.
Council member Don Adams asked Foley if the money could be used to provide funding for countywide ambulance service. Foley said the law does allow the county to use the money for emergency medical services such as ambulances.
Foley said all the amounts listed by the state are estimates and could change depending on the economy.
Also, he said the figures are based on current debits by all taxing agencies. Foley said those numbers would change if a taxing agency, such as a school system or city, issued bonds for a project that would be repaid with property taxes.
HEA 1478 also establishes in each county a nine member tax and capital projects review board which can approve or reject and civil or school capital project over $7 million dollars. The review board will go into effect in 2009.