Commuter tax

House Bill 1007 would shift some local welfare cost to the state and allow counties to impose individual and corporate income taxes of up to 1 percent.

The bill could be a boon to Lake and other counties that draw workers who live in other counties. On a per-worker basis, counties would have to send 25 percent of their individual income tax revenue to the county that worker commutes to for work. For example, Porter County would send Lake County 25 cents of every dollar it collects from a resident who commutes to a workplace such as Mittal Steel. Lake would have to do the same for any of its residents who commute across the county line. Republican lawmakers complained that the provision is unfair to rural Indiana and have dubbed Kuzman's legislation a "big city bill."
BY PATRICK GUINANE, Times of Northwest Indiana
pguinane@nwitimes.com

INDIANAPOLIS | House Democrats advanced a property-tax relief plan Wednesday that would shift some local welfare costs to the state while allowing counties to impose a new tax on individual and corporate income.

Introduced a day earlier by state Rep. Bob Kuzman, D-Crown Point, the proposal cleared the House Ways and Means Committee on a mostly partisan 16-9 vote. The Democrat-led committee rejected more than a dozen Republican attempts to amend House Bill 1007, which now heads to the full House.

The plan offers two forms of tax relief:

* Local child welfare costs would be rolled back to 2005 levels, with the state agreeing to shoulder at least $120 million a year in added costs. The state also would send counties a one-time refund of $149.5 million, including about $5 million for Lake County.

* Counties could charge a new income tax of up to 1 percent on individuals and -- for the first time -- corporations. Local governments would have to spend at least 60 percent of the individual income tax proceeds on property tax relief, while the rest could be used for police, fire and other public safety services.

"It's an excellent first step," said Portage Mayor Doug Olson, who was in town for a meeting of the Indiana Association of Cities and Towns. "(Public safety) is the biggest part of your budget anyway."

Republican legislators didn't share such enthusiasm. Uniondale Rep. Jeff Espich, the budget negotiator for the House GOP, said the plan would give local governments more than $500 million in new money at a time when the entities should be cutting costs.

"Don't expect us to support this bill," he said. "This is a tax-and-spend bill."

Critics also labeled the legislation a "big city bill" that would benefit Indianapolis and other metropolitan areas at the expense or rural Indiana. The proposal includes a so-called commuter tax, which, on a per-worker basis, would send 25 percent of a county's individual income-tax revenue to the county a particular resident travels to for work.

Kuzman said the provision would help defray public safety and road repair costs incurred by high-employment areas. No figures were available Wednesday, but Kuzman acknowledged that Lake County and other metropolitan areas stand to benefit.
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