Howard County hopeful Chrysler will pay its $8.3 million in property taxes

ken.delabastide@kokomotribune.com

The bankruptcy filing by Chrysler could impact local government entities if the automaker is unable to pay its property taxes.

Howard County is taking a proactive approach in trying to determine if Chrysler will pay the spring tax installment.

County officials have experience when it comes to the bankruptcy of a major taxpayer.

Delphi Corp. filed bankruptcy in 2006 and only paid a portion of the taxes owed. Local taxing units were able to obtain no-interest loans from the state to cover the lost taxes. Those loans have to be repaid in 10 years.

County Attorney Larry Murrell said the Chrysler bankruptcy could impact the county when it comes to tax collections.

He said the county has been in contact with Indianapolis law firm Barnes & Thornburg, which is representing the county in the Delphi bankruptcy.

Barnes & Thornburg will contact attorneys for Chrysler to determine if the company intends to make the spring property tax payment, Murrell said.

"We're hoping there will be no problem," he said. "We want to know their intention when it comes to the payment of property taxes."

Murrell said if the tax payment is not made the county will eventually get the money because it is a secured obligation.

Chrysler owes $8.3 million in property taxes, according to Treasurer Martha Lake.

"Whenever there is a bankruptcy involved, there is always a concern," Lake said. "We're hoping they will pay the taxes on time. There is no comment from Chrysler that they won't pay."

Lake said Chrysler has always paid their taxes on time and has been wonderful to work with over the years.

"We are being proactive," she said of the action by the county. "We look at the best and worst scenarios. The information we received is that Chrysler intends to do business as usual."

Jim Branham, Kokomo City controller, said city officials are concerned but there is no reason to believe that Chrysler won't pay the taxes due.

"I sure hope they do," he said. "It wasn't an issue until [Thursday]. There is no contingency plan in place right now."

Branham said the city is letting the county work with Chrysler because it is responsible for the collection of taxes.

"If there is an indication the taxes won't be paid, we will have to see how many options we have," he said. "I suspect we will seek some financial assistance from the federal or state government."

Branham said since Chrysler indicated it will meet all its obligations, the taxes will be paid.

Ryan Snoddy, superintendent of the Northwestern School Corp., said until the state took over financing the general fund, a loss of Chrysler property taxes would have had a huge impact.

"It will have some impact," he said if Chrysler fails to pay the taxes in June. "Local property taxes fund our debt service, capital projects and transportation funds."

Snoddy said he was aware of the possibility that the taxes might not be paid. He noted Chrysler has always paid its taxes on time.

"They have been good to the district," he said. "Having them in the district has made a huge difference. We will continue to do the best we can."