By Maribeth Holtz, Chronicle-Tribune
mholtz@chronicle-tribune.com
While 2009 was a tough year for local units of government, local elected officials remain leery about the future financial outlook.
While the local option income tax was approved for Grant County, they say the LOIT won't make up for all revenue lost from property tax reform, so more cuts will probably have to be made.
"State revenues are still coming in under projections, and that effect ends up trickling down to local units of government," said Mike Burton, county auditor.
Burton said the LOIT would make up for about half of revenue lost because of property tax reform. That forced local units of government this year to make cuts in staffing
Burton said when they look into planning for the county's 2011 budget - which will be done in September 2010 - local government will have to remain frugal.
"2011 is going to be even more of a challenge, because we will lose a little over $700,000, whereas in 2010 we lost around $450,000," Burton said.
The Indiana General Assembly in 2010 will consider making property tax caps permanent in the state's constitution. If it approves the measure, it would go before voters in the November election.
Burton said he would support that, to make future funding of local government more predictable.
"If you're going to have the tax caps, I would support putting it in the constitution so the legislature can't change it whenever they feel like it," Burton said.
Mayor Wayne Seybold agreed. He said because the state has steered away from property tax-based funding, to more funding across property, income and sales taxes, it would behoove Hoosier residents to have property tax caps in the constitution so it remains that way.
For example, the LOIT was approved locally, but if the state legislature changes property tax law again, taxpayers might end up with a LOIT and higher property taxes, he said.
"I think it has to go in as a protection for the taxpayer," Seybold said.
Seybold said he's hopeful the city's cuts to the 2010 budget will prove helpful when planning for 2011.
"Everybody's been freaked out about 2009 and 2010, but the nasty year is 2011," Seybold said.
The LOIT has to be reviewed by local units of government every year, and Burton said if they want to make changes it would have to be approved by more than half of the local tax council.
Burton and Seybold said there probably wouldn't be a change to the LOIT.
Jim McWhirt, president of the Grant County Council, said they will review the LOIT in the spring. He said they will use whatever data is available to make the decision.
"If we have to make some tweaks, it wouldn't surprise me, because of the uncertainty in revenues," McWhirt said.
McWhirt said because state revenue projections aren't good - especially those related to income taxes - he's leery about what the future will bring for funding local government.
McWhirt is not in favor of putting the property tax caps in the state's constitution, because he said they haven't been in place long enough to determine if they are what's best for the state.
"I'm concerned," McWhirt said. "I think the changes the legislature has done on funding local government has put us in a situation where we're uncertain."