CROWN POINT | The Lake County Council found enough votes Monday afternoon to begin seriously talking about a local income tax.
It voted 4-3 to pass, on first reading, an ordinance requiring all county residents, workers and shareholders in county businesses to pay 1 percent of their taxable income.
County and municipal leaders will be meeting feverishly between now and year's end to work out how to allocate about $78 million in anticipated new tax revenues among the county's 19 cities and towns and its unincorporated area.
A fair distribution is needed to win over at least one more vote to make the tax a reality.
Councilman Thomas O'Donnell, D-Dyer, who could provide that crucial swing vote, voted Monday against the tax. However, a new distribution formula made public Monday could change his mind. The formula, in the ordinance passed Monday, would create an income tax the state pools and then returns to Lake County in the form of property tax relief to all county homeowners and landlords. But the ordinance's distribution formula is sure to breed bitter debate before any final tax vote is taken.
A super majority of five council votes likely is needed to override a veto by the three-member Board of Commissioners.
County Commissioners Fran DuPey, D-Hammond, and Gerry Scheub, D-Schererville, promised again Monday night they will veto any income tax.
The state hasn't provided a distribution system delivering a dollar of property tax relief for every dollar of income tax paid, said Michael Claytor, a consultant for the council.
The proposed plan passed by the council Monday makes winners of Cedar Lake, Crown Point, Dyer, East Chicago, Hammond, Highland, Munster, St. John, Schererville, Schneider, Whiting and Winfield.
Those communities would receive $6.3 million more in property tax relief than they pay in income taxes.
The gain comes at the expense of Gary, Griffith, Hobart, Lake Station, Lowell, Merrillville and New Chicago. Those communities would receive $6.3 million less in property tax relief than they pay in income tax.
Gary Mayor Rudy Clay, whose city would lose more than $3 million in the exchange, said he wants an income tax, but refuses to accept distribution as it now stands and will lobby County Council members to amend their plan.
County Council President Elsie Franklin, D-Gary, said a council committee of three will meet with all mayors and other suburban leaders to do just that.
Lake is the only county in the state without an income tax. State officials pressing its adoption as part of a property tax relief plan will cut local government budgets by $15 million if an income tax isn't approved.
Suburban city and town councils have opposed the tax, while big city mayors have supported it on the previous expectation it would redistribute wealth from south county suburbs to north county cities.
That still could happen if the council amends its tax ordinance to give big cities more income tax revenue.
