Despite bounty of new taxes, Lake County debt looms large

2013-05-18T19:00:00Z 2013-05-19T17:27:05Z Despite bounty of new taxes, Lake County debt looms largeBy Bill Dolan, (219) 662-5328

CROWN POINT | Lake County could be on the receiving end of an $18 million tax windfall next year.

The Indiana Department of Revenue told county officials late last week they can expect their first share of revenues from a 1.5 percent tax on the personal income of county residents and workers in January 2014, said Dante Rondelli, the finance director for the Lake County Council.

The first year's income tax revenues will be limited because tax collections begin Oct. 1. However, that still could amount to between $14.7 million and $15.4 million, according to estimates provided by the Indiana Legislative Services Agency and William Sheldrake, president of Policy Analytics and a former state budget official.

County officials also will be the beneficiaries of about $3 million in additional local property taxes in 2014 because the General Assembly recently rescinded a 2007 law that froze annual growth in the county's levy to punish local government for refusing to adopt an income tax.

It's the best news county fiscal officials have had in years. But there is a downside, Rondelli said.

The county is likely to lose $1 million next year in inheritance tax revenues and will have to set aside at least $2 million in public contributions in 2014 for the rising cost of health and pension benefits of the county's 1,695 full-time employees.

There also will be calls for the county to provide new radio communications gear, worth tens of millions of dollars, to equip a new, consolidated E-911 network. The network must be launched by the end of 2014, as required by a state mandate.

Rondelli said when the council commences its 2014 budget hearings, members will be asked to choose between cutting millions in current spending or borrowing several million more until 2015 when additional income-tax-related revenues will come to the county's rescue.

It's unclear at this time whether county officials would want to push the county's debt higher than the more than $121 million in long-term obligations amassed over the last eight years, according to the Gateway database provided by the Indiana State Board of Accounts and Indiana Department of Local Government Finance.

It will take at least until 2028 to repay existing debt.

The older debt includes $30.6 million in bonds dating back to 2005 for improvements to county parks, including the Deep River Waterpark complex; $31 million borrowed in 2007 and 2009 to make older government buildings more energy efficient; $1.7 million in 2008 to buy a new police helicopter; and a $4 million bond in 2010 to settle a lawsuit filed against the county.

County officials borrowed $55 million last year alone for improvements to the Lake County Jail and Juvenile Detention Center, repaving county highways, settling new lawsuits targeting overcrowded jail conditions and replacing tax shortfalls to balance the county government's budget this year.

Lake County government total debt, including millions of dollars in short-term borrowing to cover operating expenses between twice-a-year property tax draws, is the second largest sum of Indiana's 92 counties.

Larry Blanchard, an administrative aide working on the E-911 consolidation, said the county could avoid spending millions of dollars upfront to own new E-911 communications gear by leasing it instead.

Lake County Councilman Dan Dernulc, R-Highland, said he didn't support borrowing $15 million for this year's operating expenses and couldn't vote for another loan, either.

He and Councilman Eldon Strong, R-Crown Point, have argued for cost-cutting measures that would freeze county employee hiring, cross-train existing employees for multiple skills as a prelude to cutting the payroll further, and close the three satellite county courthouses in Gary, Hammond and East Chicago.

Councilman David Hamm, D-Hammond, who voted for the income tax, said going on a spending spree would send the wrong message to an already wary public.

"I'm not for bloated government. I think we should use some of this new money to pay down our debt," Hamm said.

The County Council also is conferring with Indiana University Northwest's School of Public and Environmental Affairs about how to manage county spending, which now depends on more diverse and volatile revenue streams from property, personal income and user fees.

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