A little-known property tax in Lake County generates about $4 million a year for county schools. In the past 10 years, the county has collected $37 million that has gone directly into the general funds of school districts.
Of Indiana's 92 counties, only two in the state implement the tax — Lake County and Dearborn County, and some Lake County officials would like to see the tax go away.
Established in 1976, IC 20-45-7 was designed to help shore up the budgets for sparsely populated school districts in the southern part of the county.
However, that's no longer the case. Northern Lake County has lost population as residents have steadily moved south over the past two decades.
"I'm in favor of anything we can do to save the county money and keep us balanced," said Lake County Council President Ted Bilski, D-Hobart. "We're having to borrow to balance our budget. Anything we can do to save revenue will help us narrow the gap. It will take legislative action to change that law. It's been a topic of discussion off and on over the years. We have new council members. I'm not even sure if they are aware of it."
But School Town of Highland Superintendent Mike Boskovich said his district traditionally receives more than $250,000 annually from the supplemental tax. "If we lose that money, we'd be harmed ... and would have to cut a program or two," he said.
"We need that money to survive. It goes into our general fund budget. We've already taken so many cuts from the state. We have declining enrollment, which has hurt us. When it comes to a teacher's salary, that money represents close to 4 percent of our wages or it could be four or five teaching positions. It's necessary. We rely on it. We would not want to see it eliminated."
The Gary Community School Corp. receives the most money annually from the supplemental levy. In 2012, Gary schools received nearly $485,000; in 2011, the corporation received about $815,000.
Lake County Councilwoman Elsie Franklin D-Gary, said if the schools benefit, she'd like to see the tax levy remain in place. "I have had children and grandchildren in the school system. Our schools are suffering from the lack of so many things. We don't have everything we should have in athletic programs. There is no swimming program for students. When you take the money away from schools, it takes away the activities and programs for children," she said.
In 2009, to provide property tax relief, the state eliminated property tax revenue as a source of funding for a school district's general fund. Instead, the state decided to support that fund through an increase in the state sales tax.
Lake County officials said they don't understand why the state did not also take over the supplemental tax levy when it began supporting school districts' general funds.
Ax the tax?
While he doesn't want to see the schools lose money, Lake County Commissioner Gerry Scheub, D-Crown Point, called IC-20-45-7 an "illegal" tax because it only applies to two counties in the state.
"We were $15 million over budget for 2013 and had to borrow money," Scheub said. "When the state took over the schools' general fund, this tax should have gone with it. We believe the state should take this from Lake and Dearborn counties. That would mean the schools don't lose and the taxpayers win.
"I've been trying to get this tax eliminated for 16 years. Everybody is worried about their taxes. I won't move for any new taxes in Lake County. We shouldn't have to put this tax on our local property taxes. This is a state responsibility."
Richard Cockrum, who serves as Lake County's lobbyist in the Indiana General Assembly, said no bill has been filed in this legislative session to eliminate the tax. Cockrum, who runs Indianapolis-based Capitol Assets — an advocacy, government relations and political consulting firm — said it's not unusual for Lake County to be singled out for "special" legislation.
School Town of Munster Superintendent Richard Sopko called the supplemental tax a "Robin Hood tax."
"The districts with a higher assessed valuation collect more money, yet the districts with a lower assessed valuation see more of the money. The tax has outlived its usefulness," Sopko said.
The School Town of Munster collected about $107,000 from the tax levy, but Sopko said he can see it should be eliminated in the interest of taxpayers.