CROWN POINT | The Lake County Council is faced with its own choices Tuesday when its seven members vote to pass a local option income tax.
Councilman David Hamm, D-Hammond, said he is prepared to introduce a motion the fiscal and legislative body impose three separate taxes to add up to 1.5 percent of the personal income of all county residents.
"I'm not thinking about a future election or my own popularity," Hamm said. "I'm doing it because I think it's right and not because I get off on passing taxes. I would be imposing it on myself and my mother."
Council President Ted Bilski, D-Hobart, said the county, cities and towns have cut their budgets but cannot keep services at current levels without the new tax.
While council members can make minor changes in the tax ordinance's language before their final passage, the broad outline of what he would like the council to consider appears clear.
What kinds of taxes are being proposed?
Three: A 1 percent County Adjusted Gross Income Tax; a 0.25 percent Public Safety Income Tax; and a 0.25 percent County Economic Development Income Tax.
The 1 percent part of the tax is earmarked by state law to provide property tax relief. The current language of the council's tax ordinance restricts that relief to a homeowner's principal residence. Landlords, renters and businesses are left out. However, many homeowners in East Chicago, Gary, Griffith, Hammond, Lake Station and Whiting already get the most tax relief allowed under state law through the so-called circuit breaker, which caps the taxes imposed on any single parcel per year. The income tax money for their communities would be channeled into the city hall budgets.
Residents of other communities would receive varying property tax reductions depending on the percentage of their property tax devoted to county government operations.
The 0.25 percent public safety tax is restricted to salary and benefits for police, firefighters, emergency medical services, operating the county jail including medical care for inmates and the juvenile detention center, and an E-911 communications system.
The 0.25 percent economic development tax can be spent "for any lawful purpose" under state law. That could include government employee health care and infrastructure such as roads, bridges and drainage waterways.
How much money would an income tax generate?
An estimated $90 million to $96 million for every 1 percent income tax enacted, although Lake County's tax collections have been disappointing in recent years. Whatever is generated must be distributed to the more than 70 county, township, municipal and school districts based on their share of county's overall property tax levy.
All county residents regardless of where they work.
Past resistance by local elected officials to an income tax has been eroded by state laws that have reduced revenues from property and inventory taxes on businesses local government used to thrive on. The county was forced to borrow $15 million this year, and is reluctant to borrow again.
The General Assembly also has frozen since 2007 the inflation index that normally would allow increases in the county's total property tax levy. The freeze will only thaw when the council passes an income tax, according to state law. Council members also are concerned the legislature may put further restrictions on how to spend the new taxes if they wait further.
What happens Tuesday?
The Lake County Council gathers at 10 a.m. at the Syd Garner auditorium of the courts building at the Lake County Government Complex, 2293 N. Main St. Council members will cast what could be three separate votes of approval or disapproval for three tax ordinances. Only four votes are needed to approve any one of them on first reading.
Are there enough votes to pass it on first reading?
Hamm said he believes there are. He, Bilski and Councilman Jerome Smith, D-Gary, favor of the tax. Councilwoman Elsie Franklin, D-Gary, voted for an income tax years ago, but has been in poor health and wasn't present at last week's workshop meeting. Councilwoman Christine Cid, D-East Chicago, has been non-committal. Councilmen Dan Dernulc, R-Highland, and Eldon Strong, R-Crown Point, are opposed.
If they fail to pass, what next?
County officials warn they must cut nondiscretionary spending by additional millions of dollars next year and warn essential services must take a major hit.
If a tax (or taxes) passes?
The council must vote again to pass them on second reading at a future meeting. Bilski said a second-reading vote would take place at a night meeting. No special meeting date has been set yet. The next scheduled council meeting is May 14.
What if the taxes pass on second reading?
The taxes, in the form of ordinances, go before the three-member Board of Commissioners for their approval or veto, just as the state legislature sends bills to the governor to sign, or not. Commissioners Mike Repay, D-Hammond, and Gerry Scheub, D-Crown Point, have indicated they cannot support the taxes.
What happens if the taxes are vetoed?
The tax ordinances would return before the County Council for an override vote. There would need to be five votes to override the commissioners' veto for final passage of the income taxes.