SCHERERVILLE | City and town clerks were told Friday to prepare for a $45.3 million windfall of local income tax revenues next year.
That was the good news, according to Dante Rondelli, financial director for the Lake County Council. Rondelli delivered the news to a monthly meeting of 16 Plus, a group of municipal officials from throughout the county who gathered Friday at Schererville Town Hall.
The bad news is property taxes will rise in suburban areas while property tax collections for other government services will drop significantly in coming years, he said. The spike will pay for the upcoming launch of a consolidated E-911 communications network for all police and fire services in the county.
"You will see county tax rates for bonds go through the roof," Rondelli said. "If your taxpayers come to complain about that, tell them why we are doing that."
The County Council passed a 1.5 percent tax in May on the personal incomes of county residents and workers. The county will begin collecting it from paychecks Oct. 1.
The new tax eventually will generate $135.6 million annually. Two-thirds of that will be in the form of property tax relief. But because of lags in tax collection and distribution, the county won't begin to feel any of that relief until 2015, Rondelli said.
However, Rondelli said local officials can start planning to spend the remaining third in 2014. County government will get the biggest share, a total of $15.3 million.
Approximately half the money must be spent on police, fire and other public safety costs.
Municipal officials asked Rondelli how much E-911 consolidation will cost them.
Rondelli said the county likely will ask the state to transfer about $8 million cities and towns now spend on their individual E-911 services to the county's new consolidated E-911 service in 2015. This will cover the payroll, utilities and other operational costs of emergency communications, he said.
Rondelli said the county will have to borrow tens of millions of dollars over the next decade to pay for new communications equipment and other capital expenses.
Rondelli also said all that borrowing will reduce the remaining property tax dollars available for other government units and jack up taxes in most suburban areas.
He said the only way the cities and towns could avoid these property tax problems is to volunteer some of their new income tax revenues toward the E-911 launch.