Plans to spend income tax vary by municipality

2013-10-05T19:15:00Z 2013-10-07T00:08:45Z Plans to spend income tax vary by municipalityTimes Staff
October 05, 2013 7:15 pm  • 

Lake County cities and towns are in line to receive revenue from the newly implemented county option income tax. But how local governments are preparing to handle those funds vary, according to a Times survey.

Some are taking a wait-and-see approach and not budgeting the money until officials have a better handle on how much their municipality will receive. Others may use the new revenue to offer employees raises. At least three municipalities said they will use the revenue to hire police or firefighters.

“Even though they implemented the tax, we still have the old adage of having something in your hand before you spend it,” East Chicago Mayor Anthony Copeland said. “It's kind of hard until you actually get the hard, true numbers of what this would total up to.”

Copeland said he has a wish list on how to budget the city's portion once the amount is realized, including hiring 13 police officers and eight firefighters.

Town leaders in Merrillville and Schererville are being equally cautious. The communities haven’t decided how they will use the income tax funding.

Merrillville Clerk-Treasurer Eugene Guernsey and Schererville Clerk-Treasurer Janice Malinowski said their municipalities won’t commit the revenue to specific expenses until they have a solid understanding of how much additional funding they will receive.

In Hammond, the city will use the approximately $7 million to $8 million in revenue anticipated from the tax to supplement its general fund.

Hammond Mayor Thomas McDermott Jr. told City Council members prior to a Sept. 23 meeting that while he believes in offering pay raises every year, the city must be sensitive to taxpayers.

Hammond's 2014 budget proposal offers a 1 percent salary increase to municipal employees, which is covered by gaming revenue received from the Horseshoe Casino.

“We have to be very sensitive to the fact that taxpayers are hurting right now,” McDermott said. “We just passed this local option income tax...if we are going to give pay raises it needs to be 1 percent max.”

St. John Town Manager Steve Kil said the increased revenue provided by the new income tax will allow the municipality to give town employees a raise, the first in several years. The town’s budget proposal contains a 3 percent raise for employees, Kil said.

In Hobart, the City Council has approved a 2 percent salary increase for city employees and elected officials for 2014, and if possible, revenue from the income tax could go to support that, City Councilman Matt Claussen said.

The 1.5 percent income tax is broken down as 1 percent of the tax going toward property tax reductions, 0.25 percent as a public safety tax and 0.25 percent in an economic development tax.

Lowell is planning to hire the town’s first paid firefighter using the income tax. Officials say the new position is necessary to deal with the lack of daytime responders.

The Lowell police chief’s salary also will be funded by the new revenue, freeing up money in the town’s general fund, according to Clerk-Treasurer Judy Walters.

“We’re going to let (revenue) build the first year, and we’ll budget it for 2015” Walters said of the rest of the tax. “Then we’ll have a better idea of how much we have.”

Whiting plans to bring its police and fire departments up to normal operating levels with the income tax. The city will hire firefighters next year and likely add ranks to its police department in 2015, Whiting Mayor Joe Stahura said.

In Crown Point, officials plan to use an expected $355,567 of the tax to pay salaries and benefits of top ranking police and fire officials, removing those costs from the property tax-backed general fund.

New Chicago officials are hopeful they will be able to use a portion of the amount set aside for both infrastructure and economic development, areas in dire need.

“We want to wait until the money actually comes through and see what our draws are,” New Chicago Clerk-Treasurer Lori Reno said. “Then we will go from there.”

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