INDIANAPOLIS | New legislative options for divvying up the estimated $81 million in property tax relief generated by a 1 percent Lake County income tax still would create winners and losers.
But the geographic disparities would drop considerably under two of the three proposed distribution formulas, according to an analysis released Wednesday by the Lake County Council. (Read the report.)
The study by Crowe Chizek, a consulting firm, shows that taxpayers in each of the county's 19 cities and towns would get back as much property tax relief as they paid in income tax under one of the distribution options advancing through the General Assembly. But there still would be inequity among unincorporated areas, with Calumet Township, for instance, losing $767,000 and Hanover Township gaining $503,000.
Similar gains and losses of less than $1 million would be seen under a second proposal to return 60 percent of the income tax money to the city or township where it was raised and distribute the rest by population. But a third option to use all of the proceeds to cut county government levies would produce wide disparities, with taxpayers in Calumet Township losing an estimated $6.4 million and St. John Township residents gaining $3.9 million.
State legislators last year passed a new law freezing most local government budgets until Lake ends its status as the only county without an income tax. The Lake County Council couldn't secure the five-vote majority it needed to impose the tax last year.
Council President Christine Cid said the new distribution options eventually might squelch inequity complaints, but the council hasn't warmed to the tax.
"I don't believe the votes are there for it right now, so I wouldn't bring it to the table," she said.
Councilman Ted Bilski, a Hobart Democrat who represented as potential swing vote last year, said he's not ready to support the tax. And Councilman Larry Blanchard, R-Crown Point, still says the county should focus on cutting costs, not raising one tax to lower another.
"I said long ago that there isn't a good (income tax) distribution formula," Blanchard said. "None exists."
The new options -- unlike current state law -- would split the property tax relief evenly among homeowners, landlords and businesses, even though corporations don't pay county income tax. Cid said the council likely will ask state legislators to restore the power to steer more of the tax relief to homeowners, and Senate Tax Chairman Luke Kenley, R-Noblesville, said he is willing to accommodate such a request before lawmaker adjourns on March 14.
