National and state economic problems continue to hit Kosciusko County as county auditor Sue Ann Mitchell found out this week.

Thursday, she told the county council the county is more than $2.7 million in the red in the Economic Development and County Option Income Tax funds.

For the next three years, beginning in 2004, the Indiana Department of Local Government Finance will reduce the entire county's share of COIT by 10 percent, approximately $990,000 per year. EDIT distribution for the entire county will be reduced by 5.7 percent, approximately $241,990 per year. The reductions are being made to pay back the state what it estimates it overpaid the county.

Statewide, officials estimate they overpaid $87.5 million in local income tax revenue to 36 counties during the last two years. (Related story - page 8A.)

The state estimates how much revenue will come in from the taxes for the year ahead, notifies local governments of these projections, collects the money and then distributes the money to the local governments.

However, after an unexpected two-year decline in income tax collections, the process ran into trouble because the law does not allow the state to withhold tax payments or lower them.

In an e-mail from the State Budget Agency to county auditors statewide, the auditors were told "the State Budget Agency has developed a plan to reduce the distributions and to begin to recover from those counties that have a negative balance. ... Essentially, if your reduction is less than 10 percent but you have a negative reserve account, up to 10 percent will be withheld from your 2004 distribution. If your reduction is more than 10 percent, and you have a negative balance, then you will not have to incur additional reductions at least in the next year."

According to an Indianapolis Star report, the hardest-hit counties in the state are the wealthiest Indiana counties, which include Kosciusko, Allen, Elkhart, Grant, Bartholomew and Rush. Mitchell said these counties are being hardest hit because people who invested money paid less in taxes after the economy declined. Hamilton County government agencies, according to the newspaper report, owe $31.3 million back to the state, which is 36 percent of the state's total overpayments.

Because of another unexpected shortfall, the county council approved three additional appropriations totaling $600,000 to cover the county's group insurance, retirement contributions and Social Security contributions for the year. A shortfall in the county's monies to pay for the three funds is expected by September.

Kosciusko County administrator Ron Robinson said the county will spend close to $1 million for health insurance this year for 352 employees. The county commissioners, he said, have made some changes to the county's insurance plan but expenses have risen in part because of the Sept. 11, 2001, terrorist attacks. County employees' out-of-pocket expenses have increased in part due to the expenses as part of the changes made.

Robinson said instead of one insurance company, the county will probably end up dealing with several insurance companies because "no one wants to take municipalities on." He said they knew the medical insurance was going to go up, but not as much as it did.

In other business, the council:

• Heard from Mitchell the reassessment tax bills are due to be sent out sometime in late July for a pay date of Aug. 8, with a collection and distribution date set to be Sept. 15. However, she said, the county still has many hurdles to jump over and adjoining counties have to be finished before Kosciusko County can set its rates. Hopefully, she said, they can meet the deadlines they set for themselves.

• Approved the Wabash Valley Manufacturing Inc. abatement forms. Mitchell reported the company is more than meeting its side of the abatement agreement.

• Approved the position of a new case worker in the Title IVD office with a salary of $25,441. The county will pay only a third of the salary, with the remaining funds coming from the state.

• Approved the additional appropriation of $31,000 from the deferral funds to pay for one part-time prosecutor.

• Approved the reappointment of Sen. Kent Adams to the Bowen Center Board of Directors.

• Approved the probation department's request for the position of a full-time secretary to be split into two part-time positions - a secretary for $9.50 per hour and a probation officer for $15 per hour.

Members of the Kosciusko County Council are Harold Jones, Tom Anglin, Maurice Beer, Brad Tandy, John Kinsey, Larry Teghtmeyer and Charlene Knispel. Their next monthly meeting is April 16 at 7 p.m. in the county courthouse, Warsaw. [[In-content Ad]]