Continuously serving Kosciusko County since 1854
The question of a county-wide Economic Development Income Tax has returned to the fore.
At a special meeting Monday, the Warsaw City Council approved a resolution calling for the county council to establish EDIT at a .4 percent rate beginning in 2000. The need for such a tax was outlined and they were given estimates of how much revenue EDIT would generate.
David Van Dyke, from the Department of Public Works, said the current sewage treatment facility is teetering on the edge of not having sufficient capacity to service existing homes and businesses. That situation makes it very difficult, if not impossible, for the treatment plant to service additional areas in the county or new residential or industrial development.
"Our average daily flow is 2.5 million gallons. The maximum allowable flow to allow proper control of ammonia is 2.8 million gallons per day," Van Dyke said. "Future growth for industry will have to be limited until we get more capacity."
The 300,000-gallon difference is only sufficient to handle an additional 1,100 residential units. Any industrial development would use up that capacity at a higher rate, he said.
Todd Samuelson, of the accounting firm Umbaugh and Associates, said the city's distribution from the current County Option Income Tax is approximately $200,000 per year. Their portion of EDIT would be $700,000 per year.
"The difference between the two distributions is that townships aren't included in the EDIT distribution," Samuelson said.
EDIT is a more flexible tool to finance public works projects, such as the new sewage treatment facility, because it's based solely on income. COIT is collected in lieu of property taxes.
Samuelson cautioned that even with EDIT, not all of the town's distribution could be used to finance the sewage plant.
"Not every dollar can be used for debt financing," he said. "Roughly $550,000 of a $700,000 EDIT distribution would be available for financing."
The estimated cost of a new sewage treatment facility is $10 million, he said. The $500,000 would service a debt of $7 million, so Warsaw would have to find a way to fund the $3 million difference.
Two options, other than an increase in sewer rates, to fund that $3 million would include seeking grants or using the state's revolving loan fund for such projects.
"There are grants available, but not as many as there were a few years ago," Samuelson said. "Quite frankly, in the scoring used for grants, Warsaw won't score very high. The city's sewer rates are relatively low and your income levels are high."
The option of using the revolving loan fund is also a double-edged sword, according to Samuelson.
"You could certainly service a higher amount of debt through the SRLF, but the current interest rate is 3.9 percent and that is not significantly lower than what can be found on the open market," he said
Additionally, using the SRLF would cost more to administer due to additional state oversight in the construction and maintenance of the sewage facility.
City Planner Jeff Noffsinger said EDIT would relieve pressure on the city to raise property taxes.
"If an EDIT is passed, you wouldn't have to see a property tax increase," he said. "But, if it isn't, then you would probably have to increase property taxes to fund the new plant.
"The way I look at EDIT is it is an investment tax in that the city invests back into the community to encourage industrial growth and grow the tax base," Noffsinger said.
He added that while sewer rates may have to be raised to fund the difference between the EDIT distribution and the cost of the new facility, the rate increase would be softened by the city's ability to service areas outside city limits.
"Sewer rates would have to be increased above the current $14.50 per month, but the increase would be eased somewhat by the ability to service other areas, such as Leesburg," Noffsinger.
Samuelson said one other reason EDIT should be seriously considered is that the county is falling behind surrounding counties in its ability to compete for industrial development.
"EDIT is a tool that Warsaw and Kosciusko County can use in their competition in locating industrial development in the county," he said. "And your neighboring counties are currently using EDIT to compete for those industries."
The council votes 4-1 to approve the resolution calling for the establishment of EDIT. Councilwoman Tammy Rockey voted against the measure.
"I'm voting against this measure because once a tax is put in place, it is never rescinded," she said.
