Income taxes will be a topic of discussion at the Kosciusko County Council meeting Thursday.
Tuesday, County Auditor Sue Ann Mitchell told the Kosciusko County Board of Commissioners that David Bottorff, executive director of the Association of Indiana Counties, will attend the council meeting to discuss Indiana's tax situation and options available to counties.
A sharp increase in property tax levels throughout Indiana has state legislators looking for ways to offer taxpayers some relief, but Mitchell said one solution may not fit all.
"One solution is not going to fit everybody's needs," she said.
In 1998, the Indiana Supreme Court ordered every county to move to a market-value system for assessing property values and setting property tax rates. The reassessed values have led to a general increase statewide. Governor Mitch Daniels recently ordered a reassessment of property values in three counties after drastic increases sparked protests.
In a July editorial letter, Bottorff wrote that two main factors were responsible for moving more of the property tax burden to homeowners this year. "Trending, or annual assessed value increases, increased the taxable assessed value of homes for taxes payable this year," Bottorff wrote. "For neighborhoods with increasing home values, the tax liability is expected to increase. This year homeowners experienced the result of having several years of increased home values hit all at once."
According to Bottorff, the other factor that increased the homeowner tax burden was the exemption of business inventory from taxation. The Kosciusko County Council voted to eliminate the inventory tax in 2003. By removing the inventory tax, the county lost $3 million that had to be replaced with increases in property taxes.
One option available to counties looking to spare property owners high taxes is to impose a county income tax to replace property tax revenue. In a joint statement Tuesday, Governor Mitch Daniels, Senate President Pro Tempore David Long and Speaker of the House B. Patrick Bauer said in counties that adopt a 1 percent income tax, property tax bills could be cut by an average of 60 percent.
"The state is trying to encourage counties to move to an income tax approach," Mitchell told the commissioners Tuesday. "However, for Kosciusko County, it would not be a good solution because we have so many people who are not full-time residents here. If we moved to an income tax, those people would pay nothing in property taxes and nothing in income taxes so our county would collect nothing from them. Losing that revenue would be devastating to the county."
Mitchell said corporations with facilities in the county, but based outside the county, would also not pay a county income tax. Oct. 1 is the deadline for counties to implement the optional income tax.
Mitchell said the public and officials from all county taxing units are invited to Thursday's meeting. She said Bottorff will be available to answer questions. The meeting is scheduled to begin at 7 p.m. in the old courtroom on the third floor of the county courthouse.
