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Tomorrow's Kosciusko County Council meeting to consider imposing the Economic Development Income Tax promises a lively debate.
The county needs a jail expansion to relieve an overcrowded situation that will eventually lead to an expensive court fight if not addressed. Warsaw is in need of a new sewer facility to expand their capacity to handle not only their own needs, but those of Winona Lake, Leesburg and the surrounding county areas. Syracuse is looking at ways to fund the infrastructure for their planned industrial park.
The alternatives to funding these projects, and their ramifications, will be considered by the council and the public as the decision nears. But what are the alternatives?
For the county - and all county taxpayers - the new jail, a major capital project, will cost in the neighborhood of $10 million. According to County Auditor Charlene Knispel, the county's Accumulated Jail Fund has a current balance of $7 million. If the remaining $3 million for the new jail is funded through a general obligation bond issue, a debt liability of roughly $4 million, assuming the current 4 to 5 percent interest rate on government bonds, would have to be funded through property taxes.
"For every two-cent increase in the county's property tax rate, you're going to see $250,000 and $400,000 of additional revenue," Knispel said. "With EDIT, the county would receive $2.9 million based upon the adjusted gross income of all county residents at slightly more than $1.1 billion.
"This will be a difficult decision for the council and the commissioners," Knispel said. "Do 10 people always know what we as individuals need? No matter which way they go, people aren't going to be happy."
Knispel said that while resistance to taxes - either a new one, such as EDIT, or an increase in the existing property rate - is understandable, the least unfair tax is sometimes needed to meet the demands on the county government.
"With the property tax, you're not going to hit everybody, and with EDIT you will. Is that fair? I don't know. Is any tax fair?" she added.
That's the question Warsaw Mayor Ernie Wiggins is asking - how to fund the new sewer treatment facility, with an estimated cost of $10 million, without unfairly burdening city taxpayers and sewer customers. One thing is certain, he said. The city cannot fund the new facility with another revenue bond. The city has reached the state mandated limited on indebtedness for sewer service with the two current revenue bond issues outstanding, Wiggins added.
The city issued $7.8 million in revenue bonds in 1993 and another $1.6 million in 1995 to pay for sewer improvements. The total annual payment on those two obligations in 1998 was $788,785, with the sewer facility having a total revenues in 1998 of $4,576, 272.
"If EDIT were not to pass, I'd be asking Todd Samuelson of Umbaugh and Associates what the best alternative would be," Wiggins said. "A property tax increase would be one way, but not the best way."
He said the city receives $19,700 for every one-cent increase in the property tax rate. To fund the new sewer facility entirely with property taxes would mean a 36-cent increase in the city's property tax rate.
"Whether it's a tax increase or user fee increase it's still a cost to the individual, regardless of their ability to pay. It's regressive," Wiggins added. "Also, increasing the rates now would be strapping the current customers with the expense of a new sewage treatment facility with no increase in service, and that wouldn't be fair either."
