Continuously serving Kosciusko County since 1854
Three fire territories currently exist in Kosciusko County, but there are no fire districts.
Monday night, Baker Tilly Senior Manager Susan Cowen spoke to the Kosciusko County Fire Association in detail about territories and districts for over an hour and a half, explaining everything from their differences and formation to finances and questions.
The meeting was purely just informational for firefighters.
The fire territories in Kosciusko County include Turkey Creek Township, North Webster-Tippecanoe Township and Warsaw-Wayne. There are 14 fire departments in the county, but only three are paid fire departments.
For two or more entities to form a territory, they have to share a border. To form a district, an entity doesn’t have to join anybody - the county could determine they could be a district on their own.
The Why
“There’s many, many reasons that municipal units decide to form fire territories. Usually, it’s because you need more money - that’s the primary burning reason. And if you are from a taxing unit, you understand how your max levy works. You can’t just randomly say, ‘Oh, I want more property tax this year’ and get more property tax. It’s set to a specific amount of growth each year. Those levies were originally set back in the ’70s. They’ve grown sometimes a percent, sometimes 2%. This year and the past two years they’ve grown 4%, but when you think about costs going up, maybe 6, 8, 10%, that 4% growth in levy isn’t always enough to maintain your fire service,” Cowen said.
There’s nothing like territories and districts for police or any other public safety. If there’s an ambulance service, Cowen said that falls under the territories and districts.
“Supporting EMS service is one of the valid reasons that you can form a district. If you’re concurrently running fire and EMS, both can be included, both can be put in that new tax levy because this is really about the quickest statutory way to get more property tax levy to fund fire,” Cowen said.
“Across the state we hear that volunteerism is down. They’re having problems, especially manning during the day when volunteers are at work. They can get people at night, they can’t get people during the day, so you’re wanting to put some paid firefighters or a paid ambulance driver on during the day. So to do that, you need more money. But maybe the township that’s funding your fire department, or the combination of townships funding your fire department don’t have access to that increased levy to be able to let your departments do that.”
At their heart, she said both the fire territory and district are funding sources. They don’t mean the department has to change how it runs or change its name. The volunteer fire departments are not parts of the territories or districts, but are beneficiaries of them.
“So instead of receiving two contractual payments - if those two townships go together and form a territory, they would create a budget based upon what they both would need to provide you, and you would then receive one payment from that territory,” Cowen said.
The Formation
The formation processes for territories and districts are formally written in Indiana code and have been around for quite a while. Districts are a little older than territories. There are specific steps that have to be taken to form both of them.
Cowen said there are options on how a district is formed. “There’s one time-consuming path to form a territory. Districts are a little bit more straight-forward, don’t take as many public meetings, but they’re set up differently and governed differently,” she said.
At the end of 2024 in Indiana, there were 75 fire districts and 71 fire territories. Cowen said she knew of at least three new fire territories that formed in 2025.
“You get to establish a dedicated property tax levy, based upon operations. So in addition to that operating fund, you can also create a capital fund. It’s called a cumulative fire fund for a district, or an equipment replacement fund for a territory, but they do the same thing. They’re both at a max rate of $0.0333, based upon all the assessed value within either the territory or the district. There’s no requirement that you have to spend that capital each year if you don’t need to. You can keep it, accrue it long-term for the purchase of a truck,” she said, or the lease payment of a truck, loan payments or vehicles.
Comparing a territory to a district, Cowen said a territory has to be two or more taxing units. Territories and districts can be multiple units as the Department of Local Government Finance (DLGF) likes to see them as large as possible.
“In the case of the territories, it’s the legislative bodies of those units that approve the territory. So if you have a town, it would be the town council. Township would be the board of trustees. Those units would have to vote to approve it, and then it ultimately goes to the DLGF, they give it final approval to make sure all the procedures were followed, all the t’s were crossed and all the i’s were dotted appropriately,” she said.
For the fire district, the main way that they are usually handled is through the county commissioners. Once two units -such as two townships - decide to go together to form a district, those township boards don’t have to vote. It’s up to the commissioners to approve it and ultimately the county council has approval for the districts’ budgets.
The boundaries for a district can be a little less defined, while a territory has to be specific taxing units. Each entity has a governing board, with the territory board members appointed by the legislative bodies that are approving it; for a district, the county commissioners appoint people to serve on the board. For the territory, one of the participating units has to be the provider unit, responsible for all the administrative tasks of the territory.
“Even though the board is recommending a budget, it’s up to the town, the town council, to ultimately approve the budget. Because a territory is not a free-standing separate municipal corporation that has its own property tax levy. It’s a sub-department of the provider unit,” Cowen said. “A district is a little bit different because it is considered a separate municipal corporation, has its own taxing authority and creates its own budget, which, yes, ultimately has to be approved by the county council. But that fire board of trustees for a district has one less step in there to get the budget approved because they just go directly to the county council. They’re considered a binding review unit.”
In Indiana, only elected officials can approve property tax levies.
There’s a deadline to establish a territory or district.
Territories have to go through a series of public and adoption meetings. They can only take place each year between Jan. 1 and March 31. Once a territory is approved, it goes to the DLGF for review and final approval. Fire territories that were approved in 2025 will start receiving property tax dollars in 2026.
A fire district is somewhat different as the public hearings aren’t required and don’t have to have all the public meetings that territories do, she said. They have to be approved by Jan. 1 in order for the property tax levies to start on Jan. 1 of the following year.
“Basically, for a fire district, the board of trustees has the same authority that the township trustee and township board would currently have, as far as setting fire budgets and levy,” she said.
Once the territory or district is formed, those existing levies for fire from the individual units are removed so there’s no double taxation.
Cowen also explained the dissolution or withdrawing of a territory or district. A district has to be dissolved by the county commissioners or a property owner petition. A fire territory can survive if one unit chooses to back out and there are at least two units left.
The Revenue
On the sources of revenue available for a territory or district, Cowen it’s primarily property tax. Any unit that receives property tax also gets a share of the taxes that go through the license branch, the vehicle excise tax. There’s also EMS billing/contractual payments and grants and other funding sources.
After 2028, there’s no guarantee that anyone in fire service will get local income taxes (LIT) because of Senate Enrolled Act 1 (SEA 1) that passed earlier this year.
“It affects not only property taxes, but also local income taxes. It’s changing, things that were currently property tax deductions are now credits on the property tax side, and it’s completely redoing the schema for local income tax collection and distribution,” Cowen stated. “The changes to property tax start in 2026 ... if you’re a fire territory that was created in 2025 or going forward, your levy is capped at 40 cents (per $100 of net assessed valuation).”
While there are territories in Indiana that have levies higher than 40 cents, they’re not limited. It’s only if a fire territory was started last year or is started any year going forward.
“So going forward, you have to operate within 40 cents. So if levy growth would push you over the 40-cent rate, the DLGF is going to hold you back and cap you at 40 cents. And that’s not just on operating, it’s a combination of operating and capital,” she said.
There is currently not a cap on fire districts, but Cowen said they tend to have lower rates than fire territories. She then went into the new LIT structure, effective beginning in 2028 unless the state legislature changes it.
“The new schema is the county can choose to adopt a 1.2% local income tax rate, completely for itself. Doesn’t give it to anybody else. Can be used for anything. ... They keep all of that, and it’s on the Adjusted Gross Income of the entire county,” Cowen said. Everyone in the county currently is paying the same LIT rate.
The county also can opt to adopt a 0.40% LIT that is only for fire and EMS. The three primary units it goes to are municipal fire departments, territories and districts. They can opt to give it to volunteer fire departments if they choose.
“You have to go to the county and talk to them about it. All these meetings have to take place in the summer of ’27 to prepare for ’28. The current schema is in place through the end of ’27. This new one starts the beginning of ’28. All decisions have to be made, ordinances have to be adopted and signed by Oct. 1 of ’27 to be put in place with new tax tables and everything by Jan. 1 of 2028,” Cowen explained.
A township is currently getting the certified shares. A volunteer fire department, supported by a township, is likely being paid its contract or for its expenses from the township from the current certified shares.
“Going forward, there’s no guarantee that they’ll get the fire protection and EMS LIT. There’s a type of non-municipal LIT that the county can adopt,” Cowen said, explaining a non-municipal can be an airport, township or library but not schools. “Schools don’t get any local income tax going forward at all.”
The maximum amount they could do is two-tenths of a percent, “but no type, no one group of unit can get more than a quarter of that two-tenths,” she said. Even if the county adopts the non-municipal LIT for them, they can only get a maximum of 0.05 and then it’s divided up by all the townships in the county based on population.
She suggested all the townships work together to make sure that everyone is working together to ask for that levy if they want to receive that.
“There’s also a small municipality LIT that counties would adopt. It is another up to 1.2%. It’s for communities less than 3,500 in population,” Cowen said.
The county can also keep up to 75% of that 1.2% for small municipalities for itself.
“So even if they adopt 1.2, if they’ve also adopted their 1.2 at the county level, they can keep 75% of the small municipal LIT. Large municipalities adopt their own LIT, so the city of Warsaw will adopt its own LIT in 2028,” Cowen said, as well as any towns in the county with a population of more than 3,500. “And that’s only on the AGI of the citizens that live in their boundaries. So you have the potential for as many LIT rates in the county as you have communities over 3,500 plus one because there’s that one that the county is going to adopt. It’s going to be everybody but the municipality.”
The point, she said, is that there’s not going to be guaranteed LIT revenue after 2028.
