2016 Local Income Tax Rates — How Does Monroe County Compare?

17 Mar

WestsideBack in 2014, when Monroe County was considering a small increase in the Juvenile County Option Income Tax, I ran a comparison of Monroe County with the other 91 counties on overall income tax rates (Income Tax Rates in Indiana Counties — How Does Monroe County Compare?). Now that we are starting to hear some calls from public safety agencies for a public safety local option income tax (which would be passed by the Bloomington City Council, not the County Council, incidentally), I thought I’d re-run the comparisons using 2016 local option income tax rates.

Here is a table showing the total combined local option income tax rates for 2016 for each county in Indiana, along with each county’s percentile.

Screenshot 2016-03-17 07.26.43

2016 Local Option Income Tax Rates by County

Monroe is at the 24th percentile rank, which basically means that Monroe County’s income tax rates are in (near the top of) the bottom quarter. Put differently, 76% of Indiana counties have a higher income tax rate than Monroe County.

So how do we compare to our neighbor counties?

Screenshot 2016-03-17 07.31.47

2016 LOIT Rates for Monroe County Neighbors

Monroe County currently has the lowest income tax rates of any of its neighbor counties.

Finally, how does Monroe County compare with its “peer” counties?

Screenshot 2016-03-17 07.35.43

2016 LOIT Rates for Monroe County Peer Counties

Obviously the definition of “peer” county is somewhat subjective, but these counties are ones that Monroe County is typically compared against, in terms of population, urbanization, demographics, etc.  In this comparison, we have the second-lowest income tax rates, second only to Vanderburgh County.

Data Source: Indiana Handbook of Taxes, Revenues, and Appropriations, Fiscal Year 2015

New Road Money for Local Governments

16 Mar

rockport5This past week, House Enrolled Act 1001 and Senate Enrolled Act 67 both passed the Indiana General Assembly, and are on their way to the Governor’s desk. Both have implications for local units of government around the state and here in Monroe County.

SEA 67: Returning Local Income Taxes to the Locals

First, let’s consider SEA 67. This act reduces the amount that the state is required to hold in each county’s income tax trust fund from 50% of the amount that is actually certified to be distributed to the local governmental units in the county to 15%. The trust fund is essentially an escrow account that holds the money collected from local option income taxpayers and that is used to pay out the annual distribution to local governments each year (referred to as “certified shares”). The theory is that local option income tax trust fund balances have been increasing over the years, and too much is being withheld from local governments.

Further, SEA 67 requires the state to make a one-time distribution of ALL of the excess trust fund balance as of December 31, 2014, to local units of government that receive local option income taxes (using the standard procedures for allocating local option income taxes to these units). This includes the county, cities and towns, public libraries, townships, and fire protection districts.

However: for the county and cities and towns, there is a restriction. 75% of the money must be spent on roads and aviation (or deposited in the rainy day fund, and later spent on roads and aviation). The remaining 25% can be spent on any lawful expense of local government. So basically, money that has been collected from local taxpayers, as authorized for particular purposes by local governments — is being given back to local governments by the state, but being restricted in use. And these restrictions only apply to the county, cities, and towns — townships and the public library have unrestricted use of these funds!!

The following table provides my very rough estimate of the amounts that each taxing unit in Monroe County will receive. Note that the total amount distributed to Monroe County ($6,892,000) is based on the latest fiscal note on SEA 67 (authored by Legislative Services Agency). However, it isn’t clear from the fiscal note whether the total is based on 88% of the December 31, 2014 trust fund balances (where the bill started out) or 100% (where the bill ended up). So please don’t take these numbers as definitive — they are simply estimates of roughly what the taxing units might be expecting.

Screenshot 2016-03-14 09.43.34

My Estimates of What Local Governments Will Receive Under SEA 67 (One-Time Distribution)

As the chart shows — Monroe County Government could be receiving approximately $2.7M from its income tax trust fund — however, only $675K would be unrestricted. And remember — this is money that has already been collected from taxpayers.

HEA 1001: Additional Local Option Highway User Tax and New Local Road and Bridge Matching Fund

839DE454-D67C-4C8A-B2C4-1D9CDB7D9303House Enrolled Act 1001, on the other hand, provides additional road funding to local governments through several very different mechanisms: (1) the provision for local units to increase their wheel tax/excise surtax; and (2) the creation of a new matching fund called the Local Road and Bridge Matching Grant Fund.

Wheel Tax/Excise Surtax

Sometimes referred to as a Local Option Highway User Tax (LOHUT), this refers to two separate taxes that must be adopted concurrently: a wheel tax and an excise surtax. Currently, this is the only local option tax available for road funding. The excise surtax portion is a surtax paid at the time of vehicle registration, and applies to cars, motorcycles, and trucks under 11,000 pounds. It is currently $25/vehicle in Monroe County. The wheel tax applies to all vehicles that aren’t subject to the excise surtax, including RVs, tractors, trailers, trucks, and buses. The wheel tax is currently $40/vehicle, except for vehicles under 3000 pounds (i.e., mopeds). Both the wheel tax and the excise surtax in Monroe County are at the statutory maximum (well, until HEA 1001).

The following table from the Bureau of Motor Vehicles shows the current LOHUT rates for Monroe  County:

Screenshot 2016-03-14 21.10.54

Wheel Tax / Excise Surtax Information for Monroe County as of 2016-03-14

Once collected, these taxes are then distributed to the county and to municipalities, and are earmarked for construction, reconstruction, repair, and maintenance of roads in each unit’s jurisdiction. The LOHUT (wheel tax/excise surtax) brought in $1,574,021 (2014) and $1,288,792 (2015) to Monroe County Government respectively.

HEA 1001 provides a couple of additional options for local governments with respect to the LOHUT:

  • It doubles the maximum rate for the wheel tax/excise surtax for counties (i.e., counties would be permitted to adopt up to $50 excise surtax and $80 wheel tax), IF the county is using a transportation asset management plan (see the section on the Local Road and Bridge Matching Grant Fund, below).
  • It allows municipalities (cities and towns) with a population of at least 10,000 to adopt the wheel tax/excise surtax (maximum of $25 for the excise/surtax and $40 for the wheel tax). Formerly only counties could adopt the wheel/excise surtax. To adopt these taxes, municipalities must also be using a transportation asset management plan.

Local Road and Bridge Matching Grant Fund

Bill Williams Bridge in Stinesville

Bill Williams Bridge in Stinesville

HB 1001 also creates a new program called the Local Road and Bridge Matching Grant Fund. The new fund provides a competitive 50-50 match to local units of government for local road and bridge projects that “repair or increase the capacity of local roads and bridges” and that are “part of the local unit’s transportation asset management plan” (a new requirement that local governmental units have a plan for transportation assets and drainage systems and rights-of-way that affect transportation assets).  INDOT (the administrator of the program) is instructed to “give preference to projects that are anticipated by the department to have the greatest regional economic significance for the region in which the local unit is located.” In addition, at least 50% of the grants in each fiscal year are required to be made to local units in counties with populations of less than 50,000.

The grant program is funded from state reserves and one percentage point of the 7% gross retail sales tax (for fiscal year 2018) and 1.5 percentage points of the sales tax for fiscal years 2019 and after.

The local unit must provide their 50% match out of the following sources:

  1. revenues from an increase in the wheel tax/excise surtax rate (see above)
  2. any special distribution of local income taxes (again, see above); or
  3. any  money in the unit’s rainy day fund.

Since most local counties and municipalities, including Monroe County and the City of Bloomington, will receive substantial cash infusions into their rainy day funds from the excess trust fund balances, the goal will be to use this revenue to lever the same amount of money in the new Local Road and Bridge Matching Grant Fund, and effectively double its spending power on local roads.

Tax Abatement Application and Grant Funding for Futures Family Planning Clinic — Preview of Monroe County Council Meeting 2016-03-08

6 Mar

2016 County Council MembersThis Tuesday’s regular session of the Monroe County Council (2016-03-08 5:30 PM in the Nat U Hill Room) will feature several important topics, including a first reading for a tax abatement application for the 3D Stone mill at 6700 S Victor Pike and appropriation of grant funding for the County’s Futures Family Planning Clinic. The full packet for the meeting is available here: Council_Packet_20160308.

The Council will be hearing the first reading (of two) for a personal property tax abatement application from Lily and Kurt Sendek (doing business as L & K Real Estate Investments) for an expansion of their 3D Stone business at 6700 S Victor Pike, in southern Monroe County.

The property is shown below. Note that the property crosses Victor Pike, and includes a parcel that a proposed County greenway (going along the Illinois Central rail line) goes through.

Screenshot 2016-03-06 08.52.49

3D Stone Mill Property, 6700 S Victor Pike

The site currently has 44 full-time employees. The owners are proposing to add a second production shift to the business, which will add approximately 32 new full-time permanent positions, ranging in starting wages from $11 (General Labor) per hour to $20 (Stone Cutter) per hour, plus a supervisor at $25 per hour. Benefits include employee profit-sharing plan and health/dental/vision insurance. The abatement application in the council packet (Council_Packet_20160308) provides more details on positions, wages, and benefits.

The owners are requesting the tax abatement only on personal property (i.e., business equipment) — on the approximately $800,000 in equipment they propose to purchase for the business expansion (including CNC cutting equipment, saws, forklifts, and IT production management system).

Here is a picture of the business. Note that the red lines are caused by an error in the county’s GIS.

Screenshot 2016-03-06 09.05.43

3D Stone Mill

The County Council will be hearing this tax abatement application for the first reading. It has already been reviewed and received a favorable recommendation by the Monroe County Economic Development Commission (EDC). If the County Council votes in favor of this tax abatement at the meeting, a public hearing will be conducted and the Council will take a final vote (“confirmatory resolution”) on the abatement.

Other items up for discussion at the meeting include:

  • The Health Department is requesting the appropriation of funding (as well as creation of budget lines and other housekeeping) for the County’s Futures Family Planning Clinic from Title V, Title X, and Temporary Aid to Needy Families (TANF)
  • The Legal Department is requesting the appropriation of $40,000 in fees that the county attorneys are allowed to receive in penalties and fees collected from delinquent personal property taxpayers. County attorneys are able to supplement their regular salary by working off-the-clock to collect unpaid personal property taxes. The amount they receive is on top of the taxes actually collected on behalf of the county, so the county does not lose any tax revenue.
  • The Probation Department is requesting the appropriation of $50,000 in grant funding from the Annie E. Casey Foundation’s Juvenile Detention Alternatives Initiative (JDAI), which supports alternatives to incarcerating youth.
  • The Veterans Affairs department is requesting an additional appropriation of $41,503, primarily because the county’s Veterans Service Officer position was reclassified and upgraded to full time after the 2016 budget had been set. In addition, $5000 of new training funding is being requested.

As always, the meeting is open to the public, and will be held this Tuesday evening (March 8, 2016) at 5:30 in the Nat U Hill room of the Monroe County Courthouse, and it will be broadcast on CATS. Public comment will be taken. Hope to see you there!

More Discussion about Funding for Volunteer Fire Departments and New Financial Software for the County? Preview of Monroe County Council Work Session 2016-02-23

23 Feb

2016 County Council MembersThis evening’s work session of the Monroe County Council (5:30 PM in the Nat U Hill Room) will feature two topics: funding for volunteer fire departments and potential new financial software for the county.

Funding for Volunteer Fire Departments

At the last regular session, the Council appropriated $5000 for each fire department in the county with a volunteer component (8 total fire departments) from revenues received by the Indiana Department of Natural Resources from timber sales from state forests located in Monroe County.  This was the amount requested by the County Commissioners — $2500 for each fire department from 2014-2015 revenues and $2500 for 2011-2012 revenues (somehow the county neglected to make the distribution to fire departments in 2012).

I provided a little more background on the timber sales distributions here.

The reason for tonight’s discussion is that some councilors, and in particular Council President Cheryl Munson, who has been strongly involved in volunteer fire departments through her service in Indian Creek Township, think that the distribution requested by the County Commissioners ($2500 per department) is too low compared to the need. The statute that requires the timber sales distribution to volunteer fire departments earmarks up to 50% of the timber sales revenue for fire departments, if the Commissioners request it. For this year (2014-2015), this would mean that the Commissioners could have requested up to $4955 per fire department.

The purpose of this discussion tonight is to explore options and interest in providing additional funding for fire departments.  For additional background, here is some data on county distributions of timber sales revenues to volunteer fire departments from 2005-present:

Screenshot 2016-02-23 06.27.38

County Financial Software

A an item that is not yet on the agenda will likely be discussed. The county council is still under discussions to potentially fund the purchase of new financial software. We are considering, upon request from the Auditor’s Office, the purchase of financial software from Low Associates to replace the County’s aging Harris Open Window financial system.

A representative from Low is anticipated to be at the work session to answer Council questions, as will the County’s Director of Technical Services (IT).

Costs of the new software (including installation, implementation, and training) are estimated at $188,236, plus an additional $37,176 in annual maintenance expenses. Discussions will likely center around (1) should the County move forward in purchasing the new financial software; (2) if so, when, and (3) if so, how should we pay for it. Options for funding the software include cash on hand from County Option Income Tax (COIT) revenues, the Commissioners’ Cumulative Capital Development fund, and a potential future General Obligation (GO) bond.

The packet for the meeting is available here: Council_Work_Session_Packet_20160223. However, it probably won’t be particularly useful — there is no detail on the timber sales issue, and the Low software discussion is a last-minute addition.

As always, the meeting is open to the public and will be televised on CATS. Hope to see you there!

 

2016 Monroe County Budget Order — Property Tax Rates and Budgets Approved

12 Feb
Monroe County Courthouse at Night

Monroe County Courthouse at Night

Yesterday, Monroe County received its budget order for 2016 from the Indiana Department of Local Government Finance. This means that the Department of Local Government Finance has approved for Monroe County:

  • The budgets for all taxing units (i.e., county, cities and towns, school districts, townships, public library, special units)
  • The property tax levies and tax rates for all taxing units
  • The property tax rates for each taxing district (i.e., the tax rates that actually affect each property owner)

Here is a chart showing the 2016 tax rates by taxing district (along with the 2013, 2014, and 2015 rates for comparison):

2016 Monroe County Tax Rates by District

 

Tax rates for all taxing districts actually went down this year, except for Bloomington Township and Salt Creek Township. Tax rates for these two districts went up a bit, because of fire debt service payments.

The full budget order can be found here: Monroe County 2016 Budget Order

Funding for Volunteer Fire Departments, CASA, and New Financial Software for the County? Preview of Monroe County Council Meeting 2016-02-09

7 Feb

2016 County Council Members

The packet and agenda for this Tuesday’s regular meeting of the Monroe County Council is now available: Council_Packet_20160209.

The following are the major substantive items on the agenda:

  • The Monroe County Circuit Court is requesting an additional appropriation of $27,334 out of the Juvenile County Option Income Tax (a 0.095% special income tax earmarked for juvenile services) for Court Appointed Special Advocates (CASA), a a volunteer-powered program which provides representation in juvenile court for child victims of abuse and neglect. This is an increase over the 2016 budgeted amount of $137,166 (which was unchanged from the 2015 amount), and is being requested due to increasing demands on the program.
  • The Health Department is requesting an appropriation of a $15,000 grant to support the Monroe County syringe exchange program, in an agreement with the Indiana Recovery Alliance. The Health Department announced the opening of the syringe exchange program this past Friday. The program will provide free syringes, prevention supplies, HIV and Hepatitis C testing, treatment and social service referrals, and harm reduction and naloxone education.
  • The Probation Department is requesting the creation of a fund and appropriation of a $32,065 Justice Assistance Grant for the Drug Court Coordinator position, funding for which is shared with the COIT General Fund budget. This is a cut from last year’s grant, and we have been notified that after 11 years of funding, we will be unlikely to receive funding next year. Monroe County’s Drug Court has been a demonstrable success in the past, and it will be a priority both of the Probation Department and — hopefully — the County Council to continue to fund Drug Court operations.
  • The Legal Department is requesting an appropriation of $25,000 for potential claims settlement. The legal department has typically had this amount available to it to settle claims on behalf of Monroe County when a negotiated settlement is in our best interest. The line was cut in 2016 budget hearings; however, the legal department is requesting it be reinstated, in order to broaden our options in future negotiations.
  • The Correctional Center is requesting an additional appropriation of $35,441.61 out of the Misdemeanant/County Corrections Fund for part-time hourly. It appears that this part-time hourly request was accidentally omitted from the jail’s 2016 budget request. The hope is that better use of part-time hourly revenue could result in reduced overtime costs, which was a major problem in 2015, and will likely be in 2016 as well, following a collective bargaining agreement with the correctional employees that changed the rules on overtime. In addition, there might be additional discussion of recent and proposed statutory changes to the rules for the Misdemeanant Fund.
  • The Auditor’s Office is requesting an appropriation of $235,000 out of the COIT General fund for purchase of new financial software (LOW Windows Accounting System).
    • The Auditor’s Office switched to LOW’s property tax management system two years ago, and has been investigating a potential conversion for the past couple of months, and has conducted a public demonstration with all county stakeholders, worked extensively with the Technical Services Department (IT), and led site visits to other counties that are using the same system.
    • The Council has not seen the full financial plan for purchasing and supporting LOW yet, nor a requested cost-benefit analysis, though, so while the switch to LOW is very promising, this request is premature, in my opinion.
  • The County Commissioners are requesting an appropriation of $40,000 out of the General Fund for aid to volunteer fire departments in the county.
    • Every year, by statute, the county receives 15% of the net proceeds from logging activities on state forests located in the county from the Indiana Department of Natural Resources.
    • For the 2015-2016 fiscal year, Monroe County received $79,295, which was deposited in the Property Tax General Fund in December. Also by statute, 50% of this revenue is earmarked for rural and volunteer fire departments within the county that have a cooperative agreement with the state.
    • However, the statute also specifies a $1000 maximum annual distribution per fire company, unless the legislative body (the County Commissioners) allows a greater distribution.
    • Whatever the distribution amount allowed, it must be the same for all eligible fire departments. There are 8 fire departments in Monroe County eligible for this funding: Bean Blossom Township Fire Department, Benton Township Fire Department, Bloomington Fire Department, Bloomington Township Volunteer Fire Department, Ellettsville Volunteer Fire Department, Indian Creek Firefighters Inc, Perry/Clear Creek Fire Protection District, and Van Buren Township Volunteer Fire Department. Note that many of these fire departments have both volunteer and professional firefighters.
    • The Commissioners have decided to give each volunteer fire department $2500, for a total of $20,000. The maximum that they could have provided each department was $4956 ($4956 x 8 departments = $39,648, which is 505 of the revenue). The rest of the revenue not provided to volunteer fire departments reverts to the Property Tax General Fund, where it can be spent on any expense of county government.
    • In addition, it was discovered that no distribution was provided to fire departments from the 2012 timber sales revenues. Therefore, the Commissioners are requesting an additional $2500 per fire department, to make up for the missed distribution. Honestly, I am really shocked that no one noticed this omission before now. Some of these rural fire departments are very small, and need all of the assistance they can get!
  • The Commissioners are making several requests for  appropriations for capital projects that have already been programmed.
    • They are requesting $317,609 in appropriations from the 2013 General Obligation bond, to finish up several projects, including Showers building repairs, a remodel of the jail, fire suppression systems, the solar project on the Justice Building, and a section of the Karst Farm Greenway.
    • They are also requesting $239,140 in appropriations from the 2014 General Obligation bond for emergency notifications, IT hardware, and the energy conservation project.
  • The Commissioners are requesting $102,500 from the Cable Franchise Fees fund for several items that were accidentally left off of 2016 budget requests (but are typically funded from the Cable Franchise Fees fund): telephone maintenance, software development services, and the county’s copier lease.
  • The Clerk is requesting the appropriation of $191,918 from a federal Violence Against Women grant that will pay a program coordinator and supplies for the Clerk’s Office, the courts, and law enforcement.
  • The Council will be working with the Clerk and the Election Board to complete the establishment and appropriations for the county’s new Election and Voter Registration Fund. The purpose of this fund is to smooth out the variability in election expenses over the four-year cycle (Presidential election, no election, off-year election, municipal election). The new fund has already been created and the Council transferred $986,000 into it out of the Rainy Day Fund. At this meeting, the council will be setting up the budget lines in the new fund, appropriating into these lines, and deappropriating the old Voter Registration and Election budgets (in the Property Tax General and COIT General Funds, respectively).

Whew, sounds like it could be a long night!

As always, the meeting is open to the public, and will be held this Tuesday evening (February 9, 2016) at 5:30 in the Nat U Hill room of the Monroe County Courthouse, and it will be broadcast on CATS. Public comment will be taken. Hope to see you there!

Future of Tourism in Indianapolis?

31 Jan

IMG_1056The Indy Star published an interesting and balanced article today on the Indianapolis Convention Center, its expansion over time (there is a great interactive infographic on its expansions since 1972 at the end of the article), and its effects on tourism and visitation in Indianapolis.

The article makes the case that the Convention Center has largely been effective, and kept Indianapolis highly competitive as a second-tier destination, bringing in the desired revenue and visitation into the city.

However, at the same time, the article points out some of the long term challenges. First, convention center expansion in itself is a very expensive arms race — just as Indianapolis invests in expansion, its competitor cities are doing the same thing, and competing over essentially the same visitors. Second, the article points out some challenges more specific to Indianapolis. Indy is perceived as a bland Midwestern city — friendly, walkable, but not very exciting. It doesn’t have many natural assets, and those that it does have (the White River, for example) are very difficult to capitalize on. And of course, RFRA has harmed the state’s reputation and had some effect on convention business.

One thing that the article never addresses is the benefits and costs that the Convention Center and tourism in general has on residents. I have never seen good statistics (anywhere, not just with respect to Indianapolis) on how much tourism taxes (lodging, car rental, ticket taxes, and food and beverage) cost residents (vs. visitors). Clearly lodging and car rental taxes are paid primarily by visitors (although they are also indirectly paid for by businesses whose employees and consultants travel to Indianapolis). But what about food and beverage taxes? How much new revenue do they actually bring in, and how much goes to local residents?

Follow

Get every new post delivered to your Inbox.

Join 38 other followers