Archive | April, 2014

Income Tax Rates in Indiana Counties – How Does Monroe County Compare?

28 Apr

As I have mentioned in previous postings, Monroe County is considering raising its income tax rate to support juvenile services from 0.05% to 0.095%. Several constituents have asked me how Monroe County’s income tax rate compares to other counties in Indiana.

First of all, there are six different types of local option income taxes available to all Indiana counties, in various combinations. They are:

  • County Option Income Tax (COIT) — Monroe County uses this, at a 1% rate
  • County Adjusted Gross Income Tax (CAGIT)
  • County Economic Development Income Tax (CEDIT)
  • Local Option Income Tax (LOIT) to freeze property tax growth
  • Local Option Income Tax (LOIT) to replace property taxes
  • Local Option Income Tax (LOIT) to support public safety

In addition, there are several special income taxes that are available through legislation specific to individual counties. Monroe County has one of these special income tax rates available for juvenile services (the so-called Juvenile COIT). We are authorized to raise the rate up to a maximum of 0.25%. The rate is currently 0.05%, and the County Council is considering raising it to 0.095%. If this passes, Monroe County’s total income tax rate would be 1.095%, up from 1.05%.

The other thing to remember about income taxes is that taxpayers pay income tax based on where they live, not where they work. So a Greene County resident who works in Monroe County, for example, would pay to Greene County an income tax rate of 1% (i.e., Monroe County would receive nothing). Incidentally, although not the topic of this posting, this system puts “employment center” counties (like Monroe, Tippecanoe, Marion, etc.) at a disadvantage relative to their neighbor counties.

So how does Monroe County’s total income tax rate stack up against other Indiana counties? The following table lists all of the counties in Indiana, along with their total income tax rate (combining all of the income taxes that the county has adopted) and their rank in the state, where 1 represents  the highest tax rate and 92 the lowest. For the purposes of this analysis, I used 1.095% for Monroe County (i.e., how we would compare IF we adopted the higher tax rate).

 

County  Income Tax Rate Rank
Pulaski County         3.130 1
Jasper County         2.964 2
Wabash County         2.900 3
Morgan County         2.720 4
Miami County         2.540 5
Cass County         2.500 6
Jay County         2.450 7
Fayette County         2.370 8
Parke County         2.300 9
Clay County         2.250 10
Grant County         2.250 10
Brown County         2.200 12
Warren County         2.120 13
Montgomery County         2.100 14
Wells County         2.100 14
Clark County         2.000 16
Clinton County         2.000 16
Washington County         2.000 16
Fulton County         1.930 19
Benton County         1.790 20
Steuben County         1.790 20
Daviess County         1.750 22
Huntington County         1.750 22
Lawrence County         1.750 22
Madison County         1.750 22
St. Joseph County         1.750 22
Starke County         1.710 27
Carroll County         1.704 28
Hancock County         1.650 29
Marion County         1.620 30
Howard County         1.600 31
Jackson County         1.600 31
Tipton County         1.580 33
Perry County         1.560 34
DeKalb County         1.500 35
Elkhart County         1.500 35
Lake County         1.500 35
Martin County         1.500 35
Noble County         1.500 35
Putnam County         1.500 35
Randolph County         1.500 35
Rush County         1.500 35
Union County         1.500 35
Wayne County         1.500 35
Scott County         1.410 45
Hendricks County         1.400 46
LaGrange County         1.400 46
Ripley County         1.380 48
Blackford County         1.360 49
Allen County         1.350 50
Decatur County         1.330 51
White County         1.320 52
Owen County         1.300 53
Bartholomew County         1.250 54
Franklin County         1.250 54
Henry County         1.250 54
Jennings County         1.250 54
Marshall County         1.250 54
Orange County         1.250 54
Shelby County         1.250 54
Vigo County         1.250 54
Whitley County         1.233 62
Floyd County         1.150 63
Adams County         1.124 64
Fountain County         1.100 65
Knox County         1.100 65
Tippecanoe County         1.100 65
Monroe County (*)         1.095 68
Delaware County         1.050 69
Boone County         1.000 70
Crawford County         1.000 70
Dubois County         1.000 70
Greene County         1.000 70
Hamilton County         1.000 70
Harrison County         1.000 70
Johnson County         1.000 70
Kosciusko County         1.000 70
Newton County         1.000 70
Ohio County         1.000 70
Posey County         1.000 70
Switzerland County         1.000 70
Vanderburgh County         1.000 70
LaPorte County         0.950 83
Spencer County         0.800 84
Dearborn County         0.600 85
Gibson County         0.500 86
Porter County         0.500 86
Warrick County         0.500 86
Pike County         0.400 89
Jefferson County         0.350 90
Sullivan County         0.300 91
Vermillion County         0.200 92

Pulaski County has the highest income tax rate in the state, at 3.13%, while Vermillion County, at 0.2% has the lowest. Monroe County’s rank is 68th.

So we are in the lower third of counties in Indiana for income tax rates. How do we compare to our neighbor and peer counties, though?

The following chart shows the 2014 income tax rates and rankings among Monroe County and its contiguous neighbors:

NeighborCountyTaxRates2014

Monroe County has the second lowest income tax rate of its neighbor counties.

Now how about our peer counties? Peer counties are counties that are generally similar to Monroe County in size and demographics (i.e., college towns, rural-urban breakdown, etc.). These counties are typically used in policy comparisons.

The following chart shows the 2014 income tax rates and rankings for Monroe County along with its peer counties.

PeerCountyTaxRates2014

If the proposed juvenile tax increase passes, we will be third-lowest of our peer counties. Currently we are actually tied with Delaware for second-lowest.

The final comment to make about local income taxes is that unlike property taxes, there is no guarantee that, despite the rates, the amount of tax actually collected will grow or remain stable over time. The amount of tax revenue for local governments is directly tied to the amount of income actually earned by county residents. and thus the overall economic development of the county.

 

 

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Follow-Up to Monroe County Council Work Session (2014-04-22)

25 Apr
Monroe County Courthouse at Night

Monroe County Courthouse at Night

Last Monday I posted a preview of the April 22, 2014 Work Session of the Monroe County Council. Several actions were taken during that meeting, as well as work session discussions.

Following is a summary of what happened at the meeting.

  • The Clerk requested a new position — Training Coordinator — to be created, and classified as a PAT (Professional, Administrative, and Technical) III.
    • The Clerk requested this position in lieu of two existing positions, which will then remain vacant. In addition, one supervisory position was replaced with a non-supervisory position.
    • The Council voted 7-0 to approve this request.
  • The Plan Commission requested that the Senior Planner position be moved from 35 hours per week to 40 hours per week.
    • Arguments in favor of this request included that the Senior Planner had to participate in numerous evening meetings, leading to inadequate hours during the week to actually do the work of the office. Arguments against included that many departments would like their staff to be reclassified to 40 hours per week, and it isn’t fair to grant the request to this one department only.
    • After significant discussion, however, the County’s HR Director expressed some concern that this position, which is currently classified as FLSA non-exempt should actually be exempt, given the parameters and salary of the position.
    • The Council voted 7-0 to table the request, in order to give the HR Director time to review the FLSA exemption status of the position.
  • The Council voted 7-0 to give the Legal Department permission to re-fill the position that will be vacant upon the impending retirement of the department’s long-time administrative assistant, Peggy Good.
  • The Auditor is requesting that the Payroll Representative (the deputy Auditor responsible for payroll) be reclassified from a COMOT IV to a COMOT V.  The rationale for this request was the high turnover in a position that has been underclassified in the past.
    • The Council supported this request in principle; however, several councilors raised concerned about making this kind of change in the middle of the budget year. The Council voted to amend the request for reclassification to take place effective December 31, 2014, so that the increased salary would be voted on as part of the 2015 budget. Councilors Dietz and Jones voted no on this amendment. However, the reclassification effective December 31, 2014 was subsequently approved 7-0.
  • The Assessor gave a presentation on (a) the assessment appeals process, (b) the status of high-profile appeals, and (c) the potential financial impact on the county and other taxing units of these high-profile appeals.
    • This presentation was requested by the Council after the 2014-04-08 County Council Meeting, in which the Council learned that an appeal by the owner of the Fields apartment complex that had been allowed to languish for 5 years by the State was just settled by the Assessor, costing the County and other taxing units (including the City of Bloomington and MCCSC) over $700,000.
    • The Assessor’s presentation is available here: Appeals Process Presentation
  • The Council discussed the report recently received from the Department of Local Government Finance detailing the circuit breaker credits for Monroe County taxing units for 2014. I provided some 2013-2014 summaries, breaking the impacts down by taxing unit and by type of circuit breaker. I will do a more detailed posting on this subject in the next week.
  • The Council briefly discussed a report commissioned by the Monroe County Redevelopment Commission on a situation in the County’s Richland Economic Development Area (TIF district) in which several parcels were annexed by the City of Bloomington.
    • The City and the County developed an interlocal agreement to determine how the tax increment would be divided between the City and the County; however, after several parcel splits and renumbering, the County erred in distributing the appropriate amount of revenue between the two parties from 2009 on. The study, conducted by Financial Solutions Group (FSG), determined that the County overpaid the City by $441,191.70 during the period of 2009-2013. The County would recoup this overpayment by withholding distributions in 2014. The analysis was provided to the City, and the County is waiting for a response. No council action is required.
    • The FSG report can be found here: Binder of MONROE COUNTY (ANALYSIS OF PAY 2009-2013 RICHLAND CITY TIF REV
  • The Council briefly discussed the proposal to increase the  Juvenile County Option Income Tax (JCOIT) from 0.05% to 0.095%. This was originally discussed in the 2014-04-08 County Council Meeting.
    • The committee I created to study the issue of which juvenile expenses can and should be paid for from JCOIT revenues (Councilors Yoder, Hawk, and Jones) gave a report of their findings.
    • No action will be taken at this meeting; a public hearing and potential vote will be conducted at the regular County Council meeting on 2014-05-13.

The meeting was also broadcast on CATS TV, and can be found here: County Council 4/22 

Preview of Tomorrow’s Monroe County Council Meeting (2014-04-22)

21 Apr

 

Monroe County Courthouse at Night

Monroe County Courthouse at Night

The agenda and packet for tomorrow’s work session of the Monroe County Council is available here. I expect this one to be pretty interesting!

Following are the highlights of the agenda:

  • The Clerk is requesting a new position — Training Coordinator — to be created, and classified as a PAT (Professional, Administrative, and Technical) III. This is the first of 3 position-related requests that were read for the first time at the last regular meeting but not discussed or voted upon. Since a salary ordinance amendment requires a unanimous vote to pass on the first reading, and one councilor indicated that she would be voting “no” on all 3 position requests, the council chose to just do a first reading at the last meeting, and discuss and vote at the work session. The Clerk is requesting this position in lieu of two existing positions, which will then remain vacant. The Council’s Personnel Administration Committee (PAC) voted to recommend in favor of this move 3-0.
  • The Plan Commission is requesting that the Senior Planner position be moved from 35 hours per week to 40 hours per week. Most county positions are 35 hours per week; however, the Planning Director and Assistant Planning Director have already been moved to 40 hours per week. The Plan Commission’s arguments are (a) that 35 hours/week does not cover the workload (and they will be presenting documentation on the increase in filings and other demands) and (b) that the current 35 hour/week salaries are simply not high enough to compete in what is essentially a national marketplace and thus Monroe County has an extremely high turnover rate in skilled planners, to the detriment of service to the public. This request was forwarded by PAC with a 3-0 positive recommendation.
  • The Auditor is requesting that the Payroll Representative (the deputy Auditor responsible for payroll) be reclassified from a COMOT IV to a COMOT V.  The rationale for this request was the high turnover in a position that has been underclassified in the past. This request was forwarded by PAC with a 3-0 positive recommendation.
  • In what will probably be the most closely watched of the evening’s discussions, the Assessor will give a presentation to the Council that will cover (a) the assessment appeals process, (b) the status of high-profile appeals, and (c) the potential financial impact on the county and other taxing units of these high-profile appeals. This presentation was requested by the Council after the 2014-04-08 County Council Meeting, in which the Council learned that an appeal by the owner of the Fields apartment complex that had been allowed to languish for 5 years by the State was just settled by the Assessor, costing the County and other taxing units (including the City of Bloomington and MCCSC) over $700,000.
  • The Council will discuss the report recently received from the Department of Local Government Finance detailing the circuit breaker credits for Monroe County taxing units for 2014.
    • There are two types of circuit breaker credits in Indiana. One is the so-called 1%-2%-3% tax caps (that are in the Indiana Constitution), and the other is a limitation on increases in property taxes for property owners over 65 years of age. Circuit breakers represent caps on taxes for property owners, but losses of revenue for local government.
    • Although in gross terms the circuit breaker amounts for 2014 are quite low compared with many other counties, Monroe County saw a substantial increase from 2013-2014 in the 1%-2%-3% tax caps (i.e., the aggregate amount by which property owners’ taxes exceed a particular percentage of their gross assessed value — 1% for homesteaders, 2% for multifamily residential, rental, and agricultural property, and 3% for businesses):image
  •  This discussion is for information of the Council; no action will be taken
  • The Council will discuss report commissioned by the Monroe County Redevelopment Commission on a situation in the County’s Richland Economic Development Area (TIF district) in which several parcels were annexed by the City of Bloomington.
    • The City and the County developed an interlocal agreement to determine how the tax increment would be divided between the City and the County; however, after several parcel splits and renumbering, the County erred in distributing the appropriate amount of revenue between the two parties from 2009 on. The study, conducted by Financial Solutions Group (FSG), determined that the County overpaid the City by $441,191.70 during the period of 2009-2013. The County would recoup this overpayment by withholding distributions in 2014. This discussion is for the Council’s information; we do not have any action or vote to take.
    • The FSG report can be found here: Binder of MONROE COUNTY (ANALYSIS OF PAY 2009-2013 RICHLAND CITY TIF REV
  • The Council will further discuss a proposal to increase the Juvenile County Option Income Tax (JCOIT) from 0.05% to 0.95%. This was originally discussed in the 2014-04-08 County Council Meeting. The Council will be discussing which expenses can appropriately be moved into the JCOIT fund. The committee I created to study the issue of which juvenile expenses can and should be paid for from JCOIT revenues (Councilors Yoder, Hawk, and Jones) will give a report of their findings. No action will be taken at this meeting; a vote is anticipated at the regular County Council meeting on 2014-05-13.

 

Final I-69 Silt and Sedimentation Complaint Letter

21 Apr

In my posting Highlights From Monroe County Council Meeting 2014-02-11 I mentioned that during public comment:

“Scott Wells presented a letter of complaint to four federal agencies (EPA, US Fish and Wildlife Service, Federal Highway Administration, and the US Army Corps of Engineers) that was agreed upon by the Plan Commission asking these federal agencies to address the issues of ongoing siltation and sedimentation of Monroe County waterways during the I-69 corridor construction (Section 4).”

The final draft of this letter was signed by all members of the Monroe County Plan Commission, the Monroe County Commissioners, the Monroe County Drainage Board, the Monroe County Stormwater Management Board, the Monroe County Board of Health, the Monroe County Environmental Quality and Sustainability Commission, and 6 out of 7 members of the County Council.

The letter was sent in April to:

  • Indiana Governor Mike Pence
  • United States Environmental Protection Agency
  • Federal Highway Administration
  • INDOT: I-69 Section 4 Office
  • Indiana Department of Environmental Management
  • Indiana Department of Natural Resources – Division of Water
  • U.S. Fish & Wildlife Service
  • U.S. Army Corps of Engineers

The full letter, with signatures and supporting documentation and pictures, can be found here:

Preview of Tomorrow’s Monroe County Council Meeting (2014-04-08)

7 Apr
Monroe County Courthouse

Monroe County Courthouse

The agenda and packet for tomorrow’s regular meeting of the Monroe County Council is available here:

Following are the highlights of the agenda:

  • Proposed increase in the Juvenile County Option Income Tax rate. This is undoubtedly the highlight of the meeting.
    • The Juvenile COIT rate — a special income tax used to support juvenile treatment and services — is currently set at 0.05%. The Council will consider raising it up to a potential of 0.1% (the rate that was advertised), in order to keep existing juvenile services sustainable. The Council will consider moving other expenses that are already being paid in support of juvenile treatment from other funding sources into the Juvenile COIT fund.
    • These expenses include both capital and operating costs of maintaining the county’s juvenile services at the Binkley House and the Johnson Hardware building, as well as the costs of staffing the juvenile court system.
    • Any tax increase, if passed, would take effect on October 1, 2014.
    • This meeting has been advertised as a public hearing, required for raising any county income tax rates. Public comment will be taken (and is encouraged!).
  • Approval of an amendment to an interlocal agreement between the City of Bloomington and Monroe County, in order to use proceeds from the 2012 Edward Byrne Justice Assistance Grant (JAG) program to purchase electronic signage.
  • Request from the County Commissioners to transfer $33,456 from the County General fund to the Energy Conservation Fund.
  • Transfer of up to $2.6M from the Rainy Day fund to the County General fund.
    • $2M of this transfer is to rebuild the cash balance of the General Fund after having made several large one-time purchases from it, including $1.8M for equipping the new Unified Dispatch Center and $250K to hire a consultant (MKSK) to develop the comprehensive land use plan for the Bloomington Urbanizing Area (the former two-mile fringe / Area Intended for Annexation).  This transfer has been discussed and anticipated by the Council for over six months.
    • The remaining $600K of this transfer is to allow the County to pay out a settlement on assessed value with a taxpayer who has appealed their property tax assessment over a 7 year period. By statute, the County is required to pay out reductions in assessed value out of the general fund, and then recover the money from the other taxing units (i.e. the City of Bloomington, Perry Township, the Monroe County Public Library, Perry-Clear Creek Fire Protection District, etc.) at settlement in June.
    • Appeals of property tax assessments happen all the time…and sometimes they are successful. Normally noone (including the Council) ever hears about them; however, this one is large enough that the Council would actually need to transfer money into the General Fund in order to pay out the refund to the taxpayer. There are a lot of outstanding questions about this payout, and I would anticipate some pushback from the Council before allowing a payout of this magnitude.
  • The Highway Department will request $1,585,800 in annual appropriations from the Cumulative Bridge fund for bridge projects throughout the county.
    • The Cumulative Bridge fund is supported by a property tax levy; however, unlike most other funds, it is typically not budgeted during annual budget hearings, but instead is budgeted through additional appropriations in the spring of each year.
    • This request includes budget lines and appropriations for the following bridges: Stinesville Road, Mt. Tabor Road, Garrison Chapel Road, Kinser Pike, Mt. Gilead Road, Dutch Church Road, Mt. Zion Road, Ratliff Road, Brighton Road, Ketcham Road, Maple Grove Road, Thomas Road, Stansifer Lane, Bottom Road, Simpson Chapel Road, Lee Phillips Road, Wolf Mountain Road, Ratliff Road, and Burma Road.
    • The annual report will full details about the County’s comprehensive bridge program can be found here: 2014 Cumulative Bridge Program
  • The Health Department is requesting an appropriation of the $2700 it was awarded from the County Council’s Sophia Travis Community Service Grants Program, for STD tests at the Futures Family Planning Clinic.
  • The Auditor is requesting the reclassification of its Payroll Representative from a COMOT IV to a COMOT V classification, in order to more accurately reflect the work that the Payroll Representative does and to ensure better retention of this position, which has seen significant turnover recently.
  • The Clerk is requesting the creation of a new position, Training Specialist, to be classified as a PAT III. The Clerk is leaving two positions vacant in order to create this position.
  • The Planning Department is requesting that their Senior Planner position be amended from 35 hours per week to 40 hours per week (to match the Planning Director and Deputy Planning Director).
  • The County Sustainability Coordinator and Grants Administrator will present the key findings in the Monroe County Environmental Quality and Sustainability Annual Report for 2013.

This meeting, as with all regular meetings of the Monroe County Council, will be broadcast on CATS. Public comment will be taken. The public is especially encouraged to attend and make comment. Hope to see you tomorrow at 5:30PM at the Nat U Hill room in the Monroe County Courthouse!

 

 

Uncertainty in Civic Amenities: Carmel’s Center for the Performing Arts

6 Apr

Today’s Indy Star featured a long article on the economics underlying Carmel’s Center for the Performing Arts (Carmel’s Center for Performing Arts plan vs. reality: miles apart). The story of the Center is a cautionary tale for all of us (very much including myself) who have supported large civic projects.

Some of the highlights:

  • The initial “sales pitch” and presentation of the Center projected a worst-case government operational subsidy of $309K/year became a $2.5M annual subsidy.
  • The initial concept of operations was that the Center would be a for-hire venue, with concert promoters bearing the risk and costs of show production. However, many supporters — including Mayor Jim Brainard — wanted the Center to be a venue for shows that went beyond those that are commercially viable (i.e. many classical concerts) that would help Carmel be more nationally competitive for high-end businesses and affluent workers (boosters compared the proposed Center to Carnegie Hall!)– and pushed the Center in that direction.
  • The mayor assured the community that a $40M endowment could be raised privately to support operations and enhancements. Unfortunately, the economic downturn occurred right in the middle of construction, and the endowment never materialized.
  • The Center faced a number of contractor disputes, including a recent $575K settlement with Bloomington contractor Crider & Crider.

All in all a must-read about the unanticipated risks and vagaries of large civic  projects.

Tale of Two Cities: Embezzlement in Bloomington IN and Covington, KY

2 Apr

Just as the story was breaking about the embezzlement of around $800,000 by a City of Bloomington public works employee, the news broke of the guilty plea of the finance director of the City of Covington, Kentucky (the city right next to my home town of Fort Thomas, Kentucky) for embezzling — get this — around $800,000 from the City of Covington. Unlike the alleged perpetrator in the Bloomington case, the Covington ex-official both admitted his crime and expressed significant remorse.

Cincinnati.com just reported today on some of the security and accountability controls that Covington is putting in place in the wake of the scandal (In light of theft, Covington patches things up). Although many of the details of the Bloomington incident have yet to be released. just from the media accounts it appears that the Covington theft was far less sophisticated than the Bloomington one.

Most significantly, in Covington, the same official had complete control of the city’s finances and of the city’s information technology. This control allowed the finance director to create checks in the financial system to fake vendors (and/or himself and relatives) and then cover up his tracks by changing the data in the financial system to make it look like the checks were written to legitimate vendors. From the outside, it is hard to imagine how such a system had been allowed to exist. Separation of duties is essential to maintaining accountability in any financial system.

The use of computer databases adds particular additional managerial burden, since without adequate controls in place, it can be easy both to commit malfeasance and to cover up the evidence. Covington has since created both an internal auditor and a separate information technology manager.

I would like to make one comment about both embezzlement cases, and the justifiable outrage expressed by the public surrounding them. While some of the security controls in place — particularly in the Covington case — seem almost laughably lax (or absent), there will never be one set of processes or officials or board members that will forever be foolproof. There will never be an unpickable lock or an unbreachable vault. There will never be a board or commission that is able to exercise perfect oversight. As long as there is money to be made, there will be smart criminals who will figure out a way around any system of security controls. Financial crime will always be a cat-and-mouse game; sometimes the cat will have the advantage and sometimes the mice.