Officials get primer on new tax laws (06/12/07)

If you're looking for property tax relief, it's going to have to come from locally generated income taxes.

That's the message delivered to Jay County Commissioners and members of the Jay County Council by an Indianapolis expert in state fiscal policy.

Gretchen Gutman, a former senior fiscal policy analyst for the Indiana General Assembly and now an attorney with Sommer Barnard, outlined the choices facing county officials during a joint meeting of the commissioners and council Monday. The meeting was arranged by Portland attorney John Coldren, who is senior legislative consultant with Sommer Barnard.

"In 2005, the state sort of made a decision they were no longer going to be in the property tax replacement business," Gutman said, after detailing the dozens of changes in state fiscal policy since the early 1970s.

The property tax relief fund was created in 1973 during the administration of Gov. Otis Bowen, and since that time it has undergone numerous changes. Homestead Credits, which soften the impact of property taxes, have been increased, reduced, and increased again.

Now, said Gutman, they're on the verge of extinction.

As to the property tax replacement credit, Gutman said, "That train has derailed and stopped. State government is of a mind that they're not gonna get back on that train."

Instead, she said, through legislation passed this year, the General Assembly hopes to steer local government toward greater reliance on local income taxes.

"From the state's perspective, they've given local government some tools to control their own destiny," said Gutman.

"The impact this will have on counties will vary across the board," Coldren said.

The bottom line for Jay County, said Gutman, is that there will be less money coming from the state for property tax relief and any such relief will have to come from the county adjusted gross income tax.

There will be a 19-month transitional period where the state will provide additional dollars for the Homestead Credit. "But after 19 months, they're gonna bail," said Gutman.

The new legislation allows counties to increase the local income tax up to two tenths of a percent to cover growth and another two tenths of a percent to create a county stabilization or "rainy day" fund.

If that step is taken, the county could also add up to another one percent to provide property tax relief.

And if both those steps are taken, the county could add another quarter of a percent to provide additional funding for public safety.

Currently, Jay County has a 1 percent county adjusted gross income tax and a half percent county economic development income tax.

If the county were to adopt the maximum rates allowable under the new law, the income tax rate would move from its current level of 1.5 percent to 3.15 percent.

To get additional property tax relief from local income taxes, the county would have to adopt the new tax rate by Aug. 1 in order for there to be distribution in 2008.

If the county waits until Aug. 1, 2008, there would be no distribution of property tax relief until 2009.

"You've got to think about it because the Homestead Credit starts to go away," said Gutman. "Income tax is going to be an increasing part of your revenue stream."

County officials expressed little enthusiasm for the changes. "It's the same crazy quilt, catch-all nonsense we've been seeing for years," said county councilman Gerald Kirby.

Local officials were also skeptical about the General Assembly's plan to provide $300 million in property tax rebates later this year. Jay County Auditor Freida Corwin said 6,400 rebate checks will be issued locally under the program.

Gutman noted the legislation only affects counties and other units of civil government such as cities, towns, and townships. School systems are not affected by the legislation because they do not receive county adjusted gross income tax revenues.

One portion of the legislation, however, will affect school corporations, she said. That is the creation of a county capital projects review committee in 2009 which will require additional local approval of construction projects.[[In-content Ad]]Jay County zoning and building permit fees were hiked Monday - in some cases more than doubling.

Jay County Commissioners gave unanimous approval to the new fee schedule, which had been presented by the Jay-Portland Building and Planning Board.

It's the first increase in fees in nearly 10 years and reflects a number of higher costs involved on the part of the building and planning department, commissioners noted.

The largest increase came for confined feeding facilities, which jumped from $25 to $350. Fees for wind towers and communications towers jumped from $25 to $100.

Many other fees - variances, special exceptions, map changes, planned unit developments - doubled. Most will now be $200, while planned unit developments will be $500.

Subdivision development plan applications rose from $150 to $250.

Zoning use permits jumped from $25 to $35, home occupancy permits increased from $25 to $50, swimming pool permits rose from $25 to $35, and pond permits rose from $25 to $50. A zoning application permit for mobile home non-conforming use was set at $50.

Building permits for manufactured housing rose from $50 to $75, and related construction will now be based on a fee of 8 cents per square foot, bringing it in line with stick-built housing. There was no change in permit fees for stick-built housing, which remains 8 cents per square foot with a $120 minimum.

Building permits for commercial buildings remained at 6 cents per square foot under 10,000-square feet and 5 cents per square foot over 10,000-square feet. The maximum fee for a commercial building permit was increased from $1,000 to $2,000.