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Rep. Culver: Officials consider income tax gap fix administratively

Indiana lawmakers serving Elkhart County offered an update on legislative action going on in Indianapolis.
Posted on Feb. 23, 2013 at 12:00 a.m.

GOSHEN — Indiana Rep. Wes Culver said hope isn’t lost in efforts to address local officials’ concerns that the state shortchanges locales here in their due income tax revenue.

A measure he authored to address the matter, House Bill 1479, has stalled, the Goshen Republican told a gathering Saturday, Feb. 23, at the Goshen Chamber of Commerce. But the Indiana Department of Revenue may be able to address the issue administratively, without the need for legislation.

Here’s more on H.B. 1479

Many county and city leaders have long complained that because state officials base income tax distributions on income tax returns filed, they don’t get their due amount. Though employers withhold income tax for all workers and send it to Indianapolis, not all employees file returns each April, leading, local officials say, to the shortfall.

Culver noted that starting this year, employers sending withholding taxes to the state identify on standard forms the county from which the revenue comes. Thus, state officials have a way to track the origin of incoming money, theoretically giving them a means to more precisely determine how to re-distribute it.

Still, any fix could take “years,” Culver said, given the lag between the time taxes are actually collected from workers and when they’re distributed back to locales.

Culver, speaking at the chamber’s regular Third House meeting, touched on other matters, including the proposed state budget. The periodic meetings are meant to provide the public the chance to hear from the local delegation to Indianapolis.

Members of Elkhart County’s delegation to Indianapolis also spoke Saturday at a Third House gathering at the Greater Elkhart Chamber of Commerce. Here’s a look at some of the highlights:

More on income taxes: The varied lawmakers expressed mixed views about Gov. Mike Pence’s proposal to cut the individual income tax rate here by 10 percent, from 3.4 percent to 3.06 percent. None expressed overt enthusiasm.

Rep. Tim Neese, R-Elkhart, said he opposes it. Rather than a cut, more revenue should be directed to education.

Rep. Tim Wesco, R-Osceola, is non-committal at this stage. He’d like to see some sort of tax relief, he said, pointing to a proposal he authored to immediately eliminate the state’s inheritance tax, which faces tweaking.

Rep. David Ober, R-Albion, would like to see some sort of tax cut, whether in the corporate income tax rate, the state sales tax or something else. While saying Pence has a good idea, he’s not ready to throw his support behind it until likely revenue entering Indiana coffers is clarified.

Sen. Joe Zakas, R-Granger, said alternative proposals have been floated calling for a gradual phase-in of an income tax cut, instead of doing it all at once.

The state budget:Crafting a budget for fiscal years 2014 and 2015 remains the key task of lawmakers this session, and the House proposal calls for around $30 billion in general fund spending over the two years.

Education, under the House proposal, would get another $354 million compared to 2013 over the two years, said Wesco. Per-student funding to the Concord, Baugo and Wa-Nee school districts would likely increase slightly in each of the two years, he said, while funding to Elkhart Community Schools would dip in 2014 and increase marginally in 2015.

Roads funding: Proposed budget tweaks would generate another $250 million in funds for road maintenance across Indiana, said Culver. Neese thinks Elkhart County’s share of that could increase slightly, from around $8.3 million a year to $9.1 million.

County leaders say funding for routine maintenance has gotten tighter over the years, making it tough to keep roads in shape.

Drug testing aid recipients: Culver thinks House Bill 1483, requiring drug testing in certain circumstances of recipients of Temporary Assistance for Needy Families benefits, could pass. He noted it doesn’t allow for criminal prosecution of TANF recipients based on drug test results, a sticking point in a prior version.

Look here for more on H.B. 1483

House Bill 1483 would oblige TANF recipients to complete a written questionnaire and, depending on the results, submit to drug testing.

Follow Tim Vandenack on Twitter at @timvandenack.

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