GOSHEN — Elkhart County and Goshen city leaders say property tax caps have been wreaking havoc on local budgets since 2008 – and there’s no end in sight if something isn’t done to change the law.
The Indiana General Assembly adopted property tax caps six years ago with the intention of providing tax relief and limiting future increases, but local officials said Thursday, April 27, that county and city budgets have been hit hard because of the recession and declining revenues.
County commissioner Mike Yoder said the county faced a roughly $9 million shortfall this year. Officials had to fill the gap by trimming budgets, shifting funds and using economic development income tax, or EDIT, dollars.
“There’s going to be another deficit in 2015,” said Yoder, who spoke Thursday at the Goshen Chamber of Commerce’s Wake Up, Goshen program. “We’re just not sure what it’s going to be.”
Yoder said he hopes next year’s shortfall is not any worse than what the county encountered when preparing for 2014.
In 2008, the county’s income tax revenue was about $11.3 million, and in 2013, the revenue was $8.3 million. This year, however, income tax revenue is projected to hit $10.7 million.
“Our income tax revenue is almost fully recovered, but the property tax revenue went from $41 million to $23 million,” Yoder said. “That’s a huge difference.”
Indiana lawmakers considered eliminating the business personal property tax during their most recent legislative session. The move would have further cut incomes to local taxing districts. Leaders with the Goshen chamber, the city and the county rallied against the elimination of the tax without a plan to replace the revenue it generates. State lawmakers did not get rid of the tax but provided some local options and created a study committee that will take a look at the issue.
“We can’t continue to have loss upon loss,” Goshen mayor Allan Kauffman said. “We’ve coped until now, but it’s gotten to the point where we’re upside down on some of our budgets, and without additional revenue sources, we can’t continue to offer some of the services we have. It’s the same in the city of Elkhart and Elkhart County.”
Follow Elkhart Truth reporter Angelle Barbazon on Twitter at @tweetangelle.