Some county officials are hoping an increase in the local income tax could bring relief to the county’s suffering budget.
The Elkhart County Board of Commissioners are recommending that the Elkhart County Council pass what’s called a property tax relief local option income tax.
While its mechanisms are somewhat complicated, the hope is simple — to recoup some of the losses wrought upon the county budget by property tax caps.
Here are six questions answered about the proposed tax:
Who decides whether or not to pass the tax?
While the county commissioners have given their recommendation, the decision is ultimately up to the Elkhart County Council, comprised of seven elected officials.
How would it affect my paycheck?
The rate for the proposed income tax would likely be 0.25 percent, according to Mike Yoder, county commissioner. It would be joined by a 0.25 percent public safety income tax, bringing the total rate to 0.5 percent.
That would raise Elkhart County’s collective income tax rate up to 2 percent, which currently includes a 1 percent adjusted gross income tax, a 0.25 percent economic development income tax and a 0.25 percent special jail income tax.
The proposed tax would be applied to workers’ adjusted gross incomes, according to a 2011 policy brief by Ball State University’s Center for Business and Economic Research.
So, for every $20,000 a resident earns in gross adjusted income, about $100 would go to the proposed tax.
Social Security payments would not be affected.
Why is this being considered?
Elkhart County’s budget is largely funded by property taxes.
Since property tax caps went into effect in 2009, property owners have had more money in their pockets. On the flip side, the county has less money to pay for its government as well as cities, towns, townships, libraries and schools.
In 2010, cumulative losses from those caps totaled $13.15 million. By 2014, those cumulative losses had reached $42.63 million.
(Read more about property tax cap losses with reporter Tim Vandenack’s “Losses in Elkhart County to property tax caps mount, property tax funding going down”)
If the losses aren’t counteracted in some way, the county could be forced to cut back funding for public services, a concern echoed repeatedly by county officials in recent months.
At this point, it’s unclear which services would be affected.
How would the new income tax work?
If the council passes the proposed tax at the rate suggested by the commissioners, 0.25 percent would go straight to public safety funds.
That means more money for police and fire departments, emergency medical services, corrections facilities and pensions for workers in those areas, according to Ball State’s report.
The other 0.25 percent would be applied as a credit on county property tax bills. This would ultimately allow the county to recoup some of the property taxes that would have been lost to tax caps.
Some property owners could end up with no change or a decrease to their property tax bills, while others could see an increase, depending on their tax cap class, net assessed value and tax rate, according to Yoder.
When will a decision be made?
The commissioners are hoping to see the council pass the new income tax by Oct. 1, which would allow it to go into full effect in 2015, according to Yoder.
However, a decision either way may not be made until later in the year, and there’s always the chance it could ultimately be shot down.
How can I give my input?
Both the commissioners and the council have time at the end of their meetings for public input. The county council’s next two meetings are 8 a.m. Saturday, Aug. 9, and 8 a.m. Saturday, Sept. 13.
The county commissioners hold their regular meetings at 9 a.m. on the first and third Monday of the month.
Both entities hold their meetings in room 104 of the County Administration Building, 117 N. Second St., Goshen.