Evansville stands to take a $7 million hit if the state eliminates a business tax outlined in Gov. Mike Pence’s legislative agenda, city officials said Tuesday.
Pence has recommended the Indiana General Assembly approve a “phase out” of Indiana’s business personal property tax, saying the move would spur growth and investment in the state. However, Pence and Republican legislative leaders have yet to release details on how a potential phase out would occur.
Evansville Mayor Lloyd Winnecke sent a letter this week to Southwestern Indiana’s legislative delegation relaying his opposition to the proposed elimination of the tax, which businesses pay on computers, machinery and other equipment.
“The elimination of this tax, without 100 percent replacement, will be devastating to cities all across Indiana,” Winnecke wrote.
Losing the revenue would likely cause layoffs across city government, City Controller Russ Lloyd Jr. said. Lloyd estimated approximately 30 to 50 layoffs could occur.
Separately, the city’s parks, which receives its own share of property tax revenue, would experience an approximate $800,000 cut in funding, Lloyd said.
The business tax represents about 14 percent of the property tax revenue the city receives, Lloyd said. Eliminating the tax also would come on top of Indiana’s property tax caps, which have cut funding to local governments in recent years.
House Speaker Brian Bosma (R-Indianapolis) said legislative leaders are looking at options on how to soften the impact to local governments, which receive about $1 billion in revenue from the tax. Bosma said one option being explored is implementing the phase out in a way that it wouldn’t immediately impact every county in the state.