HANCOCK COUNTY — The Hancock County Council voted Wednesday to raise
income taxes to rescue local government from a looming funding crisis. 

    After hearing from a handful of people protesting the new tax, council members voted unanimously to institute a 0.4 percent local option income tax, LOIT, to help fill a budget shortfall threatening to cut into public services. 

    The move will cost taxpayers approximately $5.6 million. But according to the state law that allows counties to implement LOIT, the county will direct only $1.2 million of the total toward county expenses, with the remainder going to other taxing entities. 

    Indiana code requires that the first 0.25 percent, or $3.5 million, be used as property tax replacement. Workers will pay that much more in income taxes while property taxes for most homeowners decrease by the same amount. 

    The remainder, roughly $2.1 million, or 0.15 percent, will be new income tax revenue designated for public safety, which the law requires be divided among the county, city and towns. 

    “I realize that we are all facing the economy, but I only have so many pockets,” objected Ralph Sweet. “Where am I going to go to make up my deficit?” 

    Blue River Township resident John Priore protested, “LOIT does not work in a shrinking economy. All you are doing is shrinking the amount of money in the private sector that can be spent.” 

    Another opponent of the LOIT compared the decisions county officials are making with the choice that led automakers astray. 

    “We all took GM down,” said Don Houk, a retired member of the United Auto Workers union. 

    “Management and the unions, everyone poured all of the burden on the consumer until nobody could buy cars. It imploded.” 

    The council vote sets the total burden at 1.55 percent. Workers will pay 1 percent in county adjusted gross income tax, 0.4 percent in local option income tax and 0.15 percent in county economic development income tax. The additional amount for 2010 will be pro-rated for the two months it is in effect. 

    County officials reiterated remarks about the nature of the choice. 

    “We don’t want to do it, and we are not united on this,” Councilwoman Rosalie Richardson said. 

    In 2009, the county council approved budget requests totaling $15.7 million in general fund expenses. With less money collected through income and property taxes the following year, the approved budget in 2010 totaled $15.1 million. Now, according to projections, Hancock County government will have little more than $13 million to support the same public services in 2011. 

    The deficit is the result of two factors: property tax caps and the economy. 

    While impact from the property tax caps most likely will be permanent, officials hope to see income tax revenues rebound with the economy. 

    Shelby proposed an amendment to the ordinance that puts a four-year expiration date on the new tax. The “sunset” requires elected officials to justify extending the LOIT in 2014. 

    The council also is considering a property tax freeze that shifts the annual growth rate allotted to municipalities each year to income taxes. 

    Councilman Richard Pasco and Shelby expressed concerns about the inflow of money the LOIT will provide to the city and towns. 

    “If they are going to get this kind of windfall they ought to be coming to the plate for 911,” Pasco said. 

    Shelby proposed the county pass a resolution directing the other units of government to give at least half of the income tax revenue they receive back to the county to fund the cash-strapped emergency dispatch center.
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