Continuously serving Kosciusko County since 1854
The Municipal Unit Strategic Taskforce Committee had its first meeting Thursday to discuss possible changes to the local income tax rate.
Joe Irwin, MUST chairperson, said the state, through the Department of Local Government Finance and the Association of Indiana Counties, has encouraged counties to review their local income tax structure.
Irwin stated the Kosciusko County Council reviewed the state’s recommendations, current fiscal conditions and long-term financial stability before determining the current LIT rate “remains stable, effective and efficient for county and municipal needs.”
“At this time, the council does not intend to adopt a new LIT rate or modify the existing rate,” Irwin stated.
He reminded those in attendance no action needs to be taken until 2028 in preparation for budget year 2029.
“There’s two more legislative sessions between now and then,” Irwin said. “With the uncertainty, we feel it’s best just to stay put.”
He then encouraged the attending clerk-treasurers to share their positions on the LIT rate.
Most of the towns’ representatives agreed with the Kosciusko County Council’s position, though Tricia Gall, Milford clerk-treasurer, said towns should be compensated for potential property and income tax losses.
“I agree with staying the same for now, but with the LIT changes that are coming, and whatever that ends up being, the town of Milford would appreciate being made whole (from) the property tax losses and the local income tax losses that we would have,” Gall said. “That was the intention of changing the LIT rate to begin with.
“We’re obviously in the position where we can’t pass our own rate, so we’re at the mercy of the county to do that for us,” Gall continued. “So, we would just appreciate that philosophy being carried through as the intended purpose of the changes.”
The clerk-treasurers for Etna Green, Syracuse and Silver Lake, along with other clerk-treasurers in attendance, agreed with Gall’s viewpoint.
Jeff Knight, Nappanee clerk-treasurer, stated Nappanee is planning on using Elkhart County’s LIT rate, which means the city does not have to generate its own LIT rate. This will also prevent Nappanee citizens from being double-taxed.
After further discussion, the MUST Committee passed a motion to keep the LIT rate unchanged while seeking to help towns recover potential property and income tax losses “to the best ability possible,” as Gall stated it.
After the motion was passed, several community members shared their opinions on the meeting and the LIT rate.
Karl Stutzman, director of Milford Public Library, said libraries receive LIT revenue but argued the current allocation method “need(s) to change.”
“The way that LIT gets allocated to us now … it’s a percentage of our property tax, which gives us actually a backwards incentive to do as much increase in our levies as we can,” Stutzman said. “If we don’t, we’ll also lose LIT revenue.”
Sue Ann Mitchell, county commissioner, told the MUST Committee the meeting should identify flaws in the law preventing officials from making decisions about future tax changes. She said uncertainty surrounding property values, tax rates and credits makes it difficult to determine how the changes will affect taxpayers.
Mitchell explained that changes to how assessed values are calculated have affected tax rates and said the committee needs to document its concerns for the state Legislature.
“There is no clear path to explain how you could ever think about adopting anything today,” Mitchell said. “... I fear, that if we don’t get something on the record saying these are the things that are our concern, I feel like nothing is going to happen.”
Irwin said he would share a list of concerns with the committee.
“We talk about being made whole, and I think the first step in that is determining needs from wants,” Irwin said. “That includes … all of us, but moving forward, we know things are going to be tight.”
Chris Plack, a resident of Warsaw, raised concerns about how lower property taxes could affect school operating budgets.
“I understand we can’t make real decisions yet because of two legislative meetings, but what have you done to start thinking about these budget shortfalls that are coming to you?” Plack said.
In response, Virginia Cazier, Syracuse clerk-treasurer, stated residents could end up paying for services they previously received without charge to offset lost revenue.
“They’re getting punished for something that we’re told that we’re going to lose,” Cazier said.
She stated along with the question of whether town councils should start discussing potential charges now, “there’s a lot of questions we just don’t know.”
“I feel like we need to start advertising, promoting and telling people this is what’s going on in our community,” Cazier said.
Jeremy Skinner, community and economic development director for the City of Warsaw, addressed Plack and said “every community is a little bit different” when it comes to property tax losses.
“At the end of the day, it’s not a matter of ‘are we losing revenue,’ it’s a matter of, ‘are we not gaining more than we could have gotten?’” Skinner said. “To the comments of everybody in this group, I think the key … for all of us is to stay unanimous in the decisions we make so we can’t be picked apart by the state … I think we’re stronger as a whole.”
Ultimately, Irwin said those present “can agree we don’t want to jump into something.”
“I think we need to stay united on this, and the message to the state is, you want us to make these decisions, but you’re not giving us the tools,” Irwin said.
The MUST Committee will have its next meeting sometime six months from now, after the next state legislative session has concluded.
