Bartholomew County likely would gain $1 million to $2 million a year in tax revenue if state legislators pass a commuter tax being proposed at the Statehouse.
Local officials from counties that stand to benefit said it’s money that, in the hands of local communities and entities, could help pay for critical infrastructure the county, cities and towns are working hard to maintain, as well as providing more funding for libraries, fire districts and schools.
A pair of lawmakers from Indianapolis and Kokomo are pushing for a greater share of the local option income tax coming out of people’s paychecks to go to the county in which they work.
Currently, counties pull a very small portion — less than 1 percent — from each person who works in one county but lives in another county. The rest goes to a person’s county of residence.
But legislators at the Statehouse may consider upping that rate to anywhere from 25 to 50 percent of the sum of income tax rates under two separate proposals, one authored by Rep. Cherrish Pryor, D-Indianapolis, and the other put forward by Rep. Michael Karickhoff, R-Kokomo. Both proposals now sit before the House committee that reviews tax proposals, where members can decide whether to explore the idea or let it die without a hearing.
With about 8,000 more people commuting into Bartholomew County rather than leaving to work elsewhere, Bartholomew would be one of 28 counties to benefit from a shift of up to $211.6 million in tax revenue that would begin in 2016.
Columbus Mayor Kristen Brown is all for Pryor’s proposal, which the mayor and City Attorney Jeff Logston estimate would mean about $1 million in additional revenue for the city from county adjusted gross income tax and economic development income tax dollars.
That money would “go a long way bridging the gap” between the $2 million needed for annual road maintenance and the $400,000 the city draws in gas-tax revenue, Brown said.
The proposal also would mean a more equitable distribution of revenues, as each employee coming into the county for work consumes services and contributes to wear and tear on critical infrastructure, she said.
“We’re happy to have people come here and work. They help our economy in many different ways,” Bartholomew County Council at-large member Evelyn Pence said. “But that does cause extra wear and tear on our roads.”
If passed, either proposal could have a positive effect for the county, but the legislation likely would have to get through a lot of hoops, Pence said.
Other counties that aren’t net importers like Bartholomew likely will oppose the bills, she said.
Marion County would gain about $84 million from Pryor’s proposal and $42 million from Karickhoff’s. But legislators in suburbs surrounding Marion County, whose counties would lose the income tax money, already are lining up to put a stop to the bill.
Purdue University professor and state tax expert Larry DeBoer said he doesn’t expect the proposal will get much support, since most counties will lose tax revenue compared with few who gain, he said.
“This is just a zero sum game, a direct transfer from the out-commuting counties to the in-commuting counties. So you can count the votes to see which legislators represent winners and which represent losers and have a pretty good idea what will happen,” DeBoer said.
Local legislative reaction
Two state legislators representing large portions of Bartholomew County aren’t jumping at the chance to support the proposal just yet.
Rep. Milo Smith, R-Columbus, said he hasn’t paid much attention to either proposal, as he’s focusing on his own legislation and bills that are getting a hearing.
Smith said he isn’t sure either proposal will get a hearing.
Sen. Greg Walker, R-Columbus, also doesn’t expect the proposals to pick up much traction in the House. He said his first impression is that the commuter tax is being driven as a Marion County proposal.
There have been bills that provide for intergovernmental agreements on transportation such as light rail or rapid bus, but none that generates revenue to pay for those systems, Walker said.
“This seems like kind of a long shot at creating some revenue for that concept,” he said.
Walker, who also represents part of Johnson County, said lawmakers also would have to discuss the proposals’ potential effect on migratory patterns from county to county.
Pryor, a former member of the Indianapolis City-County Council, said the proposals aren’t a new idea.
She sits on the Ways and Means Committee for the House of Representatives, which would hear both proposals, and said the panel has discussed legislation like this before.
Her proposal calls for taxing nonresidents at half the rate of those who live in any given county, but she isn’t necessarily wedded to that number, Pryor said. The bill is simply “intended to ensure that places in which people live and also in which people work have the opportunity to collect the local option income tax,” she said.
“We have an obligation to protect and take care of those individuals when they’re in our counties. We understand they have needs where they live as well,” Pryor said. “This is just a question of fairness and what level of the taxes should stay in either county.”
Staff Writer Steve Garbacz of the Daily Journal of Johnson County, a sister publication of The Republic, contributed to this report.
People who live in Bartholomew County
53,878: County residents who are employed
49,188: County residents who work in their home county
4,690: Number who commute to another county for work
People who work in Bartholomew County
62,050: People employed at Bartholomew County businesses
49,188: Local residents who work in their home county.
12,862: People who commute into Bartholomew County from another county or state for work.
Source: Indiana Business Research Center, 2012 tax year information from Indiana Department of Revenue