New tax awaits council decision; county, city mull increase for capital expenses

The first step toward creating the first new county tax since 2009 has been taken by the Bartholomew County Commissioners.

An ordinance to establish a separate fund to hold revenue from a proposed Cumulative Capital Development Tax was given unanimous approval Monday.

However, it will be up to the Bartholomew County Council to actually create the new tax and set the rate, Bartholomew County Attorney Grant Tucker said.

The second and final vote on the ordinance is tentatively scheduled for June 19. If approved, the council would have to hold a series of public hearings that would likely keep a vote from occurring until 2018 budget talks begin in mid-summer.

However, the tax would have to be approved no later than Aug. 1 due to a state-imposed deadline, Tucker said.

In essence, the fund would be used to to help pay for costly repairs to county government-owned buildings. Although county council president Laura DeDomenic sought assurances that the ordinance include written assurances the new revenue could be used for cars and machinery, commissioner Rick Flohr said he preferred to keep the current language proposed by the state intact.

Bartholomew County Auditor Barb Hackman said impact on property owners are likely to be included in a report being prepared by H.J. Umbaugh & Associates to identify new ways to increase existing revenues, including new taxes.

Under state recommendations made in February, a property owner with a home assessed at $100,000 who takes normal deductions would pay an additional $5.44 a year, Hackman said previously. For owners of a residence assessed at $200,000, the tax liability would be $16.26 annually, she said.

That would be followed by up to .033 cents annually — double the amount — in subsequent years, creating between $1.2 million and $1.3 million in additional revenue, the auditor said.

First new tax since 2009

A new tax has not been created in Bartholomew County since an economic development income tax was implemented during the non-election year of 2009. It was still widely blamed for the defeat of three incumbent GOP council members — Keith Sells, Phyllis Apple and Sue Paris — during the 2010 primary.

Although the city of Columbus already has a cumulative capital development tax, city residents would have to pay the county tax in addition to the the city tax, Hackman said.

The new county tax will raise a minimum $700,000 in the first year, but could double to about $1.4 million in subsequent years, she said.

Pressure to enact the tax emerged last summer after state lawmakers excluded the county’s already existing cumulative bridge fund from holding $680,000 received in previous years, commissioner Rick Flohr said in August.

However, the General Assembly will provide those funds if a capital improvement fund is created, he said.

The amount the county has not received due to not having a cumulative capital development fund has now grown to $760,000, according to figures quoted during Monday’s county commissioners’ meeting.

Further pressure to establish the tax came from a consultant’s report was issued in February that stated it could cost more than $12 million to renovate or replace deteriorating Bartholomew County facilities over the next decade.

County taxpayers already are spending up to a half-million dollars annually just in maintenance costs for the county’s 11 buildings, commissioner Larry Kleinhenz said.

City Council acting, too

The Columbus City Council is proposing to reset its tax rate from its existing level — $0.0316 — to the state maximum of $0.05 per $100 in assessed value. Columbus’ current cumulative capital fund has been in existence since 1987, but has not been set at its maximum level in the past 12 years, said Jamie Brinegar, finance director for the city.

The first reading of an ordinance to reset the tax rate at the maximum level will be considered by council members during tonight’s city council meeting. Brinegar said the rate of $0.0316 brought in $786,068 to the city last year, with the revenue from that same tax rate expected to generate $815,414 for 2017.

However, Brinegar said if the rate were set at $0.05, Columbus would expect to receive $1.2 million — additional revenue of $474,810. The proposed increase in the tax rate likely means homeowners would also pay more on their property tax bills starting next year.

For example, a homeowner with a residence assessed at $150,000 would pay an additional $13.50 to the property tax bill, while someone with a $200,000 home would pay about $18 more a year, Brinegar said. However, he noted that taxpayers already at the maximum property tax would see no increase.

City officials say they plan to use money generated from the cumulative capital fund to pay for capital needs in the police and fire departments. Among those needs are $880,000 in fire apparatus equipment and $325,000 in fire station alerting system software. Police department needs include $550,000 for 25 vehicles, $100,000 to pay the final year’s contract for portable radios and $92,000 for body cameras.

The city plans to identify which items will be paid through the cumulative capital fund during the 2018 budget process, Brinegar said.

“We have significant public safety capital needs we would like to meet,” he said. “This is allowing us to forecast what capital money we will have.”

The city plans to hold a public hearing on the tax rate during its June 20 council meeting.

Reporter Matthew Kent contributed to this report.

Steps toward creating a new tax

Under state statute, the following process must be taken before a cumulative capital development fund and subsequent tax rate for Bartholomew County can be established.

Commissioners

  • Enact a ordinance establishing the fund that states the purpose for its creation. This must be done after two separate public hearings are held. The final vote for the proposed cumulative capital development tax is scheduled for 10 a.m. June 19.

County council

  • Advertise a public hearing at least 10 days before the meeting.
  • Advertise a public hearing seven days after the first advertisement and at least three days before the meeting.
  • Hold the public hearing.  Adopt an ordinance to establish the rate and reason for the fund.
  • If adopted, advertise the adoption within 30 days of the meeting.
  • Taxpayers have until noon 30 days after the adoption publication to file an objection.
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Mark Webber is a reporter for The Republic. He can be reached at mwebber@therepublic.com or 812-379-5636.