As I’m sure you have seen by now, the Indiana Dept. of Revenue recently identified a total of $205 million in local tax revenues mistakenly held in the state’s general fund. (In Hamilton County, this is the 1 percent County Option Income Tax.) These dollars were to have been redistributed to 91 counties across the state, but were not properly identified by the IDOR.
At a recent council retreat, we welcomed the news from Financial Consultant Mike Reuter, which will provide a needed influx of approximately $3 million to Noblesville’s general fund. Hamilton County is expected to receive $17.3 million in total. As a result of having these additional tax dollars available, we will be in a better fiscal position going forward, allowing us to maintain services and evaluate other projects which required funding outside of the present budget constraints. That’s the good news …
Since 1999, local government has been questioning the collection and distribution of local tax revenues. The ebbs and flows of tax dollars paid by local taxpayers based on swings in economic activity are understandable and can be seen in historic collection and distribution. However, during the last decade in periods where the economy has been increasing strongly (think late 1990s), the actual dollars returned to the county decreased. In 13 years, no changes short of the quarterly reporting were put in place.
This system has been flawed for years and has not allowed for accurate accounting of tax dollars. The unintended consequences are not without significance and have a major impact on the quality of services provided to the taxpayers.
As you may have seen, the State Budget Committee recently conducted a hearing on the entire matter. I’m sure there will be several more meetings and hearings delving further into the causes for these errors. However, it is my hope and expectation our representatives at the Statehouse will ask for and seek input from local government on a solution to the problem. I know our city, council officials and advisors are ready and willing to be an integral part of the process. It remains to be seen if those most affected will be asked for their input on the matter.