Income taxes might be rising next year in Elkhart County.

It’s up to the Elkhart County Council, which voted 5-2 to pursue a vote on a 0.5 percent county-wide income tax increase.

The decision came Thursday, Sept. 18, afterseveral days of budget hearings and nervous discussions on how county government can continue functioning in the wake of dwindling property tax revenues stemming from property tax caps.

After five years of creatively managing to balance the budget, the county has run out of options to find money to plug the holes, councilman David Foutz said.

“We’ve been dealt a hand by the state legislature that puts us in a position to look for alternative sources of revenue,” he said.

During budget hearings Tuesday and Wednesday, many department heads expressed serious anxiety about their ability to get through the next year on flat-lined budgets.

“As financial stewards, it’s damn well our job that there’s enough depth and enough strength in our local financial system to get through hard times, and right now we don’t have that,” council president John Letherman said Thursday evening.

In favor of voting on the 0.5 percent increase:

  • John Letherman – President
  • David Hess – Vice president
  • Randall Yohn – District 2
  • David E. Foutz – District 1
  • Thomas Stump – At large

Against voting on the 0.5 percent increase:

  • Daryyl Riegsecker – District 3
  • David M. Ashe – At large

Daryyl Riegsecker, who opposes voting on the increase, said too many people are struggling right now to think about raising taxes.

“I feel bad for the public,” he said.

Ashe’s concern was for parents working minimum wage jobs just to make ends meet.

“You’re looking at skimming money right out of their paycheck before they ever see it,” he said.

About 85 percent of the county’s budget pays for criminal justice — including the Elkhart County Sheriff’s Department, the Prosecutor’s Office and the courts. The next biggest expenditure is the Elkhart County Highway Department.

“Our choice is between letting the public safety go to pot or letting the roads go to pot, and I don’t think the public wants either one of those two things to happen,” Letherman said several hours before the council voted.

Elkhart Mayor Dick Moore and Goshen Mayor Alan Kauffman have both expressed support for an county-wide income tax increase in recent months.

Where would the money go?

If the council approves the 0.5 percent income tax increase, 0.25 percent would go straight to public safety funds. That means cities, towns and the county would get that money for police and fire departments, emergency medical services, corrections facilities and pensions for workers.

In 2015 the county would get $3,582,000 from the public safety income tax, and cities and towns would get a combined $6,004,000.

Revenue from the other 0.25 percent increase would be used to create a credit on property tax bills. This would ultimately allow all taxing units — county, cities, schools and libraries — to recoup some of the property taxes that would have otherwise been lost to tax caps.

In 2015, that 0.25 percent property tax income tax would grant the county an estimated $725,000 in new revenue. Townships would get $145,750, cities and towns would get a combined total of $2,300,000, schools would get $2,350,000 and libraries would get $234,750.

The bottom-line impact of the credit on an individual’s property tax bill will depend on each tax bill’s tax cap class, net assessed value and tax rate.

Residents who don’t pay property taxes would see no other effect aside from the paycheck cut.

Elkhart County’s collective income tax rate currently includes a 1-percent adjusted gross income tax, a 0.25-percent economic development income tax and a 0.25-percent special jail income tax.

What about the budget?

They council started out with a $4.7 million deficit but managed to balance the 2015 budget, more or less, without making big cuts. A 3-percent wage increase was also granted to full-time county employees.

“I don’t look at it as a 3-percent raise. I look at it as a long overdue cost of living adjustment,” Letherman said during budget hearings Tuesday, Sept. 17.

Savings for 2015 were found in several county departments, and the council was able to elimante a $2.7 million medical-cost line that was duplicated in two separate sheriff’s department budgets.

It also moved $1 million from landfill fees into the general fund and decreased wages for some positions from which staff recently retired.

Even though the budget has been balanced, there’s another $3 to $5 million in losses expected in 2015 once property tax caps kick in. The income tax increase would soften that blow, if passed.

What’s next?

The council will vote on the tax increase at 8:30 a.m. Tuesday, Sept. 30, when it does the first reading of the budget. If the vote isn’t unanimous, it could require a second vote, which would likely happen at 8:30 a.m. Wednesday, Oct. 30, when the council reads the budget again and formally adopts it.

Both meetings are public.

The Elkhart County Council meets at the county administration building at 117 N. 2nd St., Goshen.

Article Compliments of the Elkhart Truth