staff writer Vincennes Sun-Commercial
Accountant Curt Coonrod met with county council members Tuesday to discuss the potential impact House Bill 1001 will have on the county and to offer some suggestions.
Coonrod, an Indianapolis-based accountant hired by the county in January 2007 to review the county finances, said the 800-page bill was rather complicated and that because there was no previous data to compare with, he wasn't certain how to project the impact the bill will have on county finances.
"The county is in a pretty good financial position with an adequate balance but not an excessive balance in the general fund," Coonrod said.
As a part of HB 1001, the state's sales tax was increased from 6 to 7 percent but that won't make up the entire budget shortfall. Coonrod also explained how the bill will cap residential property taxes at 1 percent of assessed value, which will mean a loss of approximately $300,000 in 2010 for the county and $750,000 in 2011.
"The estimated loss for the city of Vincennes is $1.8 million by 2010, which is a significant hit to their revenue," he said. "The good news for Knox County is, the revenue in the general fund is enough to cover the loss, at least for the foreseeable future."
Coonrod said the county has the option to enact a local option income tax (LOIT) and that they had three other options, including offering a homestead credit , property tax replacement credits or a credit for all residential property.
"Regardless, you will need to be very deliberate on which you chose because it will affect the property tax rate caps," he said. "The option you chose must be oriented toward the benefit of the whole county and property tax relief as opposed to establishing a LOIT to provide additional spending money."
Coonrod told the council that the shift from property tax funding to income tax funding is risky.
"Property taxes are relatively stable and easy to predict," he said. "Income taxes fluctuate with changes in difficult economic times. Reliance on income taxes means you will have a tough time trying to predict what will happen."
Coonrod did report that the county's share of the tax rate was down 10 percent from last year.
"That has nothing to do with House Bill 1001," he said. "It was just good fiscal management."
Council president Tim Ellerman said enacting a LOIT wouldn't help the budget shortfalls some county agencies are facing.
"I'm against establishing a LOIT myself," he said. "The county council's house is in good fiscal order and it would be foolish to pass another tax. Anyone under our general fund umbrella will have the funds they need."
In other business, Criminal Justice Coordinator Bob Broady reported to the council that the general population of Knox County inmates at the jail is down and that he'd received another payment from the state for housing Department of Correction prisoners.
"We got a payment of $141,855 this month which brings the total to $349,895," he said. "That leaves only a balance of $61,875."
The county began holding DOC prisoners in September 2007 for $35 per day for each prisoner. The reason the county built a facility with more than 200 beds was to one day have extra space to house state prisoners. The county would use the extra money to cover the additional costs of operating a larger jail and to help pay off the bonds sold to finance the jail's construction.