KOKOMO, Ind. (AP) — City and county officials across Indiana are starting to
wrestle with how they’ll deal with the state’s plan to recoup roughly $610
million it overpaid local governments for income taxes it expected to
blame the recession for throwing off tax revenue estimates that led to the
extra money being paid to local governments over the past three years.
Nearly all of Indiana’s 92 counties will see money withheld from future tax
distributions in order to settle the overpayment.
Treasurer Martha Lake said her county was overpaid $10.1 million and is
looking at a decline of about 5 percent in local income tax revenue for next
year under the state’s plan to base distributions on 2011 tax collections.
will use this year’s collections as a base line and withhold additional
money in coming years toward the counties’ debt.
happen overnight,” Lake told the Kokomo Tribune. “It is their responsibility
to get the money back. We hope the collections increase.”
assistant director of the Indiana State Budget Agency, said the repayment
process is similar to one used in 2000, but the amount of that overpayment
was much less.
recession is not comparable to the one of several years ago,” he said.
amount of indebtedness is an estimate and new figures will be provided to
the counties, Lain said.
Controller Michael Trexler said that the city would likely see about
$200,000 less than expected from its share of local income taxes, which are
collected by the state and then distributed to county governments for
disbursement among cities, towns, libraries and other local government
Trexler said the
city received $7.4 million in local income tax revenue for 2011, and it
included a similar amount in its 2012 budget planning.
could be absorbed by cash reserves in the proposed 2012 budget, but Trexler
said it still would be a significant cut.
with this kind of a hit is that it eats into the reserve,” Trexler told The
Herald-Times. “That reserve doesn’t automatically replenish itself. It takes
a lot of hard work to build up.”
officials, however, are questioning whether the state’s overpayment figures
Auditor Roger Bainbridge said a state report showing a $3.2 million
overpayment to his county strains credibility.
that would amount to nearly one-third of $11 million that was expected this
year from Grant County’s 2.25 percent income tax, the Chronicle-Tribune of
state’s word for something that is so incredulous is not in my nature,” he
said. “I want to make sure no one made a mistake.”