By VICKI URBANIK
Porter County stands to lose nearly $1 million a year due to Lake County’s
decision Tuesday to impose a county option income tax.
Lake County is the last of Indiana’s 92 counties without some form of a local
option income tax. Under the state’s county income tax laws, people who work
in a county with a county tax still pay at least a part of that tax if their
home county lacks a tax of its own.
According to the Indiana Department of Revenue, 4,860 Lake County residents
work in Porter County and, in tax year 2006, paid $959,885 toward Porter
County’s income tax, CEDIT (County Economic Development Income Tax).
But now, if Lake County’s decision to impose a tax of its own stands, those
residents will no longer pay Porter County’s tax but will pay toward their
home county instead.
And that means Porter County will lose about 5 percent of its annual CEDIT
This calendar year, a total of $18.6 million in CEDIT was distributed in
Porter County. Half of that -- or $9.3 million -- is divvied up among the
county government, cities and towns. Most of that money has been spent on
capital expenditures, infrastructure or other projects linked to economic
development, although state law allows CEDIT funds to be used for any lawful
The other half of the CEDIT money goes for two purposes. One is Porter
County’s $3.5 million contribution to the Northwest Indiana Regional
Development Authority, which is made up of Lake and Porter counties. The
remainder goes to fund Porter County’s own homestead credit, which is a tax
cut for homeowners.
Unlike the other two types of county option income tax, the CEDIT tax
requires non-residents who work in the county to pay at the same rate as
The Lake County Council passed the income tax by a 5-1 vote Tuesday. Because
of the way county government is structured in Lake County, the commissioners
there can veto the tax, but the council can override the veto.