Brown Countians will pay more of their income to support local government next year.
The county council voted unanimously Oct. 17 to raise the property tax replacement portion of income taxes to the maximum authorized by the Indiana Department of Local Government Finance.
That portion had been 0.3955 percent; it is being raised to 0.5234 percent effective Jan. 1.
The total income tax rate for 2017 will be 2.5234 percent.
The last time the council increased the property tax replacement portion of income taxes was in 2013.
The council could have increased it in 2015 and 2016 — the DLGF allowed for it — but the council didn’t take the step to actually adopt that rate, Brown County Auditor Beth Mulry told council members in August.
For 2016, that meant missing out on about $185,500 in revenue for non-school local taxing units, according to a DLGF worksheet. About $144,000 of that would have gone to the county.
By raising the property replacement portion of income tax to the max allowed in 2017, Brown County government is expected to receive about $336,000 more than it did in 2016, Mulry estimated.
That’s the estimate for just the county, not factoring in townships, the library, solid waste district, Hamblen Fire Protection District and Nashville, which also get a share. Mulry didn’t have estimates yet for what this increase might mean for them.
Brown County Council member David Critser said he’d been asked why the county needs to raise its income tax rate when he’d told voters at a candidate forum earlier this month that the county is projected to have a $50,000 to $200,000 surplus at the end of 2016, and a $100,000 to $300,000 surplus at the end of 2017.
Critser said the income tax rate hike is where that projected surplus is coming from.
Later in the Oct. 17 meeting, council members were already talking about spending surplus money for unexpected bills like murder trial expenses and health insurance claims. Requests for additional appropriations from the general and riverboat funds at that meeting totaled $375,000.
Counties are allowed by the state to increase their tax levy by a “growth quotient” each year, a percentage set by the DLGF.
Mulry said the way Brown County can do that is to increase the income tax rate, because the property tax levy — the amount Brown County can raise from property taxes — is frozen.
Starting in 2014, the council started holding property taxes steady and raising the income tax rate instead to meet its needs. Critser said then that Brown County was one of the first to do that.
His rationale was that “somewhere during your lifespan, you should be able to own your own property, and you can’t do that if you can’t pay your taxes.”
However, if the county created new debt — like taking out a loan for a building project — or created a new unit of government, it would be allowed to raise its property tax rate even if it’s under a freeze, said Jenny Banks, director of communications for the DLGF.
Jacque Clements of MAXIMUS, a financial consultant to the county, said many Indiana counties that rely more on property taxes for funding are seeing large losses from the property tax caps that were placed in state law a few years ago. That can result in counties having to lay off employees for lack of funding, she said.
In Brown County, though, that isn’t happening, because this is a levy freeze county, she said. The impact of property tax caps on local government here is only a couple thousand dollars, she said.
Of the 2,040 different tax rates charged in Indiana townships and special taxing districts, like conservancies and fire districts, all six of Brown County’s units rank well near the bottom. Nashville is the highest-ranking government unit in Brown County, at 1,726th-highest in the state for property tax rates, according to the STATS Indiana database.
However, of Indiana’s 92 counties, Brown County in 2016 ranked eighth-highest in county income tax charged, at 2.3995 percent, according to the Indiana Department of Revenue.