Thursday, September 19, 2013

They Call it "COUNTY" Option Income Tax for a Reason

In a previous blog entry I showed graphs comparing the impact of eliminating the Local Homestead Credit, expanding the old IPD Tax District, and doing both, on various units of government.  In that I showed only the aggregated impact on City and County government.  That is the government run out of City Hall.

Now, because of obfuscation and deliberate confusion being tossed around by the Mayor's Office to the media, I'd like to show you what effect these tax changes would have on the pieces of City and County government.

But, first...

The Local Homestead Credit is a reduction in property tax bills that is paid for by using County Option Income Tax (COIT) revenue.  They call it County for a reason - the income taxes collected go to the COUNTY.  Not the City of Indianapolis.  Not to the IMPD fund.  Not to the IFD fund.  But to the County of Marion. If the Local Homestead Credit is eliminated, there would be more COIT money to spend on other things.  But, again, it is COUNTY Option Income Tax.

There are 6 different property tax districts that provide money to City and County government.  Each has a different footprint in Indianapolis/Marion County.  I will give you the impact data for each of these at the bottom.  But, for clarity and a bit of simplicity, I want to concentrate on the tax impact on the Police district, the Fire district, the consolidated City, and the consolidated County.

So, without further ado...

The overview of how eliminating the Local Homestead Credit, expanding the old IPD Tax District, and doing both will affect the coffers of the Police, Fire, City and County.

The scale is Millions of Dollars
As you can plainly see, most of the additional revenue would go to the County government coffers.  That's the Sheriff, Clerk, Prosecutor, and more.  By comparison, IMPD sees only a blip in increased revenue, Fire less so and nearly imperceptible changes for the City. [edited - my mistake here, the consolidate County is actually the City's general money - but none of that fund is used for police or fire.]

Looking more closely at each individual group...


The scale is Thousands of Dollars
The Police fund would see its best gain if only the old IPD Tax District were expanded and slightly less if both changes are made.  It sees a loss of just over $200,000 in revenue if only the Homestead Credit is eliminated. 


The scale is Thousands of Dollars

The Fire fund would see less than half the gain that Police see if only the old IPD Tax District is expanded.  It would experience a loss of almost $800,000 if only the Homestead Credit were eliminated.  And it would see a modest loss if both changes are made.


The scale is Thousands of Dollars
City funds would grow by a bit if the old IPD Tax District were expanded.  It would see roughly a $2000,000 loss if the Homestead Credit were eliminated, and about $150,000 loss if both are enacted.


The scale is Millions of Dollars

The County gets buckets-o-cash if the Homestead Credit is eliminated and next to no change if the old IPD Tax District is expanded.  Please note that while the scale of the preceding three graphs has been Thousands of Dollars, this scale had to be Millions of Dollars.

Here are the exact numbers for all 6 tax districts.  You'll notice an additional 'County' district that brings in even more money to the County coffers.  Please do not ask me why there are two County districts.  Loss of revenue is highlighted in red.  Gain in revenue is black.

HSC Elim. Only
IMPD Exp Only
Marion County
Indianapolis Sanitation (Solid)
Indianapolis Police Special Service
Indianapolis Fire Special Service
Indianapolis Consolidated City
Indianapolis Consolidated County

So, what have we learned here today?  While the Mayor's office continues to connect these tax changes with some improvement in IMPD's budget, it is a fabrication intended on selling the tax changes.  Expanding the old IPD Tax District does have a small, but real, affect on IMPD's revenues.  But eliminating the Homestead Credit has a negative affect on IMPD. 

It is a shame that we cannot get the real story from the Mayor or his Chief of Staff and that we citizens have to resort to examining the minutia of the numbers to learn the truth.

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