The State Budget Agency just released the local option income tax numbers for counties in Indiana for 2013, and so far the news looks good for Monroe County. Local option income taxes are income taxes that are paid by residents of a county (individuals only, not businesses). Monroe County’s local option income tax rate is 1.05%, with 0.05% earmarked for juvenile services and facilities, and the other 1% to the general fund.
According to the report that the State Budget Agency released (CY2013 COIT Certification, with my highlighting for Monroe County), Monroe County will receive $25,463,735.83 in county option income tax (our form of local option income tax) from the 1% tax rate. This is compared to $23,950,391.27 in 2012 (CY2012 COIT Certification, again with my highlighting for Monroe County). This represents an increase of $1,513,344.56, or 6.3% growth over 2012.
Note: the 2012 COIT numbers are after the correction in the error by the state in the amount of local option income taxes that were accidentally withheld from local governments. I have written about that situation here and here.
This $25.5 M in local option income taxes will be distributed to the various taxing units in Monroe County: Monroe County Government, the three municipal governments, townships, and the Monroe County Public Library. Income taxes are distributed to local governments according to a formula based primarily on the property tax footprint of the taxing unit as a proportion of the total amount for the county. In addition, a certain amount is withheld for property tax replacement (i.e., your property tax bill will be reduced a small amount, with the reduction paid for through the local option income tax; this is referred to as the COIT Homestead Credit). The information on the specific distributions to local units of government should be available within the next few days from the state. At that time, each unit will know what to expect for 2013 income tax payments. In the past, however, Monroe County Government’s share of the income tax has been around 40% of the total. If that share continues, Monroe County Government should expect to see an increase in income tax revenues for 2013 of about $600K.
This is obviously good news for local governments. Both the City of Bloomington and Monroe County Government are, at least on paper, running on a deficit budget and projecting budget deficits for 2013, spending down reserves to make up the difference (Monroe County will actually probably wind up in the black in 2012, or very close to it, though). This additional revenue should reduce these deficits, and make it less urgent to demand cuts from departments. In the county, I hope this makes it easier to give county employees a much-deserved cost of living increase for 2013. I have already written about my proposed 2013 cost of living increase here.
But the most important aspect of this story of increased local option income tax revenues is that it proves that the economy here in Monroe County is in recovery. Monroe County residents are earning greater incomes — at least, they were in 2011, when the income that will be paid out to local governments in 2013 was earned. Regardless of its impact on local units of government, this can only be considered very good news to the residents of Monroe County who have struggled through the recession.