On August 1st, the Indiana State Budget Agency released the estimates of local option income tax collection (County Option Income Tax, or COIT) for each county, to be distributed for the 2015 budget year. The projections show Monroe County’s collections of its 1% COIT at $26,909,660, an increase of $712,539, or 2.8%, over the collections for 2014. In addition, the special Monroe County Juvenile COIT, used to fund juvenile services, is projected to jump from $1,309,856 to $2,556,418, an increase of $1,246,562, resulting from a recent hike in the Juvenile COIT rate from 0.05% to 0.095% that takes effect October 1, 2014.
Income tax is one of the primary sources of revenue to fund non-highway general operations of County Government — property tax is the other. Along with the annual “cost of living” increase in the property tax levy (2.7% for 2015, see State Releases Assessed Value Growth Quotient for Local Governments), the annual certified local option income tax collection is one of the most carefully-watched numbers in local government, since those two numbers determine to a large degree what the budgets of local units of government look like for the ensuing year.
The COIT collections are important not only because of their importance to local governments as a source of revenue, but also because they serve as a barometer of the local economy (albeit a bit lagged). The following chart shows the overall COIT collections (not counting the Juvenile COIT) from 2008 to the current projection for 2015 in Monroe County. As the chart illustrates, our COIT, and therefore the income of local residents, has been going up relatively slowly but steadily since 2011, after a relatively sharp plummet from 2010-2011.
The income tax numbers that were just released are only projections; the state is required to release the official income tax certification before October 1. However, in the past the official September certifications have not differed from the August projections significantly. In fact, the income taxes to be paid out for 2015 (local units of government receive approximately equal monthly payments throughout 2015) have actually already been collected from Monroe County residents during the period of July 1, 2013-June 30, 2014.
The $26,909,660 projected for Monroe County for 2015 will be divided among all of the local units of government in Monroe County that receive COIT: Monroe County Government, the City of Bloomington, the towns of Stinesville and Ellettsville, the Monroe County Public Library, Perry Clear Creek Fire Protection District, and all of the township governments. The total income tax for Monroe County is divided up among all of these local units of government; each unit’s share — called Certified Shares — is determined roughly in proportion to each unit’s property tax levy as a fraction of the whole (with an adjustment for new debt, so that taking on debt doesn’t entitle a governmental unit to a higher proportion of the income tax). This distribution of the total COIT among the various local units of government has not yet been released.
All in all, the COIT projections are good news for local governments; although we are not seeing the sharp annual increases that we did before the recession hit, we are seeing another year of modest but steady growth. Good for the local economy, good for residents of Monroe County who, on average, are earning more, and good for the local units of government tasked with serving the local residents.
For reference, I have written about local option income taxes in Monroe County several times in the past: