Published: August 20, 2008 10:59 pm            

County to lose $670K in annexation

City officials say amount less than expected

Kokomo city officials may have felt vindicated by the latest financial report on their proposed annexation, but for Howard County officials, the numbers were simply confirmation of a major dilemma.

Wednesday, a joint city-county press release put a firm number to one of the biggest questions facing the proposed annexation of more than 12 square miles of unincorporated Howard County.

How much money, county officials asked, would the county government lose if the annexation goes through?

Indianapolis accounting firm Crowe Chizek Wednesday put the number at $670,000.

That figure is considerably less than some speculative numbers mentioned at anti-annexation meetings, and Kokomo Mayor Greg Goodnight said the numbers backed his contention that the annexation would not cripple county government.

But county officials, already faced with significant cuts due to state property tax reform, say the $670,000 is simply more money they won’t be able to cut from the budget.

“Obviously that’s an extra $670,000 we’ll be coming up short, and I think we need to be considering that now in anticipation of the future,” Howard County Council president Dick Miller said Wednesday. “But I’m really more struck with the way annexation has been presented, that it’s not going to cost anybody anymore than it currently is ... well, yes it is.”

The report estimates the city would collect about $6 million annually from the proposed annexation, with about $670,000 of that total money currently going to county government.

The rest of the money would be drawn from the annexed residents paying the city’s property tax rate.

The report did not estimate how the annexation would affect individual homeowners.

But it did assume the current property tax caps, imposed by the state Legislature, will still be in place if and when the annexation occurs.

Monday, the Kokomo Common Council will meet at 7 p.m. in council chambers, City Hall, 100 S. Union St., to discuss the city’s two annexation ordinances on third reading.

The possibility still exists, however, of a successful court challenge — or petition remonstrance — against the annexation. Annexation remonstrators have a hearing scheduled Friday in Cass Superior Court, where they’ll ask a special judge to issue an injunction against the proposed annexation.

The report issued Wednesday indicated the county will lose money to the city mainly because several tax categories are distributed to city and county based on population.

If the annexation goes through, the county would lose county option income tax (COIT) and county economic development income tax (CEDIT) revenue, and those dollars would be transferred to the city.

The county would also lose some excise tax revenue, although Crowe Chizek was unable to calculate the exact amount of auto excise tax revenue the county would lose to the city.

Finally, the county would lose some riverboat gambling revenue to the city.

In return for the additional $6 million in annual revenue, the city, by law, will be required to provide police, fire and trash pickup services to the annexed areas.

City officials say they plan to begin budgeting for increases in the police, fire and street department manpower and equipment for the 2010 budget.

The $670,000 tax shift from the county to the city would not occur until 2011, but if the annexation goes through, taxpayers in the annexed areas will begin paying the city property tax rate in 2010.

Scott Smith may be reached at (765) 454-8569 or via e-mail at scott.smith@kokomotribune.com

        

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