Published: August 28, 2008 11:15 pm            

County officials consider tax increase

Jail funding running out, options limited

When county officials established a new county option income tax last year to address rising jail costs, there were hopes it might be enough to accomplish two tasks.

First, they hoped, the new tax would provide a shift away from using property taxes to fund the jail and the Robert J. Kinsey Youth Center.

Second, they hoped the new tax would provide enough revenue to cover the rising cost of incarcerations for at least a couple of years.

So far, things haven’t worked out as planned.

County Council president Dick Miller is ready to concede several miscalculations were made when the tax was established.

And the anticipated cushion from the new tax hasn’t materialized.

Sept. 3, council will meet to weigh its options.

For Miller, there are basically two choices:

• Increase the “Jail COIT.” The council has authority to raise it from the current two-tenths of 1 percent (.20) to .25 percent.

• Go back to the state and appeal for a property tax increase.

The Jail COIT is almost completely spent for the year.

Howard County Sheriff Marty Talbert, who has already been to the council several times for additional money beyond the original jail/Kinsey budget, has another request before the council.

Last month, the council gave Talbert an additional $200,000 for jail operations. This month, Talbert’s asking for an additional $225,000 for jail operations.

If the council grants the request (which Talbert said Wednesday he may scale back), all of the money available for jail operations in 2008 would be spent.

That means any additional jail/Kinsey needs for the last three months of the year would have to be paid from property tax funds, the very thing the Jail COIT was established to guard against.

“These are things that have to be funded. We don’t control the jail population, and we don’t control the health of the inmates,” Talbert said. “I don’t see how, if people, in their own households, are experiencing increased costs for gas, food and other things, how can they expect us to do more with less?”

Three things happened to cause the present dilemma, Miller said.

First, council members balked at instituting the full amount of Jail COIT allowed by law.

When then-State Rep. Jim Buck authored the Jail COIT enabling legislation in 2006, the council expected they’d have to take the full .25 percent allowed.

Buck also wrote a provision that would have taxed commuters — those driving into work in Kokomo and driving back to other counties — at a lower rate.

When council members balked at taking the entire .25 percent, Buck had to rewrite the legislation. When he did that, the “commuter tax” provision was taken out. Both Buck and Miller blame former State Sen. Jeff Drozda for killing the provision.

In addition to losing a large amount of Jail COIT through the decision to rewrite Buck’s bill, another unexpected thing happened at the Statehouse.

When the county adopted Jail COIT, it froze the property tax levy used to fund the jail.

Each year the county receives $3.09 million in property taxes specifically for jail/Kinsey operations, including salaries, benefits, meals, utilities, etc.

Because that levy would have increased in 2007 and again this year if it hadn’t been frozen at the 2006 rate, property taxpayers have already received a property tax break.

But council members thought the state was going to freeze the property tax levy at the 2007 rate, Miller said. Losing the expected growth from 2006 to 2007 cost the county several hundred thousand dollars.

Third, a crucial error was made in calculating how much property tax would still be needed for jail operations.

When the jail levy was set at $3.09 million, it didn’t take into account the fact the county would pay all jail/Kinsey employee benefits out of Jail COIT.

All of that money had previously been paid from property taxes.

When state officials froze the levy, they did factor in about $1.3 million needed to pay benefits for the jail and Kinsey employees.

By the time county officials realized what the state had done, the new Jail COIT tax was already in place, and already insufficient to cover rising jail costs, Miller said.

“We found out there wasn’t a dime of overage available,” Miller said.

The problem for county officials, however, is that an appeal to correct the unexpectedly low property tax jail levy would involve a property tax increase.

The other option, raising the Jail COIT tax, would net the county about $800,000 this year.

But that’s not enough to make up for the jail funding deficit, the county auditor’s office confirmed.

And county officials are well aware that with the declining economy, they can’t expect local income taxes to bring in as much revenue next year, Miller added.

He said he expects, even if the Jail COIT is increased, the county will still have to dip into the county’s property tax-supported general fund to keep up with rising jail costs.

“It makes things tougher, that’s for sure,” he said.

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

        

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