Correctional Renovation Tax Local Option

Commissioners and sheriffs, the listed Indiana Code section 3 (b) lists the three options for the activation of the HB1263 statute and the associated ordinance that the county council would have to pass.  This is the 0.20% provided at 0.01% increments as long as it would not exceed the 2.5% provided overall.  Remember this is the income tax that the county would not have to share with the other shareholders.  In spite of my best efforts, it is next to impossible to get a council to adopt this ordinance any sooner than they feel is absolutely necessary.

The DLGF recently made a ruling that although an income tax may be raised or lowered only once a year– the correction’s tax and the ordinary income tax can each be raised or lowered in any calendar year.  They apparently recognize each as separate when considering the once a year requirement.  If a council were to raise all or a portion of the corrections tax; they can edit the amount once a year, up or down.  So, it is not necessary to know the monies needed for your project in order to place the tax.  Once a better understanding of the bond cost, staffing cost, and operations costs is known, an adjustment could be made.

Remember that the legislature this year passed HB1427 that limits to 20% the amount of the corrections tax that can be used for operational costs.  This 20% is that portion of the annual income.  For example, if the tax brought in, is two million dollars, you could spend no more than $400,000 for staffing and operational costs.  You would be surprised how close most come to this limit.

I hope this clears up some confusion on your part as you consider this tax and when the council needs to consider passing the ordinance.

IC 6-3.6-3-3 Effective date of ordinance

Sec. 3.

(a) An ordinance adopted under this article takes effect as provided in this section.

(b) An ordinance that adopts, increases, decreases, or rescinds a tax or a tax rate takes effect as follows:

(1) An ordinance adopted after December 31 of the immediately preceding year and before September 1 of the current year takes effect on October 1 of the current year.

(2) An ordinance adopted after August 31 and before November 1 of the current year takes effect on January 1 of the following year.

(3) An ordinance adopted after October 31 of the current year and before January 1 of the following year takes effect on October 1 of the following year.

(c) An ordinance that grants, increases, decreases, rescinds, or changes a credit against the property tax liability of a taxpayer takes effect as follows: