Counties brace for big tax losses next year

Almost all of Indiana’s 92 counties, including Marion and surrounding counties, will see big drops in income tax revenue in 2011 because of the economic downturn.

The State Budget Agency released distribution amounts for local income tax revenue on Friday that show counties collectively will receive almost 16 percent less next year than they did in 2010.

Overall, counties are expected to receive $1.3 billion in income tax revenue in 2011, $255.9 million less than they got this year.

Marion County will collect $250.4 million next year, 16 percent less than it did in 2010. Hamilton County, the second-largest county in central Indiana, will receive $82.3 million, 17 percent less than it did in 2010.

Income tax distributions mostly provide funds for property-tax replacement and relief, the homestead credit and public safety.

Distributions for 2011 are based on income tax returns from 2009, the height of the recession.

David Bottorff, executive director of the Association of Indiana Counties, said he's hopeful economic conditions will improve this year, so income tax distributions will increase in 2012.

“Hopefully, this is the bottom,” he said. “We hope that in [2012] we’ll see slight increases again.”

Among other Indianapolis-area counties, distributions will drop 20 percent for Boone, 13 percent for Shelby, 11 percent for both Johnson and Morgan, 10 percent for Madison, and 8 percent for Hendricks.

Counties in manufacturing-heavy northeast Indiana will see some of the largest drops statewide.

Whitley County, just west of Fort Wayne, is projected to lose nearly $4 million, or 37 percent, of its income tax revenue, The Journal Gazette of Fort Wayne reported, citing data compiled by Allen County Deputy Auditor Tera Klutz.

Neighboring Wells and Kosciusko counties also were forecast to lose more than 25 percent of their income tax revenue, the newspaper reported. Allen County, home to Fort Wayne, and Adams and Huntington counties also were expected to see losses greater than the statewide average of 15.9 percent, it said.