Indianapolis - Faced with the end of the inventory tax and increasing concerns regarding public transportation, the Council will introduce a proposal to levy a County Economic Development Income Tax (CEDIT). The proposal will be assigned to the Economic Development Committee and will have a public hearing on March 22, 2006 at 5 p.m. in Room 260 of the City County Building, 200 E. Washington St.
Councillor Jackie Nytes, Chairwoman of the Council’s Economic Development Committee, said, "Unfortunately, the State Legislature has resisted efforts from local officials to have more control over funding for local projects, services and operations. We are offering this proposal as a starting point for discussion of how we fund local governments, provide tax relief to citizens, and address the elimination of the inventory tax. I’m sure it will be amended along the way."
Proposal No. 100, 2006 calls for the CEDIT to be established at a rate of .35 percent. Funds from CEDIT will be used in two ways:
1. To fund a Homestead Tax Credit that will help offset the nearly $2 billion loss in assessed valuation that creates a $60 million decrease for local governments, schools and municipal corporations as a result the General Assembly’s elimination of inventory tax effective 2007. The Homestead Tax Credit will reduce the tax burden of Marion County residents by $16 million.
2. To generate approximately $17 million that will go to funding IndyGo. IndyGo will be required to allocate the dollars over a two or three-year period while the Council works with the State to identify a permanent source of increased funding for public transportation.
Councillor Jackie Nytes said, "There is no question that eliminating the inventory tax was a great economic development move that will entice more businesses to locate in Indiana. But, we also have to accept the fact that there are some consequences as a result of that change. "
Units of government are faced with the choice of reducing their budgets, which cuts needed services, or increasing the property tax rate and how to strike a balance between the two so as not to cause an undue burden on taxpayers. The Homestead Tax Credit is a tool available to the Council to reduce the increased tax burden on homeowners.
Councilman Ron Gibson, Chairman of the Council’s Municipal Corporations Committee, said, "IndyGo plays a vital role in economic development in Indianapolis and Marion County. Public mass transit services promotes economic development by increasing business sales, expanding the labor pool and reducing congestion which impacts our environment. Thus, CEDIT is needed to expand IndyGo to meet mass transit needs."
"The CEDIT is a temporary solution to the problems facing public transportation, and the pressure keeps mounting to find a permanent fix. CEDIT is only a stop gap measure that will assist IndyGo until a permanent source of funding is found," said Councillor Nytes.
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