2004 Performance Based Budget - Laserfiche WebLink

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up a significant amount of the shortfall as is reflected in the above amounts collected. As a result, the tax levy is a reliable number to use when estimating the City's anticipated property tax revenue. As more fully discussed below, the City's Common Council has recently passed ordinances that established two new local option income taxes. These local option income taxes will eventually generate enough funds to reduce the heavy reliance the City currently needs to place on property taxes to fund a majority of the services provided by the City. Approximately 76% and 62% of the General Fund and Pazk Department revenue, respectively, are funded by property taxes. It is anticipated that it will take several yeazs before these newly enacted taxes will be at a level that will make it possible to reduce the need to increase the City's total tax levy up to the maximum 5% each yeaz. In the meantime, the City continues to seazch for other sources of revenue to reduce its reliance on property taxes. As mentioned above, the City currently has available a major new source of revenue in the form of the County Option Income Tax (which was enacted effective July 1, 1997) and the Economic Development Income Tax (enacted effective July 1, 1995 and 'increased effective July 1, 1997). These two relatively new countywide taxes have allowed the City to shift a portion of its capital expenditure funding from the General Fund to these two Capital Funds. The County Option Income Tax rate was phased in over afour-year period, increasing from two tenths of a percent (0.2%) of adjusted gross income to it's current rate of six tenths of a percent (0.6%), and, when combined with the Economic Development Income Tax, the total tax is eight tenths of one percent (0.8%) of the county taxpayers' adjusted gross income. The maximum combined rate for these two income taxes could be 1% of adjusted gross income if the Economic Development Income Tax was raised to its limit (0.4%) by the County Income Tax Council. Both of the local option income taxes aze collected and administered by the Indiana. Department of State Revenue. This department is required to estimate by July 1 of each yeaz the amount of revenue to be received by the County during the following yeaz. This estimate is referred to as the "certified distribution" and it becomes an amount that the County can be guaranteed to receive. The County then allocates these receipts based upon property tax levies as described below. This allocated certified amount is the amount budgeted by the City for both taxes. These two option income taxes have generated and aze projected to generate the following annual revenue streams as a direct result of increasing tax rates (no income growth rate has been factored into these projections): Economic Development Income Tax (EDIT): Actual receipts for 2000, 2001, 2002 and 2003 were $3,105,473, $3,417,763, $5,462,867 and $3,689,202 respectively. The 2004 Budget projects receipts to be $3,582,215 and this is the anticipated level to be collected each yeaz, assuming the current rate of two tenths of one percent and no growth rate. The 2002 receipts included a one time distribution of $1,506,173. This increase from the State is a "catch-up" from prior yeaz conservative estimates. This tax is allocated between the County and the cities and towns in the County based on the proportionate amounts of property tax levy for each unit. The budgeted 2004 Cites portion is 37.8%. Any future change in the actual annual amount of adjusted gross income reported by county taxpayers would have a direct impact on the amount of EDIT taxes collected. Another possible impact on the amount of EDIT funds received in the future would be a result of an EDIT rate change if approved by the County Income Tax Council. County Option Income Tax (COIT): These countywide taxes aze allocated (net of homestead credits that aze explained later) between all taxing units within the County based on the proportionate amounts of property tax levy for each taxing unit. Actual City B-5