Monroe County council grinds towards decision on new jail tax rate, could be as high as 0.2%
Depending on what the Monroe County county council does in the next six weeks, all residents of the county could see as much as a 0.19 point increase to the local income tax (LIT) rate that they currently pay.
The higher tax would be effective starting on Jan. 1, 2025.
The increase would come in the category of the correctional facilities LIT. It’s commonly known as a jail tax.
It can be enacted by the county council on all county residents, including Bloomington and Ellettsville residents.
The current rate of the county’s jail tax is 0.01 percent. So an increase of 0.19 points would bring the jail tax rate to its statutory maximum of 0.2 percent.
A 0.2 rate applied to a taxable income of $20,000 per year works out to $40 a year. Currently, someone with a taxable income of $20,000 a year pays $2 worth of jail tax.
The current local income tax rate for Monroe County residents, for all categories, totals 2.035 percent.
Based on a work session held on Friday morning, councilors are looking to decide the rate of the jail tax increase that will be advertised to the public at their next meeting on Aug. 27. If a rate to be advertised is decided, that will allow a public hearing to be set for Sept. 16.
Assuming no intervening amendments to the rate, the council could vote on enactment anytime after Sept. 16. As long as the council acts before Nov. 1, that would make the new rate effective starting Jan. 1, 2025.
The reason county councilors are considering a 0.2 percent jail tax is to pay for a new jail. Monroe County’s jail currently operates under a 2009 settlement agreement with the ACLU, which filed a lawsuit over crowded conditions at the jail. The settlement agreement has been extended several times.
Funding streams: ED LIT versus jail tax
The factors the county councilors will consider when setting the jail tax rate include the size of the new jail, and the extent of any related justice center facilities that are built at the same site as the jail. The council has not yet decided the number of beds that should be included in the new jail, or the size of the related justice center.
Based on an analysis by the council’s long term financial consultants, if the council were to add to the jail tax revenue the roughly $11.2 million per year that it now receives from the relatively new economic development local income tax (ED LIT), enacted by Bloomington’s city council in May 2022, that would bring a possible construction budget to about $211 million.
It’s estimated by the county’s financial consultant that the jail LIT, at its maximum rate, could contribute $86 million to a $211 million construction cost of a fully co-located facility, while the economic development local income tax (ED LIT) could contribute $125 million.
The total cost of a 400-bed jail, with a fully co-located new justice center that is 50 percent bigger than the current one, has been estimated at around $200 million by DLZ, which is the county’s consultant for master planning and designing a new jail facility.
One of the questions to be weighed by county councilors is how much of each funding stream under consideration—the ED LIT and the new jail tax—should be tapped to pay for the new jail.
At Friday’s work session, councilor Marty Hawk recalled that when a couple of years ago Bloomington’s city council imposed the additional 0.69 points of income tax, in the economic development category (ED LIT), there was a lot of “gnashing of teeth” about it.
Hawk asked councilor Kate Wiltz if she recalled saying that if the county used the ED LIT to pay for the jail, it would not be necessary to impose a jail tax. Wiltz agreed that she had originally thought that it might be possible to pay for the new jail entirely out of the ED LIT.
Hawk talked about the people who would be paying the new jail tax, describing some of them as “really struggling, trying to put food on the table or gas in their car.”
Wiltz called it prudent to bear in mind the idea of not maxing out the legal rate of 0.2 percent for the jail tax. She encouraged her colleagues to consider not imposing the tax at its maximum rate, noting that it’s possible to increase it later.
Council president Trent Deckard cautioned that “the first wish and hope and dream of every entity in our system may not be fully achievable.”
Councilor Cheryl Munson pointed out that jail operating expenses had increased substantially this year. Munson indicated that in the future, the jail tax might be needed to help fund jail operations, in addition to paying for a new facility—because the county general fund would not be able to absorb the increase.
Councilor Geoff McKim does not think the ED LIT alone will generate enough money to fund a co-located jail and justice center. McKim described the $200 million construction budget as a “bogey” that could be funded, if the maximum jail LIT and all of the ED LIT revenue were put towards the project. McKim thinks all the county councilors have the information they need to come up with alternate scenarios.
Alternate site on Vernal Pike
Among the factors that county councilors will likely consider on Aug. 27—when they set the rate of the jail tax to be advertised—is the cost of the land where the new jail is to be located.
The location of the new jail is not yet decided, and it looks almost certain that Monroe County will have to buy land to build a jail, which means the land cost is not known But the leading candidate right now is North Park, which is located off SR 46 on Hunter Valley Road.
The price of the property is currently pegged by county commissioners at $11,375,000, based on a table presented by commissioner Penny Githens at a mid-July meeting.
In addition to county commissioners, under state law, the county council has to approve the purchase of any new significant property, regardless of how it is funded.
An offer by two owners of land along Vernal Pike, which was revealed at Tuesday’s county council meeting, and repeated at Wednesday morning’s county commissioner meeting, has introduced some uncertainty into the mix.
Their proposal is backed by the Greater Bloomington Chamber of Commerce and the Greater Ellettsville Area Chamber of Commerce. The two chambers sent county government leaders a joint letter of support, with logos from both organizations in the letterhead.
A followup letter from the two landowners—Craig Cowden and Dee Burris—clarified that they are willing to cap the price of their real estate at $3 million apiece for a total of $6 million. That’s independent of the two required appraisals that would have to be done by Monroe County government in order to purchase the land.
So the offer that Monroe County government officials might weigh would, all other things being equal, make a difference of about $5 million.
At Friday’s county council work session, county attorney Molly Turner-King asked the council for some guidance about whether to proceed with getting appraisals done on the Vernal Pike land. Councilors were uniform in their support for asking that appraisals be done immediately and that a Phase 1 environmental study be done—especially in light of the fact that the landowners had indicated they would shoulder the cost.
When county commissioners heard the proposal on Wednesday morning, they seemed disinclined to pursue both the Vernal Pike property and the North Park land simultaneously. Commissioner Lee Jones described the Vernal Pike land as good to keep in mind as a “backup.”
On Friday county attorney Jeff Cockerill told councilors that the Vernal Pike proposal is not just sitting idly on a desk in the office of the commissioners. He has reached out to DLZ, the county’s design and building consultant on the jail project, and asked that the land be evaluated for any obvious “red flags” that would be deal breakers.
