On Wednesday night, Bloomington’s city council voted 8–0 to postpone consideration of a countywide local income tax increase until its next regular meeting, which is scheduled for May 4.
The vote to postpone came a few minutes after 9 p.m. That made for a meeting that lasted about two and a half hours. Councilmembers asked questions of the mayor and staff, heard another round of public commentary, and discussed the proposal among themselves.
From left: Andrew Krebbs, John Hamilton, Beverly Calender-Anderson, Mike Diekhoff (April 20, 2022).
Bloomington’s city council has postponed its decision on an increase to Monroe County’s local income tax (LIT) rate.
On Wednesday, the vote on the motion to postpone was 8–1 with Steve Volan dissenting. The council will take up the matter again a week from Wednesday, at a special session on April 27.
Volan’s vote against postponement was not based on a desire to take a final vote on the LIT increase that night. Volan wanted some additional deliberation by the council on the question before postponement. The vote to postpone was taken at 10:52 p.m. almost four and a half hours after the meeting started, at 6:30 p.m.
If the city council approves the LIT rate increase by a vote of at least 8–1, that will increase the tax for all residents of Monroe County. If the approval gets fewer than eight votes of support, then the proposal would need to pick up some support from the county council and/or the Ellettsville town board.
On Wednesday, Bloomington’s city council could take a final vote that would enact an increase to the local income tax (LIT) that is paid by all residents of Monroe County, whether they live inside the city limits or not.
Bloomington mayor John Hamilton has proposed an increase of 0.855 points, which would make the total rate 2.2 percent. For county residents who pay the tax, it would mean an extra $85 dollars paid on every $10,000 of taxable income.
At the city council’s Wednesday night corral, there’s the possibility of some political horse trading, based on the amount of increase to the rate. The horse trading could even lead to a delay in the final vote for at least another week.
At-large council representative Matt Flaherty said at last week’s meeting he would support the rate as proposed by the mayor. But he added, “In working to meet my colleagues somewhere in the middle, at the very least, I think I can come down to 0.65, and find a balance of what I think is most essential.”
The balance to be struck in the package proposed by Hamilton is between public safety and essential services on the one hand, and climate change mitigation and quality of life on the other.
The focus of the council’s consideration now appears to be just the rate, and how much revenue it would mean for the city of Bloomington.
I think it’s wrong to make that the sole focus of deliberations.
Community discussion of Bloomington mayor John Hamilton’s proposed increase to the countywide local income tax (LIT) has not included much mention of category of LIT called the “certified shares” category.
The certified shares category has a current rate of 0.9482 percent.
For Monroe County, the total current LIT rate is 1.345 percent, which comes from adding an additional 0.25 points in the public safety category, 0.0518 points in the property tax relief category, and another 0.0950 points in a special purpose category. The special purpose LIT revenues are used for juvenile services.
It’s the certified shares category of LIT that many other units of local government rely on for some of their basic operating expenses.
Other revenue items on the agenda include two $5-million bond proposals—one for parks bonds and the other for public works bonds. [Updated at 4:34 on April 13, 2022: Two amendments to the list of projects to be funded by the bonds were posted by the city council office. Here’s a link: 2022-04-13 meeting packet addendum.]
Also on Wednesday’s agenda is a nominal decrease to the drinking water rate, driven by the General Assembly’s repeal of the 1.4-percent utility receipts tax. It was a pass-through tax, which means it was collected by utilities and forwarded to the state. For the residential rate, the decrease is 5 cents—from $4.03 to $3.98 per 1,000 gallons. That works out to 1.2 percent less.
No final votes will be taken on Wednesday night at the committee meeting. But it is the city council’s custom to take straw polls. That should give some indication of how councilmembers are leaning toward the proposed income tax increase. Abstentions are generally used as a mechanism to show moderate disapproval.
For a full point increase, that translates into $36.1 million in revenue countywide. That figure, multiplied by Hamilton’s proposed 0.855 increase, means about $30.87 million.
Based on the proportional population distribution method proposed by Hamilton, Bloomington’s share would be about $17.5 million. Monroe County government’s share would be about $11.9 million, with the remainder going to Ellettsville and Stinesville.
No amount was provided for a possible local income tax (LIT) increase.
But sometime in the next eight months or so, an increase to the current 1.345 percent tax on the incomes of Monroe County residents is likely to get a vote.
In the state of Indiana, local income taxes apply on a county-by-county basis. In counties like Monroe, where a city has a majority of the population, the political power to increase the tax rests mostly with the city.
In 2020, the Bloomington city council’s vote on a quarter-point LIT increase came in mid-September. The timing is affected in part by details of state law. The quarter-point increase was half what Hamilton had floated on New Year’s Day that year, but it failed 4–5 in front the city council.
Because the proposal didn’t have majority support even on the city council, there was no need for the Monroe County council or the Ellettsville town council to consider the proposed increase.
This year’s approach could be analyzed as a response to a criticism heard two years ago: The mayor should have first identified the needed programs, next calculated the cost of the programs, then based a request for a LIT increase on the specific costs.
During Thursday’s speech, Hamilton put some effort into establishing the need for more revenue—to fund programs, from basic services, like public safety, to climate action.
What has not changed in two years are some of the basics related to how local income taxes can be increased.
At Wednesday night’s meeting of the Bloomington city council, the voting tally on the proposal to enact a quarter point increase to Monroe County’s income tax was 4–5.
Voting yes were Dave Rollo, Matt Flaherty, Kate Rosenbarger and Steve Volan.
Voting no were Ron Smith, Isabel Piedmont-Smith, Susan Sandberg, Sue Sgambelluri, and Jim Sims.
Based on the wording of the state statute, the proposal looks like it is dead and does not need to be forwarded to the other members of the tax council—the Monroe County council, the Ellettsville town council and the Stinesville town council.
That’s because Bloomington’s city council action on Wednesday was a resolution to propose an ordinance to the rest of the tax council.
The statute says, “To [present an ordinance to other members of the tax council for passage], the member must adopt a resolution to propose the ordinance to the local income tax council and distribute a copy of the proposed ordinance to the county auditor.” [IC-6-3.6-3-8]
Given that the vote on the resolution was 4–5, the Bloomington city council did not adopt a resolution proposing an ordinance to the other members of the council.
A question asked by The Square Beacon at the meeting during public commentary, to confirm that the other tax council members will not need to vote on the proposal, did not get a response.