Indiana’s second largest county plans to sue the state over taxes

November 20, 2010

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Out of Indiana’s 92 counties, Lake County is the only one not to have adopted a county option income tax. This doesn’t sit well with lawmakers down in Indianapolis and even the governor of the state. 


Three years ago, lawmakers froze the county’s tax levy, limiting the amount of property taxes it can collect. The levy will be raised only if the county passes an income tax on residents or those who work in the county. So far, county officials refuse to do so.


“We opted not to do and the governor (Mitch Daniels) penalized us and froze our levy,” said Gerry Scheub, who sits on the Board of Commissioners of Lake County, Indiana, just outside of Chicago.


To unfreeze the levy, Scheub said the three member board of commissioners will file suit next month to force the state to unfreeze the levy.


“Is this selective legislation, absolutely. Is it illegal? Absolutely. Will we win? Absolutely,” Scheub said Friday.


Scheub said the county should have gone to court to unfreeze the levy much sooner.


But with layoffs planned to the county police force and other services being cut, Scheub said the county simply needs more money to operate. The levy, he estimated, has cost the county some $60 million in lost tax revenue. He said the county has cut $50 million from its annual budget but now it can’t cut anymore.


“If the state wants to tax and is that adamant about it, then they should take the option out and make it mandatory,” Scheub, a Democrat from Merrillvillle, said. “But the state doesn’t want to be the one to say ‘Hey, we raise taxes’ so they threw it on the counties, and that’s so wrong.”


Even if the county is successful in lifting the freeze on the levy, it will still be limited to the amount of property taxes it can collect from homeowners. Indiana voters this month approved a measure that puts a 1 percent cap on the assessed value of a home.