Introduced Version






HOUSE BILL No. 1754

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 6-3.5

Synopsis: Local income tax distributions. Limits the extent to which a taxing unit may experience a decrease from one year to the next of the taxing unit's share of county adjusted gross income tax revenue, county option income tax revenue, or county economic development income tax revenue.

Effective: January 1, 2006.





Thompson




    January 19, 2005, read first time and referred to Committee on Ways and Means.







Introduced

First Regular Session 114th General Assembly (2005)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
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HOUSE BILL No. 1754



    A BILL FOR AN ACT to amend the Indiana Code concerning taxation.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 6-3.5-1.1-12; (05)IN1754.1.1. -->     SECTION 1. IC 6-3.5-1.1-12 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2006]: Sec. 12. (a) The part of a county's certified distribution for a calendar year that is to be used as property tax replacement credits shall be allocated by the county auditor among the civil taxing units and school corporations of the county.
    (b) Except as provided in subsection (d) and section 13 of this chapter, the amount of property tax replacement credits that each civil taxing unit and school corporation in a county is entitled to receive during a calendar year equals the product of:
        (1) that part of the county's certified distribution that is dedicated to providing property tax replacement credits for that same calendar year; multiplied by
        (2) a fraction:
            (A) The numerator of the fraction equals the sum of the total property taxes being collected by the civil taxing unit or school corporation during that calendar year, plus with respect to a

civil taxing unit, the amount of federal revenue sharing funds and certified shares received by it during that calendar year to the extent that they are used to reduce its property tax levy below the limit imposed by IC 6-1.1-18.5 for that same calendar year.
            (B) The denominator of the fraction equals the sum of the total property taxes being collected by all civil taxing units and school corporations, plus the amount of federal revenue sharing funds and certified shares received by all civil taxing units in the county to the extent that they are used to reduce the civil taxing units' property tax levies below the limits imposed by IC 6-1.1-18.5 for that same calendar year.
    (c) The department of local government finance shall provide each county auditor with the amount of property tax replacement credits that each civil taxing unit and school corporation in the auditor's county is entitled to receive. The county auditor shall then certify to each civil taxing unit and school corporation the amount of property tax replacement credits it is entitled to receive (after adjustment made under section 13 of this chapter) during that calendar year. The county auditor shall also certify these distributions to the county treasurer.
     (d) A civil taxing unit or school corporation is entitled to receive at least the amount of property tax replacement credits determined in STEP SEVEN of the following formula:
        STEP ONE: Determine the county's distribution used as property tax replacement credits in the immediately preceding calendar year.
        STEP TWO: Determine the county's distribution used as property tax replacement credits in the current calendar year.
        STEP THREE: If the STEP ONE result is zero (0), the result of this STEP is one (1). If the STEP ONE result is not zero (0), divide the STEP TWO result by the STEP ONE result.
        STEP FOUR: Determine the lesser of the STEP THREE result and one (1).
        STEP FIVE: Determine the amount of property tax replacement credits distributed to the civil taxing unit or school corporation in the immediately preceding year under this section or section 13 of this chapter.
        STEP SIX: Multiply the STEP FOUR result by the STEP FIVE result.
        STEP SEVEN: Multiply the STEP SIX result by ninety-eight hundredths (0.98).
If for a calendar year a civil taxing unit or school corporation is

allocated a proportion of a county's property tax replacement credits under this subsection, the formula used in subsection (b) to determine all other civil taxing units' and school corporations' property tax replacement credits shall be changed for that same year by reducing the amount dedicated to providing property tax replacement credits by the amount of property tax replacement credits allocated under this subsection for that same calendar year. The department of local government finance shall make any adjustments required by this subsection and provide them to the appropriate county auditors.

SOURCE: IC 6-3.5-1.1-13; (05)IN1754.1.2. -->     SECTION 2. IC 6-3.5-1.1-13 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2006]: Sec. 13. (a) If a civil taxing unit or school corporation of an adopting county does not impose a property tax levy that is first due and payable in a calendar year in which property tax replacement credits are being distributed, that civil taxing unit or school corporation is entitled to receive a proportion of the property tax replacement credits to be distributed within the county. Except as provided in subsection (c), the amount such a civil taxing unit or school corporation is entitled to receive during that calendar year equals the product of:
        (1) the part of the county's certified distribution that is to be used to provide property tax replacement credits during that calendar year; multiplied by
        (2) a fraction:
            (A) The numerator of the fraction equals the budget of that civil taxing unit or school corporation for that calendar year.
            (B) The denominator of the fraction equals the aggregate budgets of all civil taxing units and school corporations of that county for that calendar year.
    (b) If for a calendar year a civil taxing unit or school corporation is allocated a proportion of a county's property tax replacement credits by this section then the formula used in section 12 of this chapter to determine all other civil taxing units' and school corporations' property tax replacement credits shall be changed for that same year by reducing the amount dedicated to providing property tax replacement credits by the amount of property tax replacement credits allocated under this section for that same calendar year. The department of local government finance shall make any adjustments required by this section and provide them to the appropriate county auditors.
     (c) A civil taxing unit or school corporation is entitled to receive at least the amount of property tax replacement credits determined in STEP SEVEN of the following formula:
        STEP ONE: Determine the certified distribution to the county of adjusted gross income tax revenue under section 9 of this chapter for the immediately preceding calendar year.
        STEP TWO: Determine the certified distribution to the county of adjusted gross income tax revenue under section 9 of this chapter for the current calendar year.
        STEP THREE: If the STEP ONE result is zero (0), the result of this STEP is one (1). If the STEP ONE result is not zero (0), divide the STEP TWO result by the STEP ONE result.
        STEP FOUR: Determine the lesser of the STEP THREE result and one (1).
        STEP FIVE: Determine the amount of property tax replacement credits distributed to the civil taxing unit or school corporation in the immediately preceding year under this section or section 12 of this chapter.
        STEP SIX: Multiply the STEP FOUR result by the STEP FIVE result.
        STEP SEVEN: Multiply the STEP SIX result by ninety-eight hundredths (0.98).

SOURCE: IC 6-3.5-1.1-15; (05)IN1754.1.3. -->     SECTION 3. IC 6-3.5-1.1-15 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2006]: Sec. 15. (a) As used in this section, "attributed levy" of a civil taxing unit means the sum of:
        (1) the ad valorem property tax levy of the civil taxing unit that is currently being collected at the time the allocation is made; plus
        (2) the current ad valorem property tax levy of any special taxing district, authority, board, or other entity formed to discharge governmental services or functions on behalf of or ordinarily attributable to the civil taxing unit; plus
        (3) the amount of federal revenue sharing funds and certified shares that were used by the civil taxing unit (or any special taxing district, authority, board, or other entity formed to discharge governmental services or functions on behalf of or ordinarily attributable to the civil taxing unit) to reduce its ad valorem property tax levies below the limits imposed by IC 6-1.1-18.5; plus
        (4) in the case of a county, an amount equal to the property taxes imposed by the county in 1999 for the county's welfare fund and welfare administration fund.
    (b) The part of a county's certified distribution that is to be used as certified shares shall be allocated only among the county's civil taxing units. Except as provided in subsection (e), each civil taxing unit of a county is entitled to receive a percentage of the certified shares to be

distributed in the county equal to the ratio of its attributed levy to the total attributed levies of all civil taxing units of the county.
    (c) The local government tax control board established by IC 6-1.1-18.5-11 shall determine the attributed levies of civil taxing units that are entitled to receive certified shares during a calendar year. If the ad valorem property tax levy of any special taxing district, authority, board, or other entity is attributed to another civil taxing unit under subsection (b)(2), then the special taxing district, authority, board, or other entity shall not be treated as having an attributed levy of its own. The local government tax control board shall certify the attributed levy amounts to the appropriate county auditor. The county auditor shall then allocate the certified shares among the civil taxing units of the auditor's county.
    (d) Certified shares received by a civil taxing unit shall be treated as additional revenue for the purpose of fixing its budget for the calendar year during which the certified shares will be received. The certified shares may be allocated to or appropriated for any purpose, including property tax relief or a transfer of funds to another civil taxing unit whose levy was attributed to the civil taxing unit in the determination of its attributed levy.
     (e) Under this section, a civil taxing unit must receive a certified share amount greater than or equal to the amount determined in STEP SEVEN of the following STEPS:
        STEP ONE: Determine the certified distribution to the county of adjusted gross income tax revenue under section 9 of this chapter for the immediately preceding calendar year.
        STEP TWO: Determine the certified distribution to the county of adjusted gross income tax revenue under section 9 of this chapter for the current calendar year.
        STEP THREE: If the STEP ONE result is zero (0), the result of this STEP is one (1). If the STEP ONE result is not zero (0), divide the STEP TWO result by the STEP ONE result.
        STEP FOUR: Determine the lesser of the STEP THREE result and one (1).
        STEP FIVE: Determine the certified share amount distributed to the civil taxing unit in the immediately preceding year.
        STEP SIX: Multiply the STEP FOUR result by the STEP FIVE result.
        STEP SEVEN: Multiply the STEP SIX result by ninety-eight hundredths (0.98).
If for a calendar year a civil taxing unit is allocated a proportion

of a county's certified shares by this subsection, the amount determined under subsection (b) for all other civil taxing units' certified shares shall be changed for that same year by reducing the amount dedicated to providing certified shares by the amount of certified shares allocated under this subsection for that same calendar year. The department of local government finance shall make any adjustments required by this subsection and provide them to the local government tax control board.

SOURCE: IC 6-3.5-6-18; (05)IN1754.1.4. -->     SECTION 4. IC 6-3.5-6-18 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2006]: Sec. 18. (a) The revenue a county auditor receives under this chapter shall be used to:
        (1) replace the amount, if any, of property tax revenue lost due to the allowance of an increased homestead credit within the county;
        (2) fund the operation of a public communications system and computer facilities district as provided in an election, if any, made by the county fiscal body under IC 36-8-15-19(b);
        (3) fund the operation of a public transportation corporation as provided in an election, if any, made by the county fiscal body under IC 36-9-4-42;
        (4) make payments permitted under IC 36-7-15.1-17.5;
        (5) make payments permitted under subsection (i); and
        (6) make distributions of distributive shares to the civil taxing units of a county.
    (b) The county auditor shall retain from the payments of the county's certified distribution, an amount equal to the revenue lost, if any, due to the increase of the homestead credit within the county. This money shall be distributed to the civil taxing units and school corporations of the county as though they were property tax collections and in such a manner that no civil taxing unit or school corporation shall suffer a net revenue loss due to the allowance of an increased homestead credit.
    (c) The county auditor shall retain the amount, if any, specified by the county fiscal body for a particular calendar year under subsection (i), IC 36-7-15.1-17.5, IC 36-8-15-19(b), and IC 36-9-4-42 from the county's certified distribution for that same calendar year. The county auditor shall distribute amounts retained under this subsection to the county.
    (d) All certified distribution revenues that are not retained and distributed under subsections (b) and (c) shall be distributed to the civil taxing units of the county as distributive shares.
    (e) Except as provided in subsection (j), the amount of distributive shares that each civil taxing unit in a county is entitled to receive during a month equals the product of the following:
        (1) The amount of revenue that is to be distributed as distributive shares during that month; multiplied by
        (2) A fraction. The numerator of the fraction equals the total property taxes that are first due and payable to the civil taxing unit during the calendar year in which the month falls, plus, for a county, an amount equal to the property taxes imposed by the county in 1999 for the county's welfare fund and welfare administration fund. The denominator of the fraction equals the sum of the total property taxes that are first due and payable to all civil taxing units of the county during the calendar year in which the month falls, plus an amount equal to the property taxes imposed by the county in 1999 for the county's welfare fund and welfare administration fund.
    (f) The department of local government finance shall provide each county auditor with the fractional amount of distributive shares that each civil taxing unit in the auditor's county is entitled to receive monthly under this section.
    (g) Notwithstanding subsection (e), if a civil taxing unit of an adopting county does not impose a property tax levy that is first due and payable in a calendar year in which distributive shares are being distributed under this section, that civil taxing unit is entitled to receive a part of the revenue to be distributed as distributive shares under this section within the county. Except as provided in subsection (j), the fractional amount such a civil taxing unit is entitled to receive each month during that calendar year equals the product of the following:
        (1) The amount to be distributed as distributive shares during that month; multiplied by
        (2) A fraction. The numerator of the fraction equals the budget of that civil taxing unit for that calendar year. The denominator of the fraction equals the aggregate budgets of all civil taxing units of that county for that calendar year.
    (h) If for a calendar year a civil taxing unit is allocated a part of a county's distributive shares by subsection (g) or (j), then the formula used in subsection (e) to determine all other civil taxing units' distributive shares shall be changed each month for that same year by reducing the amount to be distributed as distributive shares under subsection (e) by the amount of distributive shares allocated under subsection subsections (g) and (j) for that same month. The department of local government finance shall make any adjustments required by this subsection and provide them to the appropriate county auditors.
    (i) Notwithstanding any other law, a county fiscal body may pledge

revenues received under this chapter to the payment of bonds or lease rentals to finance a qualified economic development tax project under IC 36-7-27 in that county or in any other county if the county fiscal body determines that the project will promote significant opportunities for the gainful employment or retention of employment of the county's residents.
     (j) Under this section, a civil taxing unit must receive a distributive share amount greater than or equal to the amount determined in STEP SEVEN of the following STEPS:
        STEP ONE: Determine the certified distribution to the county of county option income tax revenue under section 17 of this chapter for the immediately preceding calendar year.
        STEP TWO: Determine the certified distribution to the county of county option income tax revenue under section 17 of this chapter for the current calendar year.
        STEP THREE: If the STEP ONE result is zero (0), the result of this STEP is one (1). If the STEP ONE result is not zero (0), divide the STEP TWO result by the STEP ONE result.
        STEP FOUR: Determine the lesser of the STEP THREE result and one (1).
        STEP FIVE: Determine the distributive share amount allocated to the civil taxing unit in the immediately preceding year under this section.
        STEP SIX: Multiply the STEP FOUR result by the STEP FIVE result.
        STEP SEVEN: Multiply the STEP SIX result by ninety-eight hundredths (0.98).

SOURCE: IC 6-3.5-7-12; (05)IN1754.1.5. -->     SECTION 5. IC 6-3.5-7-12 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2006]: Sec. 12. (a) Except as provided in sections 23, 25, 26, and 27 of this chapter, the county auditor shall distribute in the manner specified in this section the certified distribution to the county.
    (b) Except as provided in subsections (c), and (h), and (i) and sections 15 and 25 of this chapter, the amount of the certified distribution that the county and each city or town in a county is entitled to receive during May and November of each year equals the product of the following:
        (1) The amount of the certified distribution for that month; multiplied by
        (2) A fraction. The numerator of the fraction equals the sum of the following:
            (A) Total property taxes that are first due and payable to the

county, city, or town during the calendar year in which the month falls; plus
            (B) For a county, an amount equal to the property taxes imposed by the county in 1999 for the county's welfare fund and welfare administration fund.
        The denominator of the fraction equals the sum of the total property taxes that are first due and payable to the county and all cities and towns of the county during the calendar year in which the month falls, plus an amount equal to the property taxes imposed by the county in 1999 for the county's welfare fund and welfare administration fund.
    (c) This subsection applies to a county council or county income tax council that imposes a tax under this chapter after June 1, 1992. The body imposing the tax may adopt an ordinance before July 1 of a year to provide for the distribution of certified distributions under this subsection instead of a distribution under subsection (b). The following apply if an ordinance is adopted under this subsection:
        (1) The ordinance is effective January 1 of the following year.
        (2) Except as provided in sections 25 and 26 of this chapter, the amount of the certified distribution that the county and each city and town in the county is entitled to receive during May and November of each year equals the product of:
            (A) the amount of the certified distribution for the month; multiplied by
            (B) a fraction. For a city or town, the numerator of the fraction equals the population of the city or the town. For a county, the numerator of the fraction equals the population of the part of the county that is not located in a city or town. The denominator of the fraction equals the sum of the population of all cities and towns located in the county and the population of the part of the county that is not located in a city or town.
        (3) The ordinance may be made irrevocable for the duration of specified lease rental or debt service payments.
    (d) The body imposing the tax may not adopt an ordinance under subsection (c) if, before the adoption of the proposed ordinance, any of the following have pledged the county economic development income tax for any purpose permitted by IC 5-1-14 or any other statute:
        (1) The county.
        (2) A city or town in the county.
        (3) A commission, a board, a department, or an authority that is authorized by statute to pledge the county economic development income tax.


    (e) The department of local government finance shall provide each county auditor with the fractional amount of the certified distribution that the county and each city or town in the county is entitled to receive under this section.
    (f) Money received by a county, city, or town under this section shall be deposited in the unit's economic development income tax fund.
    (g) Except as provided in subsection (b)(2)(B), in determining the fractional amount of the certified distribution the county and its cities and towns are entitled to receive under subsection (b) during a calendar year, the department of local government finance shall consider only property taxes imposed on tangible property subject to assessment in that county.
    (h) In a county having a consolidated city, only the consolidated city is entitled to the certified distribution, subject to the requirements of sections 15, 25, and 26 of this chapter.
     (i) For any month in which distributions under subsection (b) are calculated, a county, city, or town must receive an amount of the certified distribution that is greater than or equal to the amount determined in STEP SEVEN of the following STEPS:
        STEP ONE: Determine the certified distribution to the county of county economic development income tax revenue under section 11 of this chapter for the immediately preceding calendar year.
        STEP TWO: Determine the certified distribution to the county of county economic development income tax revenue under section 11 of this chapter for the current calendar year.
        STEP THREE: If the STEP ONE result is zero (0), the result of this STEP is one (1). If the STEP ONE result is not zero (0), divide the STEP TWO result by the STEP ONE result.
        STEP FOUR: Determine the lesser of the STEP THREE result and one (1).
        STEP FIVE: Determine the amount of the certified distribution allocated to the county, city, or town for the same month in the immediately preceding year.
        STEP SIX: Multiply the STEP FOUR result by the STEP FIVE result.
        STEP SEVEN: Multiply the STEP SIX result by ninety-eight hundredths (0.98).

    (j) If a county, city, or town is allocated a part of a county's certified distribution by subsection (i), then the formula used in subsection (b) or (c) to determine all other county, city, or town shares of the certified distribution shall be changed by reducing the

amount of the certified distribution to be distributed under subsections (b) and (c) by the amount allocated under subsection (i).

SOURCE: ; (05)IN1754.1.6. -->     SECTION 6. [EFFECTIVE JANUARY 1, 2006] IC 6-3.5-1.1-12, IC 6-3.5-1.1-13, and IC 6-3.5-1.1-15, all as amended by this act, apply to distributions of county adjusted gross income tax revenue that are made after December 31, 2005. IC 6-3.5-6-18, as amended by this act, applies to distributions of county option income tax revenue that are made after December 31, 2005. IC 6-3.5-7-12, as amended by this act, applies to distributions of county economic development income tax revenue that are made after December 31, 2005.