Introduced Version






HOUSE BILL No. 1399

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 4-23-24.3; IC 5-1-1-1; IC 6-1.1; IC 6-2.5; IC 6-3.1-31; IC 6-3.5; IC 6-7-1-30.1; IC 6-8.1-1-1; IC 6-10; IC 8-14; IC 22-2-2-4; IC 36-1.

Synopsis: Taxes and local finances. Establishes the state commission on responsibility and efficiency. Legalizes certain public debt instruments. Makes changes in laws governing the adoption of budgets, tax rates, and tax levies and the administration of public funds. Eliminates restrictions on property tax replacement fund distributions. Provides a property tax credit for homesteads whenever the assessed value increases by more than 75% in a general reassessment. Provides an income tax credit for sales tax paid on home heating energy. Provides a temporary sales tax exemption for home heating energy and gasoline. Permanently caps the price on which sales tax is charged on gasoline at $1.50 per gallon. Permits a county income tax council or a municipality to adopt a motor vehicle excise surtax and a wheel tax under certain circumstances. Authorizes counties, cities, and towns to adopt the following additional local taxes: (1) Income taxes. (2) Food and beverage taxes. (3) Innkeeper's taxes. (4) Sales taxes. Increases Indiana's minimum hourly wage. Provides alternative procedures for cooperative agreements. Permits establishment of governmental service territories. Makes other related changes.

Effective: Upon passage; January 1, 2006 (retroactive); May 1, 2006; July 1, 2006.





Whetstone




    January 12, 2006, read first time and referred to Committee on Ways and Means.







Introduced

Second Regular Session 114th General Assembly (2006)


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.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2005 Regular Session of the General Assembly.

HOUSE BILL No. 1399



    A BILL FOR AN ACT to amend the Indiana Code concerning state and local administration.

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

SOURCE: IC 4-23-24.3; (06)IN1399.1.1. -->     SECTION 1. IC 4-23-24.3 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]:
     Chapter 24.3. State Commission on Responsibility and Efficiency
    Sec. 1. As used in this chapter, "commission" refers to the state commission on responsibility and efficiency established by section 2 of this chapter.
    Sec. 2. The state commission on responsibility and efficiency is established.
    Sec. 3. The membership of the commission consists of the following fifteen (15) members:
        (1) The president of the Indiana Association of Cities and Towns
        (2) The president of the Association of Indiana Counties.
        (3) Three (3) municipal officials appointed by the governor from a list of nominees submitted by the Indiana Association

of Cities and Towns or a designee of a member appointed under this subdivision.
        (4) Three (3) county officials appointed by the governor from a list of nominees submitted by the Association of Indiana Counties or a designee of a member appointed under this subdivision.
        (5) One (1) member appointed by the governor from a list of nominees submitted by the Indiana Manufacturers' Association or the appointed member's designee.
        (6) One (1) member appointed by the governor from a list of nominees submitted by the Indiana Farm Bureau or the appointed member's designee.
        (7) One (1) member appointed by the governor from a list of nominees submitted by the Indiana Chamber of Commerce or the appointed member's designee.
        (8) Four (4) members appointed by the governor who are:
            (A) members of the general assembly; and
            (B) members of the legislative council; or
        a member's designee. A designee under this subdivision must be a member of the general assembly.
    Sec. 4. The governor shall appoint members to the commission before June 1 in each year.
    Sec. 5. The term of a member on the commission ends on the earliest of the following:
        (1) May 31 of the year following the year of the member's appointment.
        (2) The date the member is removed by governor.
        (3) For individuals who become members of the commission under section 3(1), 3(2), or 3(8) of this chapter, the date that the member ceases to hold the office or position that qualifies the individual to be a member of the commission.
    Sec. 6. The president of the Indiana Association of Cities and Towns and the president of the Association of Indiana Counties are the cochairpersons of the commission.
    Sec. 7. The office of management and budget shall staff the commission.
    Sec. 8. The expenses of the commission shall be paid from the state general fund.
    Sec. 9. Each member of the commission who is not a state employee is not entitled to the minimum salary per diem provided by IC 4-10-11-2.1(b). The member is entitled to reimbursement for traveling expenses as provided under IC 4-13-1-4 and other

expenses actually incurred in connection with the member's duties as provided in the state policies and procedures established by the Indiana department of administration and approved by the budget agency.
    Sec. 10. Each member of the commission who is a state employee but who is not a member of the general assembly is entitled to reimbursement for traveling expenses as provided under IC 4-13-1-4 and other expenses actually incurred in connection with the member's duties as provided in the state policies and procedures established by the Indiana department of administration and approved by the budget agency.
    Sec. 11. Each member of the commission who is a member of the general assembly is entitled to receive the same per diem, mileage, and travel allowances paid to legislative members of interim study committees established by the legislative council. Per diem, mileage, and travel allowances paid under this subsection shall be paid from appropriations made to the legislative council or the legislative services agency.
    Sec. 12. Each member of the commission who is a member of the general assembly is a nonvoting member.
    Sec. 13. The affirmative votes of a majority of the voting members appointed to the commission are required for the commission to take action on any measure, including final reports.
    Sec. 14. The commission shall study local government issues focusing on property tax efficiency, including the following:
        (1) Managing rising costs.
        (2) Increasing demands for services by residents.
        (3) Responding to unfunded state and federal mandates.
        (4) Declining local property tax base.
        (5) Inadequate property tax revenues.
        (6) Creating efficiencies.
        (7) Reducing reliance on property taxes.
        (8) Studying alternatives for financing local government.
        (9) Assisting the state in balancing its budget.
    Sec. 15. The commission shall provide a forum for local officials to share with each other and with the state information on best practices related to the efficient operation of local government.
    Sec. 16. The commission shall annually report to:
        (1) the governor or the governor's designee; and
        (2) at the request of the legislative council, the legislative council in an electronic format under IC 5-14-6;
on property tax reductions and savings and reductions in required

distributions for property tax relief from state funds that are the results of local government efficiencies. The report must include examples of local government programs and projects for increased efficiency and intergovernmental cooperation.

SOURCE: IC 5-1-1-1; (06)IN1399.1.2. -->     SECTION 2. IC 5-1-1-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 1. (a) As used in this section, "leasing body" means a not-for-profit corporation, limited purpose corporation, or authority that has leased land and a building or buildings to an entity named in subsection (b) (c) other than another leasing body.
     (b) As used in this section, "swap agreement" has the meaning set forth in IC 8-9.5-9-4.
    (b) (c) All bonds, notes, evidences of indebtedness, leases, or other written obligations issued or executed by or in the name of any:
         (1) state agency, county, township, city, incorporated town, school corporation, state educational institution, state supported institution of higher learning, political subdivision, joint agency created under IC 8-1-2.2, leasing body, separate body corporate and politic, or any other political, municipal, public or quasi-public corporation; or in the name of any
         (2) special assessment or taxing district; or in the name of any
         (3) board, commission, authority, or authorized body of any such entity; and
any pledge, dedication or designation of revenues, conveyance, or mortgage securing these bonds, notes, evidences of indebtedness, leases, swap agreements, agreements, or other written obligations are hereby legalized and declared valid if these bonds, notes, evidences of indebtedness, leases, swap agreements, agreements, or other written obligations have been executed before March 15, 2000. 2005. All governance, organizational, or other proceedings had and actions taken under which the bonds, notes, evidences of indebtedness, leases, swap agreements, agreements, or other written obligations were issued or executed or the pledge, dedication or designation of revenues, conveyance, or mortgage was granted, are hereby fully legalized and declared valid.
    (c) (d) All contracts for the purchase of electric power and energy or utility capacity or service:
         (1) entered into by a joint agency created under IC 8-1-2.2; and
         (2) its members used for the purpose of securing payment of principal and interest on bonds, notes, evidences of indebtedness, leases, or other written obligations issued by or in the name of such joint agency;
are hereby legalized and declared valid if entered into before March 15, 2000. 2005. All governance, organizational, or other proceedings held and actions taken under which contracts for the purchase of electric power and energy or utility capacity or service were executed or entered into are hereby fully legalized and declared valid.
    (d) (e) All interlocal cooperation agreements entered into by political subdivisions or governmental entities under IC 36-1-7 are hereby legalized and declared valid if entered into before March 15, 2000. 2005. All governance, organizational, or other proceedings held and actions taken under which interlocal cooperation agreements were executed or entered into are hereby fully legalized and validated.
SOURCE: IC 6-1.1-17-1; (06)IN1399.1.3. -->     SECTION 3. IC 6-1.1-17-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 1. (a) On or before August 1 of each year, the county auditor shall send a certified statement, under the seal of the board of county commissioners, to the fiscal officer of each political subdivision of the county and the department of local government finance. The statement shall contain:
        (1) information concerning the assessed valuation in the political subdivision for the next calendar year;
        (2) an estimate of the taxes to be distributed to the political subdivision during the last six (6) months of the current calendar year;
        (3) the current assessed valuation as shown on the abstract of charges;
        (4) the average growth in assessed valuation in the political subdivision over the preceding three (3) budget years, excluding years in which a general reassessment occurs, determined according to procedures established by the department of local government finance; and
         (5) information concerning credits applicable under IC 6-1.1-21-5.7 to taxes first due and payable in the next calendar year; and
        
(5) (6) any other information at the disposal of the county auditor that might affect the assessed value used in the budget adoption process.
    (b) The estimate of taxes to be distributed shall be based on:
        (1) the abstract of taxes levied and collectible for the current calendar year, less any taxes previously distributed for the calendar year; and
        (2) any other information at the disposal of the county auditor which might affect the estimate.
    (c) The fiscal officer of each political subdivision shall present the

county auditor's statement to the proper officers of the political subdivision.
     (d) The officers of a political subdivision shall adjust the assessed value used in setting rates for the taxes first due and payable in a calendar year in which credits apply under IC 6-1.1-21-5.7 to eliminate or minimize levy reductions that would otherwise result from the application of those credits.

SOURCE: IC 6-1.1-17-16; (06)IN1399.1.4. -->     SECTION 4. IC 6-1.1-17-16, AS AMENDED BY P.L.228-2005, SECTION 21, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 16. (a) Subject to the limitations and requirements prescribed in this section, the department of local government finance may revise, reduce, or increase a political subdivision's budget by fund, tax rate, or tax levy which the department reviews under section 8 or 10 of this chapter.
    (b) Subject to the limitations and requirements prescribed in this section, the department of local government finance may review, revise, reduce, or increase the budget by fund, tax rate, or tax levy of any of the political subdivisions whose tax rates compose the aggregate tax rate within a political subdivision whose budget, tax rate, or tax levy is the subject of an appeal initiated under this chapter.
    (c) Except as provided in subsections (j), and (k), and (l), before the department of local government finance reviews, revises, reduces, or increases a political subdivision's budget by fund, tax rate, or tax levy under this section, the department must hold a public hearing on the budget, tax rate, and tax levy. The department of local government finance shall hold the hearing in the county in which the political subdivision is located. The department of local government finance may consider the budgets by fund, tax rates, and tax levies of several political subdivisions at the same public hearing. At least five (5) days before the date fixed for a public hearing, the department of local government finance shall give notice of the time and place of the hearing and of the budgets by fund, levies, and tax rates to be considered at the hearing. The department of local government finance shall publish the notice in two (2) newspapers of general circulation published in the county. However, if only one (1) newspaper of general circulation is published in the county, the department of local government finance shall publish the notice in that newspaper.
    (d) Except as provided in subsection (i), IC 6-1.1-19, or IC 6-1.1-18.5, the department of local government finance may not increase a political subdivision's budget by fund, tax rate, or tax levy to an amount which exceeds the amount originally fixed by the political subdivision. The department of local government finance shall give the

political subdivision written notification specifying any revision, reduction, or increase the department proposes in a political subdivision's tax levy or tax rate. The political subdivision has one (1) week two (2) weeks from the date the political subdivision receives the notice to provide a written response to the department of local government finance's Indianapolis office. specifying how to make the required reductions in the amount budgeted by fund. The response may include budget reductions, reallocation of levies, a revision in the amount of miscellaneous revenues, and further review of any other item about which, in the view of the political subdivision, the department is in error. The department of local government finance shall make reductions the adjustments as specified in the political subdivision's response if the response is provided as required by this subsection. and sufficiently specifies all necessary reductions. The department of local government finance may make a revision, a reduction, or an increase in a political subdivision's budget only by fund.
    (e) The department of local government finance may not approve a levy for lease payments by a city, town, county, library, or school corporation if the lease payments are payable to a building corporation for use by the building corporation for debt service on bonds and if:
        (1) no bonds of the building corporation are outstanding; or
        (2) the building corporation has enough legally available funds on hand to redeem all outstanding bonds payable from the particular lease rental levy requested.
    (f) The department of local government finance shall certify its action to:
        (1) the county auditor;
        (2) the political subdivision if the department acts pursuant to an appeal initiated by the political subdivision;
        (3) the first ten (10) taxpayers whose names appear on a petition filed under section 13 of this chapter; and
        (4) a taxpayer that owns property that represents at least ten percent (10%) of the taxable assessed valuation in the political subdivision.
    (g) The following may petition for judicial review of the final determination of the department of local government finance under subsection (f):
        (1) If the department acts under an appeal initiated by a political subdivision, the political subdivision.
        (2) If the department acts under an appeal initiated by taxpayers under section 13 of this chapter, a taxpayer who signed the

petition under that section.
        (3) If the department acts under an appeal initiated by the county auditor under section 14 of this chapter, the county auditor.
        (4) A taxpayer that owns property that represents at least ten percent (10%) of the taxable assessed valuation in the political subdivision.
The petition must be filed in the tax court not more than forty-five (45) days after the department certifies its action under subsection (f).
    (h) The department of local government finance is expressly directed to complete the duties assigned to it under this section not later than February 15th of each year for taxes to be collected during that year.
    (i) Subject to the provisions of all applicable statutes, the department of local government finance may increase a political subdivision's tax levy to an amount that exceeds the amount originally fixed by the political subdivision if the increase is:
        (1) requested in writing by the officers of the political subdivision;
        (2) either:
            (A) based on information first obtained by the political subdivision after the public hearing under section 3 of this chapter; or
            (B) results from an inadvertent mathematical error made in determining the levy; and
        (3) published by the political subdivision according to a notice provided by the department.
    (j) The department of local government finance shall annually review the budget by fund of each school corporation not later than April 1. The department of local government finance shall give the school corporation written notification specifying any revision, reduction, or increase the department proposes in the school corporation's budget by fund. A public hearing is not required in connection with this review of the budget.
    (k) The department of local government finance may hold a hearing under subsection (c) only if the notice required in IC 6-1.1-17-12 is published at least ten (10) days before the date of the hearing.
    (l) This subsection does not apply to a school corporation. If a petition is not filed with:
        (1) the proper officers of a political subdivision in accordance with section 5 of this chapter; or
        (2) the county auditor in accordance with section 13 of this chapter;


the department of local government finance may not conduct a public hearing under subsection (c) and must limit its review of the political subdivision's budget, tax rate, and levy to a determination as to whether the political subdivision's proposed property tax levy for the ensuing year complies with IC 6-1.1-18.5-3.
SOURCE: IC 6-1.1-18-5; (06)IN1399.1.5. -->     SECTION 5. IC 6-1.1-18-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5. (a) If the proper officers of a political subdivision desire to appropriate more money for a particular year than the amount prescribed in the budget for that year as finally determined under this article, they shall give notice of their proposed additional appropriation. The notice shall state the time and place at which a public hearing will be held on the proposal. The notice shall be given once in accordance with IC 5-3-1-2(b).
    (b) If the additional appropriation by the political subdivision is made from a fund that receives:
        (1) distributions from the motor vehicle highway account established under IC 8-14-1-1 or the local road and street account established under IC 8-14-2-4; or
        (2) revenue from property taxes levied under IC 6-1.1;
the political subdivision must report the additional appropriation to the department of local government finance. If the additional appropriation is made from a fund described under this subsection, subsections (f), (g), (h), and (i) apply to the political subdivision.
    (c) However, if the additional appropriation is not made from a fund described under subsection (b), subsections (f), (g), (h), and (i) do not apply to the political subdivision. Subsections (f), (g), (h), and (i) do not apply to an additional appropriation made from the cumulative bridge fund if the appropriation meets the requirements under IC 8-16-3-3(c).
    (d) A political subdivision may make an additional appropriation without approval of the department of local government finance if the additional appropriation is made from a fund that is not described under subsection (b). However, the fiscal officer of the political subdivision shall report the additional appropriation to the department of local government finance.
    (e) After the public hearing, the proper officers of the political subdivision shall file a certified copy of their final proposal and any other relevant information to the department of local government finance.
    (f) When the department of local government finance receives a certified copy of a proposal for an additional appropriation under subsection (e), the department shall determine whether sufficient funds

are available or will be available for the proposal. The determination shall be made in writing and sent to the political subdivision not more than fifteen (15) days after the department of local government finance receives the proposal.
    (g) In making the determination under subsection (f), the department of local government finance shall limit the amount of the additional appropriation to revenues available, or to be made available, which have not been previously appropriated.
    (h) If the department of local government finance disapproves an additional appropriation under subsection (f), the department shall specify the reason for its disapproval on the determination sent to the political subdivision.
    (i) A political subdivision may request a reconsideration of a determination of the department of local government finance under this section by filing a written request for reconsideration. A request for reconsideration must:
        (1) be filed with the department of local government finance within fifteen (15) days of the receipt of the determination by the political subdivision; and
        (2) state with reasonable specificity the reason for the request.
The department of local government finance must act on a request for reconsideration within fifteen (15) days of receiving the request.
    (b) After the public hearing, the proper officers of the political subdivision shall file a certified copy of their final proposal and any other relevant information with the department of local government finance.
    (c) The additional appropriation may not have the effect of increasing the approved tax rate or levy and must be supported by sufficient revenues on hand or unobligated revenues, as certified by the fiscal officer.
    (d) The additional appropriation will be treated as approved following the adoption of the ordinance or resolution making the appropriation.

SOURCE: IC 6-1.1-18-6.1; (06)IN1399.1.6. -->     SECTION 6. IC 6-1.1-18-6.1 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 6.1. (a) The proper officers of a political subdivision may transfer money from one (1) of the political subdivision's funds to another fund of the political subdivision after the adoption of an ordinance or resolution specifying the:
        (1) amount of the transfer;
        (2) funds involved;
        (3) date of the transfer; and
        (4) general purpose of the transfer.
    (b) The political subdivision shall publish a notice of a transfer made under this section one (1) time in conformity with IC 5-3-1.
    (c) The amount transferred is available for use after an appropriation of the funds in conformity with section 5 of this chapter.

SOURCE: IC 6-1.1-18.5-8; (06)IN1399.1.7. -->     SECTION 7. IC 6-1.1-18.5-8 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 8. (a) The ad valorem property tax levy limits imposed by section 3 of this chapter do not apply to ad valorem property taxes imposed by a civil taxing unit if the civil taxing unit is committed to levy the taxes to pay or fund either:
        (1) bonded indebtedness; or
        (2) lease rentals under a lease with an original term of at least five (5) years.
    (b) A civil taxing unit must file a petition requesting approval from the department of local government finance to incur bonded indebtedness or execute a lease with an original term of at least five (5) years not later than twenty-four (24) months after the first date of publication of notice of a preliminary determination under IC 6-1.1-20-3.1(2), unless the civil taxing unit demonstrates that a longer period is reasonable in light of the civil taxing unit's facts and circumstances. A civil taxing unit must obtain approval from the department of local government finance before the civil taxing unit may:
        (1) incur the bonded indebtedness; or
        (2) enter into the lease.
Except as provided in subsection (g), the department of local government finance may seek recommendations from the local government tax control board established by section 11 of this chapter when determining whether to authorize incurring the bonded indebtedness or the execution of the lease.
    (c) The department of local government finance shall render a decision within three (3) months after the date it receives a request for approval under subsection (b). However, the department of local government finance may extend this three (3) month period by an additional three (3) months if, at least ten (10) days before the end of the original three (3) month period, the department sends notice of the extension to the executive officer of the civil taxing unit. A civil taxing unit may petition for judicial review of the final determination of the department of local government finance under this section. The petition

must be filed in the tax court not more than forty-five (45) days after the department enters its order under this section.
    (d) A civil taxing unit does not need approval under subsection (b) to obtain temporary loans made in anticipation of and to be paid from current revenues of the civil taxing unit actually levied and in the course of collection for the fiscal year in which the loans are made.
    (e) For purposes of computing the ad valorem property tax levy limits imposed on a civil taxing unit by section 3 of this chapter, the civil taxing unit's ad valorem property tax levy for a calendar year does not include that part of its levy that is committed to fund or pay bond indebtedness or lease rentals with an original term of five (5) years in subsection (a).
    (f) A taxpayer may petition for judicial review of the final determination of the department of local government finance under this section. The petition must be filed in the tax court not more than thirty (30) days after the department enters its order under this section.
     (g) The department of local government finance may not consult the local government tax control board when determining whether to authorize incurring the bonded indebtedness or the execution of the lease if:
        (1) a petition objecting to the bond issue or the lease was not filed in accordance with IC 6-1.1-20-5; or
        (2) with respect to a controlled project (as defined in IC 6-1.1-20-1.1):
            (A) a petition requesting the application of a petition and remonstrance process was not filed in accordance with IC 6-1.1-20-3.1; or
            (B) the certificate filed with the political subdivision by the county auditor under IC 6-1.1-20-3.2(5) states that a greater number of owners of real property within the political subdivision have signed a petition than have signed a remonstrance with respect to the controlled project.

SOURCE: IC 6-1.1-20.9-2; (06)IN1399.1.8. -->     SECTION 8. IC 6-1.1-20.9-2, AS AMENDED BY P.L.246-2005, SECTION 63, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2006 (RETROACTIVE)]: Sec. 2. (a) Except as otherwise provided in section 5 of this chapter, an individual who on March 1 of a particular year either owns or is buying a homestead under a contract that provides the individual is to pay the property taxes on the homestead is entitled each calendar year to a credit against the property taxes which the individual pays on the individual's homestead. However, only one (1) individual may receive a credit under this

chapter for a particular homestead in a particular year.
    (b) The amount of the credit to which the individual is entitled equals the product of:
        (1) the percentage prescribed in subsection (d); multiplied by
        (2) the amount of the individual's property tax liability, as that term is defined in IC 6-1.1-21-5, which is:
            (A) attributable to the homestead during the particular calendar year; and
            (B) determined after the application of the property tax replacement credit under IC 6-1.1-21.
    (c) For purposes of determining that part of an individual's property tax liability that is attributable to the individual's homestead, all deductions from assessed valuation which the individual claims under IC 6-1.1-12 or IC 6-1.1-12.1 for property on which the individual's homestead is located must be applied first against the assessed value of the individual's homestead before those deductions are applied against any other property.
    (d) The percentage of the credit referred to in subsection (b)(1) is as follows:
    YEAR    PERCENTAGE
        OF THE CREDIT
    1996    8%
    1997    6%
    1998 through 2002    10%
    2003 and thereafter    20%
However, the property tax replacement fund board established under IC 6-1.1-21-10 shall increase the percentage of the credit provided in the schedule for any year if the budget agency determines that an increase is necessary to provide the minimum tax relief authorized under IC 6-1.1-21-2.5. If the board increases the percentage of the credit provided in the schedule for any year, the percentage of the credit for the immediately following year is the percentage provided in the schedule for that particular year, unless as provided in this subsection the board must increase the percentage of the credit provided in the schedule for that particular year. However, the percentage credit allowed in a particular county for a particular year shall be increased if on January 1 of a year an ordinance adopted by a county income tax council or county fiscal body was in effect in the county which increased the homestead credit. The amount of the increase equals the amount designated in the ordinance.
    (e) Before October 1 of each year, the assessor shall furnish to the county auditor the amount of the assessed valuation of each homestead

for which a homestead credit has been properly filed under this chapter.
    (f) The county auditor shall apply the credit equally to each installment of taxes that the individual pays for the property.
    (g) Notwithstanding the provisions of this chapter, a taxpayer other than an individual is entitled to the credit provided by this chapter if:
        (1) an individual uses the residence as the individual's principal place of residence;
        (2) the residence is located in Indiana;
        (3) the individual has a beneficial interest in the taxpayer;
        (4) the taxpayer either owns the residence or is buying it under a contract, recorded in the county recorder's office, that provides that the individual is to pay the property taxes on the residence; and
        (5) the residence consists of a single-family dwelling and the real estate, not exceeding one (1) acre, that immediately surrounds that dwelling.

SOURCE: IC 6-1.1-21-5.7; (06)IN1399.1.9. -->     SECTION 9. IC 6-1.1-21-5.7 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 5.7. (a) The following definitions apply throughout this section:
        (1) "General reassessment" refers to a general reassessment of real property under IC 6-1.1-4-4.
        (2) "Homestead" has the meaning set forth in IC 6-1.1-20.9-1(2).
        (3) "Net property tax bill" means the amount of property taxes currently due and payable in a particular calendar year after the application of all deductions and credits, except for the credit provided by this section, as evidenced by the tax statements required under IC 6-1.1-22-8.
        (4) "Physical characteristics" refers to physical characteristics of a homestead that bear on the determination of the assessed value of the homestead.
        (5) "Preceding year tax" means the amount of the net property tax bill for a homestead in the calendar year that immediately precedes the calendar year in which property taxes are first due and payable based on a general reassessment.
        (6) "Qualifying homestead" means:
            (A) if subsection (g) does not apply, a homestead for which the reassessment tax is at least one hundred seventy-five percent (175%) of the preceding year tax; and
            (B) if subsection (g) applies, a homestead for which the

amount determined under subsection (g) of the reassessment tax is at least one hundred seventy-five percent (175%) of the amount determined under subsection (g) of the preceding year tax.
        (7) "Qualifying individual" means an individual who is liable for the payment of the:
            (A) preceding year tax; and
            (B) reassessment tax.
        (8) "Reassessment tax" means
the amount of the net property tax bill for a homestead in the calendar year in which property taxes are first due and payable based on a general reassessment.
    (b) A qualifying individual may receive a credit against the net property tax bill with respect to the qualifying individual's qualifying homestead in:
        (1) the calendar year in which reassessment tax is first due and payable; and
        (2) subsequent calendar years;
as provided in subsections (c) through (e).
    (c) Subject to subsection (g), if the reassessment tax is at least one hundred seventy-five percent (175%) but less than two hundred fifty percent (250%) of the preceding year tax, the amount of the credit is the percentage from the following table multiplied by the amount by which the
reassessment tax exceeds the preceding year tax:
    YEAR IN RELATION TO THE
    YEAR OF LIABILITY FOR
    REASSESSMENT TAX    PERCENTAGE
        Current year            50%
        First following year
        and subsequent years        0%
    (d) Subject to subsection (g), if the reassessment tax is at least two hundred fifty percent (250%) but less than three hundred twenty-five percent (325%) of the
preceding year tax, the amount of the credit is the percentage from the following table multiplied by the amount by which the reassessment tax exceeds the preceding year tax:
    YEAR IN RELATION TO THE
    YEAR OF LIABILITY FOR
    REASSESSMENT TAX    PERCENTAGE
        Current year            67%
        First following year        33%


        Second following year
        and subsequent years        0%
    (e) Subject to subsection (g), if the reassessment tax is at least three hundred twenty-five percent (325%) of the preceding year tax, the amount of the credit is the percentage from the following table multiplied by the amount by which the reassessment tax exceeds the preceding year tax:
    YEAR IN RELATION TO THE
    YEAR OF LIABILITY FOR
    REASSESSMENT TAX    PERCENTAGE
        Current year            75%
        First following year        50%
        Second following year        25%
        Third following year
        and subsequent years        0%
    (f) Subject to subsection (g), the county auditor shall compute and apply the credit under this section for each qualifying individual entitled to the credit.
    (g) If a change in physical characteristics occurred:
        (1) after the assessment date for which the preceding year tax was determined; and
        (2) on or before the assessment date for which the
reassessment tax was determined;
the county auditor shall compute the credit under this subsection. If the change has the effect of increasing the assessed value of the homestead, the county auditor shall determine the reassessment tax for purposes of subsections (c), (d), and (e) based on a homestead assessed value that excludes the assessed value resulting from the change. If the change has the effect of decreasing the assessed value of the homestead, the county auditor shall determine the preceding year tax for purposes of subsections (c), (d), and (e) based on a homestead assessed value that would have applied if the change occurred before the assessment date for which the preceding year tax is determined. The township assessor shall assist the county auditor in determining assessed values used in this subsection.
    (h) If the qualifying individual resides in the homestead with the qualifying individual's spouse, those individuals are together entitled to one (1) credit under this section for the homestead.

SOURCE: IC 6-1.1-21-7; (06)IN1399.1.10. -->     SECTION 10. IC 6-1.1-21-7 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 7. (a) Notwithstanding IC 6-1.1-26, any taxpayer who is entitled to a credit under this chapter or who has properly filed for and is entitled to a credit under

IC 6-1.1-20.9, and who, without taking the credit, pays in full the taxes to which the credit applies, is entitled to a refund, without interest, of an amount equal to the amount of the credit. However, if the taxpayer, at the time a refund is claimed, owes any other taxes, interest, or penalties payable to the county treasurer to whom the taxes subject to the credit were paid, then the credit shall be first applied in full or partial payment of the other taxes, interest, and penalties and the balance, if any, remaining after that application is available as a refund to the taxpayer.
    (b) Any taxpayer entitled to a refund under this section other than a refund based on the credit under section 5.7 of this chapter shall be paid that refund from proceeds of the property tax replacement fund. However, with respect to any refund attributable to a homestead credit, the refund shall be paid from that fund only to the extent that the percentage homestead credit the taxpayer was entitled to receive for a year does not exceed the percentage credit allowed in IC 6-1.1-20.9-2(d) for that same year. Any refund in excess of that amount shall be paid from the county's revenue distributions received under IC 6-3.5-6.
    (c) The state board of accounts shall establish an appropriate procedure to simplify and expedite the method for claiming these refunds and for the payments thereof, as provided for in this section, which procedure is the exclusive procedure for the processing of the refunds. The procedure shall, however, require the filing of claims for the refunds by not later than June 1 of the year following the payment of the taxes to which the credit applied.

SOURCE: IC 6-1.1-41-14; (06)IN1399.1.11. -->     SECTION 11. IC 6-1.1-41-14 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 14. (a) Except as provided in subsection (b), the:
         (1) tax collected for a fund must be held in the fund for which the tax was levied; The and
        (2)
fund may not be expended for any purpose other than the purposes specified by statute authorizing the fund.
    (b) The fiscal body of the political subdivision may, by ordinance or resolution:
        (1) determine that the tax collected for a fund should be:
            (A) transferred to another fund of the political subdivision in accordance with IC 36-1-8-4; or
            (B) used for any other lawful purpose for which the political subdivision may expend funds; and
        (2) identify the fund to which the tax should be transferred and transfer the tax to the fund.

     (c) Except to the extent that IC 8-16-3-3(c), IC 14-27-6-48(c), IC 36-9-14.5-8(c), IC 36-9-15.5-8(c), or another statute specifically provides a different procedure, expenditures may be made from the fund only after an appropriation has been made in the manner provided by law for making other appropriations.
    (d) If the fiscal body makes a determination under subsection (b), the fiscal officer of the political subdivision shall transfer the tax collected to the fund specified in the ordinance or resolution.
SOURCE: IC 6-2.5-5-16.5; (06)IN1399.1.12. -->     SECTION 12. IC 6-2.5-5-16.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 16.5. (a) This section applies to a transaction:
        (1) involving the sale or furnishing of heating energy by a heating energy supplier to a consumer or residential rental housing lessor; and
        (2) for which the charges:
            (A) are invoiced in a single bill or statement for payment by the consumer or residential rental housing lessor; and
            (B) include any charges described in IC 6-2.5-1-5(c).
    (b) As used in this section, "consumer or residential rental housing lessor" means a person that receives heating energy from a heating energy supplier primarily for:
        (1) personal, family, or household residential purposes; or
        (2) use in a residential dwelling or building, including a building (as defined in IC 8-1-2-36.5(a)) served by a master meter, as described in IC 8-1-2-36.5, that is primarily rented to tenants who use the rented facilities primarily for personal, family, or household residential purposes.
The term includes a person that receives heating energy through a program administered by the division of family and children under IC 12-14-11.
    (c) As used in this section, "heating energy" means electricity, oil, gas, coal, propane, or any other fuel for use as the principal source of heating in a residential dwelling or residential building, including a building (as defined in IC 8-1-2-36.5(a)) served by a master meter, as described in IC 8-1-2-36.5.
    (d) As used in this section, "heating energy supplier" means a person, including a trustee or receiver appointed by a court, engaged in furnishing or selling heating energy in Indiana.
    (e) A transaction to which this section applies is exempt from the state gross retail tax.
    (f) The department may establish streamlined procedures for

the implementation of this section that minimize or eliminate the:
        (1) the need to apply for an exemption certificate or a refund to obtain the exemption provided by this section; and
        (2) record keeping requirements and procedures that a retail merchant must follow to make retail transactions that are exempt under this section.
    (g) This section expires July 1, 2007.

SOURCE: IC 6-2.5-5-16.7; (06)IN1399.1.13. -->     SECTION 13. IC 6-2.5-5-16.7 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 16.7. (a) The sale of gasoline that is dispensed from a metered pump is exempt from the state gross retail tax.
    (b) The department may establish streamlined procedures for the implementation of this section that minimize or eliminate the:
        (1) need to apply for an exemption certificate or a refund to obtain the exemption provided by this section; and
        (2) record keeping requirements and procedures that a retail merchant must follow to make retail transactions that are exempt under this section.
    (c) This section expires July 1, 2007.

SOURCE: IC 6-2.5-7-3; (06)IN1399.1.14. -->     SECTION 14. IC 6-2.5-7-3 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 3. (a) Except as provided in IC 6-2.5-5-16.7, with respect to the sale of gasoline which that is dispensed from a metered pump, a retail merchant shall collect, for each unit of gasoline sold, state gross retail tax in an amount equal to the product, rounded to the nearest one-tenth of one cent ($0.001), of:
        (1) the lesser of the:
            (A)
price per unit; or
            (B) product of:
                (i) one dollar and fifty cents ($1.50); multiplied by
                (ii) the gallon conversion index;

         rounded to the nearest one cent ($0.01), before the addition of state and federal taxes; multiplied by
        (2) six percent (6%).
The retail merchant shall collect the state gross retail tax prescribed in this section even if the transaction is exempt from taxation under IC 6-2.5-5.
    (b) With respect to the sale of special fuel or kerosene which is dispensed from a metered pump, unless the purchaser provides an exemption certificate in accordance with IC 6-2.5-8-8, a retail merchant shall collect, for each unit of special fuel or kerosene sold, state gross

retail tax in an amount equal to the product, rounded to the nearest one-tenth of one cent ($0.001), of:
        (1) the price per unit before the addition of state and federal taxes; multiplied by
        (2) six percent (6%).
Unless the exemption certificate is provided, the retail merchant shall collect the state gross retail tax prescribed in this section even if the transaction is exempt from taxation under IC 6-2.5-5.
     (c) For purposes of this section, the gallon conversion index is the following:
        (1) One (1) if the unit of measure by which gasoline is sold is a gallon.
        (2) Five-tenths (0.5) if the unit of measure by which gasoline is sold is a half-gallon.
        (3) Twenty-six thousand four hundred seventeen one hundred thousandths (0.26417) if the unit of measure by which gasoline is sold is a liter.
        (4) An equivalent gallon conversion index specified by the department if the unit of measure by which gasoline is sold is not described in subdivision (1), (2), or (3).

SOURCE: IC 6-3.1-31; (06)IN1399.1.15. -->     SECTION 15. IC 6-3.1-31 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2006 (RETROACTIVE)]:
     Chapter 31. Credit for Sales Tax on Home Heating Energy
    Sec. 1. The definitions in IC 6-2.5 apply throughout this chapter.
    Sec. 2. As used in this chapter, "covered transaction" means a retail transaction:
        (1) involving the sale or furnishing of heating energy by a heating energy supplier to a consumer or residential rental housing lessor; and
        (2) for which the charges:
            (A) are invoiced in a single bill or statement for payment by the consumer or residential rental housing lessor; and
            (B) include any charges described in IC 6-2.5-1-5(c).
    Sec. 3. As used in this chapter, "consumer or residential rental housing lessor" means a person that receives heating energy from a heating energy supplier primarily for:
        (1) personal, family, or household residential purposes; or
        (2) use in a residential dwelling or building, including a building (as defined in IC 8-1-2-36.5(a)) served by a master meter, as described in IC 8-1-2-36.5, that is primarily rented to tenants who use the rented facilities primarily for personal,

family, or household residential purposes.
The term includes a person who receives heating energy through a program administered by the division of family and children under IC 12-14-11.
    Sec. 4. As used in this chapter, "credit" refers to a credit granted under this chapter.
    Sec. 5. As used in this chapter, "heating energy" means electricity, oil, gas, coal, propane, or any other fuel for use as the principal source of heating in a residential dwelling or residential building, including a building (as defined in IC 8-1-2-36.5(a)) served by a master meter, as described in IC 8-1-2-36.5.
    Sec. 6. As used in this section, "heating energy supplier" means a person, including a trustee or receiver appointed by a court, engaged in furnishing or selling heating energy in Indiana.
    Sec. 7. As used in this chapter, "pass through entity" means:
        (1) a corporation that is exempt from the adjusted gross income tax under IC 6-3-2-2.8(2);
        (2) a partnership;
        (3) a limited liability company; or
        (4) a limited liability partnership.
    Sec. 8. As used in this chapter, "state tax liability" means a taxpayer's total tax liability that is incurred under:
        (1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
        (2) IC 6-5.5 (the financial institutions tax); and
        (3) IC 27-1-18-2 (the insurance premiums tax);
as computed after the application of the credits that under IC 6-3.1-1-2 are to be applied before the credit provided by this chapter.
    Sec. 9. As used in this chapter, "taxpayer" means an individual or entity that has any state tax liability.
    Sec. 10. A taxpayer that pays a gross retail tax or use tax under IC 6-2.5 for a covered transaction in the taxpayer's taxable year is entitled to a credit against the taxpayer's state tax liability.
    Sec. 11. The amount of the credit is equal to the amount of gross retail tax or use tax paid in the taxpayer's taxable year for the covered transaction.
    Sec. 12. If a pass through entity is entitled to a credit but does not have state tax liability against which the tax credit may be applied, a shareholder, partner, or member of the pass through entity is entitled to a tax credit equal to:
        (1) the tax credit determined for the pass through entity for the taxable year; multiplied by


        (2) the percentage of the pass through entity's distributive income to which the shareholder, partner, or member is entitled.
    Sec. 13. If the amount of the taxpayer's credit in a taxable year exceeds the taxpayer's state tax liability for the taxable year, the taxpayer may carry the excess over to the taxpayer's following taxable years. The amount of the credit carryover from a taxable year shall be reduced to the extent that the carryover is used by the taxpayer to obtain a credit under this chapter for any subsequent taxable year. A taxpayer is not entitled to a carryback or a refund of any unused credit amount.

     Sec. 14. To receive the credit provided by this chapter, a taxpayer must claim the credit on the taxpayer's state tax return or returns in the manner prescribed by the department. The taxpayer shall submit to the department all information that the department determines is necessary for the calculation of the credit provided by this chapter.
SOURCE: IC 6-3.5-4-1; (06)IN1399.1.16. -->     SECTION 16. IC 6-3.5-4-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 1. As used in The following definitions apply throughout this chapter:
         (1) "Adopting entity" means any of the following:
            (A) The county council, for a county in which the county adjusted gross income tax is in effect on January 1 of a year in which an ordinance is adopted under this chapter.
            (B) The county income tax council, for a county in which the county option income tax is in effect on January 1 of a year in which an ordinance is adopted under this chapter.
            (C) The county council or the county income tax council, whichever acts first, for a county not covered by clause (A) or (B).

         (2) "Branch office" means a branch office of the bureau of motor vehicles.
         (3) "County council" includes the city-county council of a county that contains a consolidated city of the first class.
         (4) "County income tax council" refers to a county income tax council established by IC 6-3.5-6-2.
         (5) "Motor vehicle" means a vehicle which is subject to the annual license excise tax imposed under IC 6-6-5.
         (6) "Municipal legislative body" refers to any of the following:
            (A) A legislative body described in IC 36-1-2-9(4).
            (B) A legislative body described in IC 36-1-2-9(5).
        (7) "Municipality" has the meaning set forth in IC 36-1-2-11.

         (8) "Net annual license excise tax" means the tax due under IC 6-6-5 after the application of the adjustments and credits provided by that chapter.
         (9) "Surtax" means the annual license excise surtax imposed by a county council under this chapter.
SOURCE: IC 6-3.5-4-2; (06)IN1399.1.17. -->     SECTION 17. IC 6-3.5-4-2 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 2. (a) The county council An adopting entity of any county may, subject to the limitation limitations imposed by subsection subsections (c) and (f) and section 2.5 of this chapter, adopt an ordinance to impose an annual license excise surtax at the same rate or amount on each motor vehicle listed in subsection (b) that is registered in the county. The county council adopting entity may initially impose the surtax either:
        (1) at a rate of not less than two percent (2%) nor more than ten percent (10%); or
        (2) at a specific amount of at least seven dollars and fifty cents ($7.50) and not more than twenty-five dollars ($25).
However, the surtax on a vehicle may not be less than seven dollars and fifty cents ($7.50). The county council adopting entity shall state the surtax rate or amount in the ordinance which imposes the tax.
    (b) The license excise surtax applies to the following vehicles:
        (1) Passenger vehicles.
        (2) Motorcycles.
        (3) Trucks with a declared gross weight that does not exceed eleven thousand (11,000) pounds.
    (c) The county council adopting entity may not adopt an ordinance to impose the surtax unless it concurrently adopts an ordinance under IC 6-3.5-5 to impose the wheel tax.
    (d) Notwithstanding any other provision of this chapter or IC 6-3.5-5, ordinances adopted by a county council before June 1, 1983, March 15, 2006, to impose or change the annual license excise surtax and the annual wheel tax in the county remain in effect until the ordinances are amended or repealed under this chapter or IC 6-3.5-5.
    (e) Except as otherwise provided in an adopting or amending ordinance, the rate of the surtax is increased in each year that begins after the year in which the initial surtax ordinance or an amendment to the surtax ordinance first applies in a county. The increase is the surtax rate in effect for the immediately preceding year multiplied by the increase in the Federal Highway Administration Price Trends for Federal-Aid Highway Construction Composite Index published by the Federal Highway

Administration. An increase under this subsection in the surtax rates under an ordinance that first applied in a county before January 1, 2006, shall be computed as if 2006 were the first year in which the ordinance applied in the county if:
        (1) the adopting entity has not adopted an ordinance imposing the surtax in the county;
        (2) the legislative body of a municipality in that county adopts an ordinance under section 2.5 of this chapter imposing the surtax in the municipality; and
        (3) an ordinance subsequently adopted by the adopting entity does not apply to motor vehicles registered in the municipality.

SOURCE: IC 6-3.5-4-2.5; (06)IN1399.1.18. -->     SECTION 18. IC 6-3.5-4-2.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 2.5 (a) This section applies to a municipality in any county in which the surtax is not in effect on January 1, 2007.
    (b) The municipal legislative body may, subject to the limitation imposed by subsection (c), adopt an ordinance to impose an annual license excise surtax at the same rate or amount on each motor vehicle listed in subsection (c) that is registered in the municipality. The municipal legislative body may initially impose the surtax either at a:
        (1) rate of at least two percent (2%) but not more than ten percent (10%); or
        (2) specific amount of at least seven dollars and fifty cents ($7.50) but not more than twenty-five dollars ($25).
However, the surtax on a vehicle must be at least seven dollars and fifty cents ($7.50). The municipal legislative body shall state the surtax rate or amount in the ordinance that imposes the tax.
    (c) The license excise surtax applies to the following vehicles:
        (1) Passenger vehicles.
        (2) Motorcycles.
        (3) Trucks with a declared gross weight that does not exceed eleven thousand (11,000) pounds.
    (d) The municipal legislative body may not adopt an ordinance to impose the surtax unless it concurrently adopts an ordinance under IC.6-3.5-5 to impose the wheel tax.
    (e) Except as otherwise provided in an adopting or amending ordinance, the rate of the surtax is increased in each year that begins after the year in which the initial surtax ordinance or an amendment to the surtax ordinance first applies in a municipality.

The increase is the surtax rate in effect for the immediately preceding year multiplied by the increase in the Federal Highway Administration Price Trends for Federal-Aid Highway Construction Composite Index published by the Federal Highway Administration.
    (f) The municipal legislative body may not adopt an ordinance under this section if the adopting entity of the county in which the municipality is located has previously adopted an ordinance to impose the surtax under section 2 of this chapter.

SOURCE: IC 6-3.5-4-4.5; (06)IN1399.1.19. -->     SECTION 19. IC 6-3.5-4-4.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 4.5. (a) After January 1 but before July 1 of any year, the municipal legislative body may, subject to the limitations imposed by subsection (b), adopt an ordinance to rescind the surtax. If the municipal legislative body adopts such an ordinance, the surtax does not apply to a motor vehicle registered after December 31 of the year the ordinance is adopted.
    (b) The municipal legislative body may not adopt an ordinance to rescind the surtax unless it concurrently adopts an ordinance under IC.6-3.5-5 to rescind the wheel tax. In addition, the municipal legislative body may not adopt an ordinance to rescind the surtax if the municipality has pledged the surtax to any bonds, leases, or other obligations of the municipality.

SOURCE: IC 6-3.5-4-3; (06)IN1399.1.20. -->     SECTION 20. IC 6-3.5-4-3 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 3. (a) If a county council an adopting entity adopts an ordinance imposing the surtax after December 31 but before July 1 of the following year, a motor vehicle is subject to the tax if it is registered in the county after December 31 of the year in which the ordinance is adopted. If a county council an adopting entity adopts an ordinance imposing the surtax after June 30 but before the following January 1, a motor vehicle is subject to the tax if it is registered in the county after December 31 of the year following the year in which the ordinance is adopted. However, in the first year the surtax is effective, the surtax does not apply to the registration of a motor vehicle for the registration year that commenced in the calendar year preceding the year the surtax is first effective.
    (b) If a municipal legislative body adopts an ordinance imposing the surtax after December 31 but before July 1 of the following year, a motor vehicle is subject to the tax if it is registered in the municipality after December 31 of the year in which the ordinance

is adopted. If a municipal legislative body adopts an ordinance imposing the surtax after June 30 but before the following January 1, a motor vehicle is subject to the tax if it is registered in the municipality after December 31 of the year following the year in which the ordinance is adopted. However, in the first year the surtax is effective, the surtax does not apply to the registration of a motor vehicle for the registration year that commenced in the calendar year preceding the year the surtax is first effective.

SOURCE: IC 6-3.5-4-4; (06)IN1399.1.21. -->     SECTION 21. IC 6-3.5-4-4 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 4. (a) After January 1 but before July 1 of any year, the county council adopting entity may, subject to the limitations imposed by subsection (b), adopt an ordinance to rescind the surtax. If the county council adopting entity adopts such an ordinance, the surtax does not apply to a motor vehicle registered after December 31 of the year the ordinance is adopted.
    (b) The county council adopting entity may not adopt an ordinance to rescind the surtax unless it concurrently adopts an ordinance under IC 6-3.5-5 to rescind the wheel tax. In addition, the county council adopting entity may not adopt an ordinance to rescind the surtax if:
         (1) any portion of a loan obtained by the county under IC 8-14-8 is unpaid; or if
         (2) any bonds issued by the county under:
             (A) IC 8-14-9; or
            (B) IC 8-18-22;

        are outstanding;
         (3) the county has pledged revenues from the surtax to any bonds, leases, obligations, or other evidences of indebtedness of the county; or
        (4) a municipality in the county has pledged revenues from the surtax to any bonds, leases, obligations, or other evidences of indebtedness of the municipality.

SOURCE: IC 6-3.5-4-5; (06)IN1399.1.22. -->     SECTION 22. IC 6-3.5-4-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5. (a) The county council adopting entity may, subject to the limitations imposed by subsection (b), adopt an ordinance to increase or decrease the surtax rate or amount. The new surtax rate or amount must be within the range of rates or amounts prescribed by section 2 of this chapter. A new rate or amount that is established by an ordinance that is adopted after December 31 but before July 1 of the following year applies to motor vehicles registered after December 31 of the year in which the ordinance to change the rate or amount is adopted. A new rate or amount that is established by an ordinance that is adopted after June 30

but before January 1 of the following year applies to motor vehicles registered after December 31 of the year following the year in which the ordinance is adopted.
    (b) The county council adopting entity may not adopt an ordinance to decrease the surtax rate or amount under this section if:
         (1) any portion of a loan obtained by the county under IC 8-14-8 is unpaid; or if
         (2) any bonds issued by the county under:
             (A) IC 8-14-9; or
            (B) IC 8-18-22;

        are outstanding;
         (3) the county has pledged revenues from the surtax to any bonds, leases, obligations, or other evidences of indebtedness of the county; or
        (4) a municipality in the county has pledged revenues from the surtax to any bonds, leases, obligations, or other evidences of indebtedness of the municipality.

SOURCE: IC 6-3.5-4-5.5; (06)IN1399.1.23. -->     SECTION 23. IC 6-3.5-4-5.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5.5. (a) The municipal legislative body may, subject to the limitations imposed by subsection (b), adopt an ordinance to increase or decrease the surtax rate or amount. The new surtax rate or amount must be within the range of rates or amounts prescribed by section 2.5 of this chapter. A new rate or amount that is established by an ordinance that is adopted after December 31 but before July 1 of the following year applies to motor vehicles registered after December 31 of the year in which the ordinance to change the rate or amount is adopted. A new rate or amount that is established by an ordinance that is adopted after June 30 but before January 1 of the following year applies to motor vehicles registered after December 31 of the year following the year in which the ordinance is adopted.
    (b) The municipal legislative body may not adopt an ordinance to decrease the surtax rate or amount under this section if the municipality has pledged revenues from the surtax to any bonds, leases, obligations, or other evidences of indebtedness of the municipality.

SOURCE: IC 6-3.5-4-6; (06)IN1399.1.24. -->     SECTION 24. IC 6-3.5-4-6 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 6. (a) If a county council an adopting entity adopts an ordinance to impose, rescind, or change the rate or amount of the surtax, the county council adopting

entity shall send a copy of the ordinance to the commissioner of the bureau of motor vehicles.
    (b) If the municipal legislative body adopts an ordinance to impose, rescind, or change the rate or amount of the surtax, the municipal legislative body shall send a copy of the ordinance to the commissioner of the bureau of motor vehicles.

SOURCE: IC 6-3.5-4-7; (06)IN1399.1.25. -->     SECTION 25. IC 6-3.5-4-7 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 7. (a) A person may not register a motor vehicle in a county that has adopted the surtax unless the person pays the surtax due, if any, to the bureau of motor vehicles. The amount of the surtax due equals the greater of seven dollars and fifty cents ($7.50), the amount established under section 2 of this chapter, or the product of:
        (1) the amount determined under section 7.3 of this chapter for the vehicle, as adjusted under section 7.4 of this chapter; multiplied by
        (2) the surtax rate in effect at the time of registration, after the application of the index described in section 2(e) of this chapter.
The bureau of motor vehicles shall collect the surtax due, if any, at the time a motor vehicle is registered. However, the bureau may utilize its branch offices to collect the surtax.
    (b) A person may not register a motor vehicle in a municipality that has adopted the surtax unless the person pays the surtax due, if any, to the bureau of motor vehicles. The amount of the surtax due equals the greater of seven dollars and fifty cents ($7.50), the amount established under section 2.5 of this chapter, or the product of:
        (1) the amount determined under section 7.3 of this chapter for the vehicle, as adjusted under section 7.4 of this chapter; multiplied by
        (2) the surtax rate in effect at the time of registration, after the application of the index described in section 2.5(e) of this chapter.

SOURCE: IC 6-3.5-4-8; (06)IN1399.1.26. -->     SECTION 26. IC 6-3.5-4-8 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 8. (a) The surtax collected by a branch office shall be deposited daily by the branch manager in a separate account in a depository designated by the state board of finance.
    (b) On or before the tenth day of the month following the month in which surtax is collected at a branch office, the branch office manager shall remit the surtax to the fiscal officer of the

municipality that imposed the surtax. Concurrently with the remittance, the branch office manager shall file a surtax collections report with the municipal fiscal officer. The branch manager shall prepare the report on forms prescribed by the state board of accounts.

SOURCE: IC 6-3.5-4-11; (06)IN1399.1.27. -->     SECTION 27. IC 6-3.5-4-11 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 11. If surtax is collected directly by the bureau of motor vehicles, instead of at a branch office, the commissioner of the bureau shall:
        (1) remit the surtax to, and file a surtax collections report with, the appropriate:
             (A) county treasurer; or
            (B) municipal fiscal officer;
and
        (2) file a surtax collections report with the appropriate:
            (A)
county auditor; or
            (B) municipal fiscal officer;

in the same manner and at the same time that a branch office manager is required to remit and report under section 9 of this chapter.
SOURCE: IC 6-3.5-4-13; (06)IN1399.1.28. -->     SECTION 28. IC 6-3.5-4-13 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 13. (a) In the case of a county that does not contain a consolidated city of the first class, the county treasurer shall deposit the surtax revenues in a fund to be known as the "_________ County Surtax Fund".
    (b) Before the twentieth day of each month, the county auditor shall allocate the money deposited in the county surtax fund during that month among the county and the cities and the towns in the county. The county auditor shall allocate the money to counties, cities, and towns under IC 8-14-2-4(c)(1) through IC 8-14-2-4(c)(3).
    (c) Before the twenty-fifth day of each month, the county treasurer shall distribute to the county and the cities and towns in the county the money deposited in the county surtax fund during that month. The county treasurer shall base the distribution on allocations made by the county auditor for that month under subsection (b).
    (d) A county, city, or town may only use the surtax revenues it receives under this section to construct, reconstruct, repair, or maintain streets and roads under its jurisdiction.
     (e) A county, city, or town may pledge surtax revenues received under this section in accordance with IC 5-1-14-4.
SOURCE: IC 6-3.5-4-13.5; (06)IN1399.1.29. -->     SECTION 29. IC 6-3.5-4-13.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 13.5. (a) In the case of a municipality other than a consolidated city, the municipal fiscal

officer shall deposit the surtax revenues in a fund to be known as the "(City or Town) of_________(name of municipality) Surtax Fund".
    (b) The municipality may use the surtax revenues it receives under this section to construct, reconstruct, repair, or maintain streets and roads under its jurisdiction.
    (c) Revenues received by a municipality under this section may be pledged in accordance with IC 5-1-14-4.

SOURCE: IC 6-3.5-5-1; (06)IN1399.1.30. -->     SECTION 30. IC 6-3.5-5-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 1. As used in The following definitions apply throughout this chapter:
         (1) "Adopting entity" means any of the following:
            (A) The county council, for a county in which the county adjusted gross income tax is in effect on January 1 of a year in which an ordinance is adopted under this chapter.
            (B) The county income tax council, for a county in which the county option income tax is in effect on January 1 of a year in which an ordinance is adopted under this chapter.
            (C) The county council or the county income tax council, whichever acts first, for a county not covered by clause (A) or (B).

         (2) "Branch office" means a branch office of the bureau of motor vehicles.
         (3) "Bus" has the meaning set forth in IC 9-13-2-17(a).
         (4) "County council" includes the city-county council of a county that contains a consolidated city of the first class.
         (5) "County income tax council" refers to a county income tax council established by IC 6-3.5-6-2.
         (6) "Municipal legislative body" refers to any of the following:
            (A) A legislative body described in IC 36-1-2-9(4).
            (B) A legislative body described in IC 36-1-2-9(5).
        (7) "Municipality" has the meaning set forth in IC 36-1-2-11.

         (8) "Political subdivision" has the meaning set forth in IC 34-6-2-110.
         (9) "Recreational vehicle" has the meaning set forth in IC 9-13-2-150.
         (10) "Semitrailer" has the meaning set forth in IC 9-13-2-164(a).
         (11) "State agency" has the meaning set forth in IC 34-4-16.5-2.
         (12) "Tractor" has the meaning set forth in IC 9-13-2-180.
         (13) "Trailer" has the meaning set forth in IC 9-13-2-184(a).
         (14) "Truck" has the meaning set forth in IC 9-13-2-188(a).
         (15) "Wheel tax" means the tax imposed under this chapter.
SOURCE: IC 6-3.5-5-2; (06)IN1399.1.31. -->     SECTION 31. IC 6-3.5-5-2 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 2. (a) The county council adopting entity of any county may, subject to the limitation limitations imposed by subsection subsections (b) and (e) and section 2.5 of this chapter, adopt an ordinance to impose an annual wheel tax on each vehicle which:
        (1) is included in one (1) of the classes of vehicles listed in section 3 of this chapter;
        (2) is not exempt from the wheel tax under section 4 of this chapter; and
        (3) is registered in the county.
    (b) The county council adopting entity of a county may not adopt an ordinance to impose the wheel tax unless it concurrently adopts an ordinance under IC 6-3.5-4 to impose the annual license excise surtax.
    (c) The county council adopting entity may impose the wheel tax at a different rate for each of the classes of vehicles listed in section 3 of this chapter. In addition, the county council may establish different rates within the classes of buses, semitrailers, trailers, tractors, and trucks based on weight classifications of those vehicles that are established by the bureau of motor vehicles for use throughout Indiana. However, the initial wheel tax rate for a particular class or weight classification of vehicles may not be less than five dollars ($5) and may not exceed forty dollars ($40). The county council adopting entity shall state the initial wheel tax rates in the ordinance that imposes the tax.
    (d) Except as otherwise provided in an adopting or amending ordinance, the rate of the wheel tax is increased in each year that begins after the year in which the initial wheel tax ordinance or an amendment to the wheel tax ordinance first applies in a county. The increase is the wheel tax rate in effect for the immediately preceding year multiplied by the increase in the Federal Highway Administration Price Trends for Federal-Aid Highway Construction Composite Index published by the Federal Highway Administration. An increase under this subsection in the wheel tax rates under an ordinance that first applied in a county before January 1, 2006, shall be computed as if 2006 were the first year in which the ordinance applied in the county.
    (e) If:
        (1) the adopting entity of a county has not adopted an ordinance imposing the wheel tax in the county;
        (2) the legislative body of a municipality in that county adopts

an ordinance under section 2.5 of this chapter imposing the wheel tax in the municipality; and
        (3) an ordinance subsequently adopted by the adopting entity of the county does not apply to motor vehicles registered in the municipality.

SOURCE: IC 6-3.5-5-2.5; (06)IN1399.1.32. -->     SECTION 32. IC 6-3.5-5-2.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 2.5. (a) This section applies to a municipality in any county in which the wheel tax is not in effect on January 1, 2007.
    (b) The municipal legislative body may, subject to the limitation imposed by subsection (c), adopt an ordinance to impose an annual wheel tax on each vehicle that:
        (1) is included in one (1) of the classes of vehicles listed in section 3 of this chapter;
        (2) is not exempt from the wheel tax under section 4 of this chapter; and
        (3) is registered in the municipality.
    (c) The municipal legislative body may not adopt an ordinance to impose the wheel tax unless it concurrently adopts an ordinance under IC.6-3.5-4 to impose the annual license excise surtax.
    (d) The municipal legislative body may impose the wheel tax at a different rate for each of the classes of vehicles listed in section 3 of this chapter. In addition, the municipal legislative body may establish different rates within the classes of buses, semitrailers, trailers, tractors, and trucks based on weight classifications of those vehicles that are established by the bureau of motor vehicles for use throughout Indiana. However, the initial wheel tax rate for a particular class or weight classification of vehicles may not be less than five dollars ($5) and may not exceed forty dollars ($40). The municipal legislative body shall state the initial wheel tax rates in the ordinance that imposes the tax.
    (e) Except as otherwise provided in an adopting or amending ordinance, the rate of the wheel tax is increased in each year that begins after the later of December 31, 2006, or the year in which the initial wheel tax ordinance or an amendment to the wheel tax ordinance first applies in a municipality. The increase is the wheel tax rate in effect for the immediately preceding year multiplied by the increase in the Federal Highway Administration Price Trends for Federal-Aid Highway Construction Composite Index published by the Federal Highway Administration.
    (f) The municipal legislative body may not adopt an ordinance

under this section if the adopting entity of the county in which the municipality is located has previously adopted an ordinance to impose the wheel tax under section 2 of this chapter.

SOURCE: IC 6-3.5-5-5; (06)IN1399.1.33. -->     SECTION 33. IC 6-3.5-5-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5. (a) If a county council an adopting entity adopts an ordinance imposing the wheel tax after December 31 but before July 1 of the following year, a vehicle described in section 2(a) of this chapter is subject to the tax if it is registered in the county after December 31 of the year in which the ordinance is adopted. If a county council an adopting entity adopts an ordinance imposing the wheel tax after June 30 but before the following January 1, a vehicle described in section 2(a) of this chapter is subject to the tax if it is registered in the county after December 31 of the year following the year in which the ordinance is adopted. However, in the first year the tax is effective, the tax does not apply to the registration of a motor vehicle for the registration year that commenced in the calendar year preceding the year the tax is first effective.
     (b) If a municipal legislative body adopts an ordinance imposing the wheel tax after December 31 but before July 1 of the following year, a vehicle described in section 2.5(b) of this chapter is subject to the tax if it is registered in the municipality after December 31 of the year in which the ordinance is adopted. If a municipal legislative body adopts an ordinance imposing the wheel tax after June 30 but before the following January 1, a vehicle described in section 2.5(b) of this chapter is subject to the tax if it is registered in the municipality after December 31 of the year following the year in which the ordinance is adopted. However, in the first year the tax is effective, the tax does not apply to the registration of a motor vehicle for the registration year that commenced in the calendar year preceding the year the tax is first effective.
SOURCE: IC 6-3.5-5-6; (06)IN1399.1.34. -->     SECTION 34. IC 6-3.5-5-6 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 6. (a) After January 1 but before July 1 of any year, the county council adopting entity may, subject to the limitations imposed by subsection (b), adopt an ordinance to rescind the wheel tax. If the county council adopting entity adopts such an ordinance, the wheel tax does not apply to a vehicle registered after December 31 of the year the ordinance is adopted.
    (b) The county council adopting entity may not adopt an ordinance to rescind the wheel tax unless it concurrently adopts an ordinance under IC 6-3.5-4 to rescind the annual license excise surtax. In

addition, the county council adopting entity may not adopt an ordinance to rescind the wheel tax if:
         (1) any portion of a loan obtained by the county under IC 8-14-8 is unpaid; or if
         (2) any bonds issued by the county under:
             (A) IC 8-14-9; or
            (B) IC 8-18-22;

        are outstanding;
         (3) the county has pledged revenues from the wheel tax to any bonds, leases, obligations, or other evidences of indebtedness of the county; or
        (4) a municipality in the county has pledged revenues from the wheel tax to any bonds, leases, obligations, or other evidences of indebtedness of the municipality.

SOURCE: IC 6-3.5-5-6.5; (06)IN1399.1.35. -->     SECTION 35. IC 6-3.5-5-6.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 6.5. (a) After January 1 but before July 1 of any year, the municipal legislative body may, subject to the limitations imposed by subsection (b), adopt an ordinance to rescind the wheel tax. If the municipal legislative body adopts such an ordinance, the wheel tax does not apply to a vehicle registered after December 31 of the year the ordinance is adopted.
    (b) The municipal legislative body may not adopt an ordinance to rescind the wheel tax unless it concurrently adopts an ordinance under IC.6-3.5-4 to rescind the annual license excise surtax. In addition, the municipal legislative body may not adopt an ordinance to rescind the surtax if the municipality has pledged the wheel tax to any bonds, leases, obligations, or other evidences of indebtedness of the municipality.

SOURCE: IC 6-3.5-5-7; (06)IN1399.1.36. -->     SECTION 36. IC 6-3.5-5-7 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 7. (a) The county council adopting entity may, subject to the limitations imposed by subsection (b), adopt an ordinance to increase or decrease the wheel tax rates. The new wheel tax rates must be within the range of rates prescribed by section 2 of this chapter. New rates that are established by an ordinance that is adopted after December 31 but before July 1 of the following year apply to vehicles registered after December 31 of the year in which the ordinance to change the rates is adopted. New rates that are established by an ordinance that is adopted after June 30 but before July 1 of the following year apply to motor vehicles registered after December 31 of the year following the year in which the ordinance is adopted.
    (b) The county council adopting entity may not adopt an ordinance to decrease the wheel tax rate under this section if:
         (1) any portion of a loan obtained by the county under IC 8-14-8 is unpaid; or if
         (2) any bonds issued by the county under:
             (A) IC 8-14-9; or
            (B) IC 8-18-22;

        are outstanding;
         (3) the county has pledged revenues from the wheel tax to any bonds, leases, obligations, or other evidences of indebtedness of the county; or
        (4) a municipality in the county has pledged revenues from the wheel tax to any bonds, leases, obligations, or other evidences of indebtedness of the municipality.

SOURCE: IC 6-3.5-5-7.5; (06)IN1399.1.37. -->     SECTION 37. IC 6-3.5-5-7.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 7.5. (a) The municipal legislative body may, subject to the limitations imposed by subsection (b), adopt an ordinance to increase or decrease the wheel tax rates. The new wheel tax rates must be within the range of rates prescribed by section 2.5 of this chapter. New rates that are established by an ordinance that is adopted after December 31 but before July 1 of the following year apply to vehicles registered after December 31 of the year in which the ordinance to change the rates is adopted. New rates that are established by an ordinance that is adopted after June 30 but before July 1 of the following year apply to motor vehicles registered after December 31 of the year following the year in which the ordinance is adopted.
    (b) The municipal legislative body may not adopt an ordinance to decrease the wheel tax rate under this section if the municipality has pledged revenues from the wheel tax to any bonds, leases, obligations, or other evidences of indebtedness of the municipality.

SOURCE: IC 6-3.5-5-8; (06)IN1399.1.38. -->     SECTION 38. IC 6-3.5-5-8 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 8. (a) If a county council an adopting entity adopts an ordinance to impose, rescind, or change the rates of the wheel tax, the county council adopting entity shall send a copy of the ordinance to the commissioner of the bureau of motor vehicles.
    (b) If a municipal legislative body adopts an ordinance to impose, rescind, or change the rates of the wheel tax, the municipal legislative body shall send a copy of the ordinance to the commissioner of the bureau of motor vehicles.
SOURCE: IC 6-3.5-5-9; (06)IN1399.1.39. -->     SECTION 39. IC 6-3.5-5-9 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 9. (a) A person may not register a vehicle in a county which has adopted the wheel tax unless he pays the wheel tax due, if any, to the bureau of motor vehicles. The amount of the wheel tax due is based on the wheel tax rate, for that class of vehicle, in effect at the time of registration, after the application of the index described in section 2(d) of this chapter. The bureau of motor vehicles shall collect the wheel tax due, if any, at the time a motor vehicle is registered. However, the bureau may utilize its branch offices to collect the wheel tax.
    (b) A person may not register a vehicle in a municipality that has adopted the wheel tax unless the person pays the wheel tax due, if any, to the bureau of motor vehicles. The amount of the wheel tax due is based on the wheel tax rate, for that class of vehicle, in effect at the time of registration, after the application of the index described in section 2.5(e) of this chapter. The bureau of motor vehicles shall collect the wheel tax due, if any, at the time a motor vehicle is registered. However, the bureau may use its branch offices to collect the wheel tax.
SOURCE: IC 6-3.5-5-11; (06)IN1399.1.40. -->     SECTION 40. IC 6-3.5-5-11 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 11. (a) On or before the tenth day of the month following the month in which wheel tax is collected at a branch office, the branch office manager shall remit the wheel tax to the county treasurer of the county that imposed the wheel tax. Concurrently with the remittance, the branch office manager shall file a wheel tax collections report with the county treasurer and the county auditor. The branch manager shall prepare the report on forms prescribed by the state board of accounts.
    (b) On or before the tenth day of the month following the month in which the wheel tax is collected at a branch office, the branch office manager shall remit the wheel tax to the fiscal officer of the municipality that imposed the wheel tax. Concurrently with the remittance, the branch office manager shall file a wheel tax collections report with the municipal fiscal officer. The branch manager shall prepare the report on forms prescribed by the state board of accounts.
SOURCE: IC 6-3.5-5-13; (06)IN1399.1.41. -->     SECTION 41. IC 6-3.5-5-13 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 13. If the wheel tax is collected directly by the bureau of motor vehicles, instead of at a branch office, the commissioner of the bureau shall:
        (1) remit the wheel tax to, and file a wheel tax collections report with, the appropriate:
             (A) county treasurer; or
            (B) municipal fiscal officer;
and
        (2) file a wheel tax collections report with the appropriate:
            (A)
county auditor; or
            (B) municipal fiscal officer.

in the same manner and at the same time that a branch office manager is required to remit and report under section 11 of this chapter.
SOURCE: IC 6-3.5-5-15; (06)IN1399.1.42. -->     SECTION 42. IC 6-3.5-5-15 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 15. (a) In the case of a county that does not contain a consolidated city, the county treasurer shall deposit the wheel tax revenues in a fund to be known as the "County Wheel Tax Fund".
    (b) Before the twentieth day of each month, the county auditor shall allocate the money deposited in the county wheel tax fund during that month among the county and the cities and the towns in the county. The county auditor shall allocate the money to counties, cities, and towns under IC 8-14-2-4(c)(1) through IC 8-14-2-4(c)(3).
    (c) Before the twenty-fifth day of each month, the county treasurer shall distribute to the county and the cities and towns in the county the money deposited in the county wheel tax fund during that month. The county treasurer shall base the distribution on allocations made by the county auditor for that month under subsection (b).
    (d) A county, city, or town may only use the wheel tax revenues it receives under this section:
        (1) to construct, reconstruct, repair, or maintain streets and roads under its jurisdiction; or
        (2) as a contribution to an authority established under IC 36-7-23.
     (e) A county, city, or town may pledge wheel tax revenues received under this section in accordance with IC 5-1-14-4.
SOURCE: IC 6-3.5-5-15.5; (06)IN1399.1.43. -->     SECTION 43. IC 6-3.5-5-15.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 15.5. (a) In the case of a municipality other than a consolidated city, the municipal fiscal officer shall deposit the wheel tax revenues in a fund to be known as the "(City or Town) of _______ (name of municipality) Wheel Tax Fund".
    (b) A municipality may use the wheel tax revenues it receives under this section
only:
        (1) to construct, reconstruct, repair, or maintain streets and roads under its jurisdiction; or
        (2) as a contribution to an authority established under IC.36-7-23.
    (c) Revenues received by a municipality under this section may be pledged in accordance with IC 5-1-14-4.

SOURCE: IC 6-7-1-30.1; (06)IN1399.1.44. -->     SECTION 44. IC 6-7-1-30.1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 30.1. (a) Two-thirds (2/3) of the money in the cigarette tax fund is annually appropriated to the cities and towns of this state and to certain local governmental entities.
    (b) The amount which is allocated to each city or town under this section equals the product of:
        (1) the total amount appropriated under subsection (a); multiplied by
        (2) a fraction, the numerator of which is the population of the city or town, and the denominator of which is the total population of all the cities and towns of Indiana.
    (c) The auditor of state shall calculate and distribute the amount allocated to each city or town under this section on or before June 1 and December 1 of each year. To make these semiannual distributions, the auditor of state shall issue warrants drawn on the cigarette tax fund to the officials designated in subsection (d) or (e).
    (d) For a consolidated city, or a city or town which is located in the same county as the consolidated city, the auditor of state shall issue a warrant for:
        (1) three-fourteenths (3/14) of the money allocated to the city or town under subsection (b) to the fiscal officer of the city or town; and
        (2) the remaining eleven-fourteenths (11/14) of the money to the treasurer of that county.
The fiscal officer of the city or town shall deposit the money distributed to him the fiscal officer under this subsection in the city's or town's general fund. The county treasurer shall annually deposit three hundred fifty thousand dollars ($350,000) which he the county treasurer receives under this subsection in the capital improvement bond fund of the county. The remainder of the money which the county treasurer receives under this subsection is appropriated to the department of transportation of the consolidated city. The county treasurer shall serve as custodian of the money so appropriated to the department.
    (e) For a city or town which is not located in the same county as a consolidated city, the auditor of state shall issue a warrant for the total amount allocated to the city or town under subsection (b) to the fiscal officer of the city or town. The fiscal officer shall deposit three-fourteenths (3/14) of the money in the city's or town's general fund, and he shall deposit the remaining eleven-fourteenths (11/14) of

the money in the city's or town's cumulative capital improvement fund. The fiscal body of the city or town shall annually determine, by ordinance or resolution, the part of the allocated amount to be deposited in the city's or town's:
        (1) general fund; and
        (2) cumulative capital improvement fund.

SOURCE: IC 6-8.1-1-1; (06)IN1399.1.45. -->     SECTION 45. IC 6-8.1-1-1, AS AMENDED BY P.L.214-2005, SECTION 25, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE MAY 1, 2006]: Sec. 1. "Listed taxes" or "taxes" includes only the pari-mutuel taxes (IC 4-31-9-3 through IC 4-31-9-5); the river boat admissions tax (IC 4-33-12); the river boat wagering tax (IC 4-33-13); the gross income tax (IC 6-2.1) (repealed); the utility receipts tax (IC 6-2.3); the state gross retail and use taxes (IC 6-2.5); the adjusted gross income tax (IC 6-3); the supplemental net income tax (IC 6-3-8) (repealed); the county adjusted gross income tax (IC 6-3.5-1.1); the county option income tax (IC 6-3.5-6); the county economic development income tax (IC 6-3.5-7); the municipal option income tax (IC 6-3.5-8); the auto rental excise tax (IC 6-6-9); the financial institutions tax (IC 6-5.5); the gasoline tax (IC 6-6-1.1); the alternative fuel permit fee (IC 6-6-2.1); the special fuel tax (IC 6-6-2.5); the motor carrier fuel tax (IC 6-6-4.1); a motor fuel tax collected under a reciprocal agreement under IC 6-8.1-3; the motor vehicle excise tax (IC 6-6-5); the commercial vehicle excise tax (IC 6-6-5.5); the hazardous waste disposal tax (IC 6-6-6.6); the cigarette tax (IC 6-7-1); the beer excise tax (IC 7.1-4-2); the liquor excise tax (IC 7.1-4-3); the wine excise tax (IC 7.1-4-4); the hard cider excise tax (IC 7.1-4-4.5); the malt excise tax (IC 7.1-4-5); the petroleum severance tax (IC 6-8-1); the various innkeeper's taxes (IC 6-9 and IC 6-10-6); the various food and beverage taxes (IC 6-9); the county admissions tax (IC 6-9-13 and IC 6-9-28); a local sales tax (IC 6-10-3); a local food and beverage tax (IC 6-10-4); a supplemental local income tax (IC 6-10-6); the oil inspection fee (IC 16-44-2); the emergency and hazardous chemical inventory form fee (IC 6-6-10); the penalties assessed for oversize vehicles (IC 9-20-3 and IC 9-30); the fees and penalties assessed for overweight vehicles (IC 9-20-4 and IC 9-30); the underground storage tank fee (IC 13-23); the solid waste management fee (IC 13-20-22); and any other tax or fee that the department is required to collect or administer.
SOURCE: IC.6-10; (06)IN1399.1.46. -->     SECTION 46. IC.6-10 IS ADDED TO THE INDIANA CODE AS A NEW ARTICLE TO READ AS FOLLOWS [EFFECTIVE MAY 1, 2006]:
     ARTICLE 10. HOMETOWN MATTERS
    Chapter 1. General Policy; Purpose; Applicability
    Sec. 1. The general assembly finds and determines the following:
        (1) The diversification of revenue sources for financing cities, towns, and counties is critical to the economic well-being of Indiana and its communities.
        (2) Reducing the reliance of cities, towns, and counties on ad valorem property taxes to fund their capital and noncapital needs will serve to encourage investment in Indiana, further enhancing the economic well-being of Indiana and its communities.
        (3) Encouraging the use of nonproperty tax revenues, whenever feasible, by cities, towns, and counties will improve the quality of life in the Indiana's communities.
        (4) For some communities, property tax revenues are the only viable source of funding, and those communities should not be penalized for factors beyond their control.
        (5) Reducing reliance on property taxes by cities, towns, and counties will in turn reduce the amount of money required to make distributions from the state property tax replacement fund.
        (6) Encouraging diversity of local government revenue sources will encourage cities, towns, and counties to operate more effectively and efficiently.
    Sec. 2. The purposes of this article are to do the following:
        (1) Encourage cities, towns, and counties to reduce their reliance on ad valorem property taxes by authorizing the imposition of local food and beverage, innkeeper's, sales, and supplemental income taxes to provide revenues to:
            (A) replace property tax revenues; and
            (B) provide additional revenue for cities, towns, and counties.
        (2) Reduce the required distributions from the state property tax replacement fund.
    Sec. 3. (a) This article applies only to cities, towns, and counties.
    (b) This article does not apply to townships, school corporations, or any other municipal corporation that is not a city, town, or county.
    (c) This article does not apply to special taxing districts.
    Chapter 2. Definitions
    Sec. 1. Except as otherwise provided in this article, the definitions in IC.36-1-2 and this chapter apply throughout this article.
    Sec. 2. "Adjusted gross income" has the meaning set forth in IC.6-3-1-3.5(a). However, in the case of a taxpayer who is not a resident of the unit that has imposed a supplemental local income tax under IC.6-10-6, the term includes only adjusted gross income derived from the taxpayer's principal place of business or employment.
    Sec. 3. "Adopting entity" means:
        (1) for a county:
            (A) the county income tax council if the county option income tax is in effect on January 1 of the year in which an ordinance is considered under this article;
            (B) the county fiscal body if the county adjusted gross income tax is in effect on January 1 of the year in which an ordinance is considered under this article; or
            (C) either:
                (i) the county income tax council; or
                (ii) the county fiscal body;
            whichever acts first, for a county not covered by clause (A) or (B); and
        (2) for a municipality, the municipal fiscal body.
    Sec. 4. "Bonds" has the meaning set forth in IC.5-1-11-1.
    Sec. 5. "Capital" means any project or program that is capital in nature, involves the formation of capital for funding, or may be capitalized under generally accepted accounting principles. The term includes acquisition of real or personal property, creation or improvement of infrastructure, and acquisition, improvement, construction, or installation of buildings, structures, and equipment.
    Sec. 6. "County income tax council" means a council established by IC.6-3.5-6-2.
    Sec. 7. "Department" means the department of state revenue.
    Sec. 8. "Hometown revenue option" refers to the following:
        (1) A local sales tax.
        (2) A local food and beverage tax.
        (3) A local innkeeper's tax.
        (4) A supplemental local income tax.
    Sec. 9. "Obligations" has the meaning set forth in IC.5-1-3-1(b).
    Sec. 10. "Operating" refers to an expense that is not capital in nature.
    Sec. 11. "Taxpayer" means the following:
        (1) For a county, an individual who, for a year:
            (A) resides in the county on January 1 of a calendar year;

or
            (B) maintains a principal place of business or employment in the county on January 1 of a calendar year.
        (2) For a city or town, an individual who, for a year:
            (A) resides in the city or town on January 1 of a calendar year; or
            (B) maintains a principal place of business or employment in the city or town on January 1 of a calendar year.
    Sec. 12. (a) "Unit" means a county, city, or town.
    (b) The term does not include a township.
    Chapter 3. Local Sales Taxes
    Sec. 1. (a) The adopting entity of a county may adopt an ordinance to impose an excise tax known as the unit's local sales tax on transactions described in section 2 of this chapter in the county.
    (b) After March 31, 2007, the adopting entity of a municipality may adopt an ordinance to impose an excise tax known as the unit's local sales tax on transactions described in section 2 of this chapter in the municipality, if the adopting entity of the county in which a majority of the territory of the municipality is located has not previously adopted a local sales tax under this chapter.
    (c) An adopting entity that is a county income tax council must use the procedures set forth in IC.6-3.5-6 concerning the imposition of the county option income tax to adopt an ordinance to:
        (1) impose;
        (2) repeal; or
        (3) increase or decrease the rate of;
a local sales tax under this chapter.
    (d) The adopting entity that adopts the ordinance shall provide a certified copy of the ordinance to the department.
    (e) The ordinance takes effect on the first day of the month specified in the ordinance. However, the effective date may not be any sooner than the first day of the month that follows, by at least forty-five (45) days, the month in which the ordinance is adopted.
    Sec. 2. A local sales tax imposed under this chapter applies to any transaction on which the state gross retail is imposed under IC.6-2.5 and that occurs in the unit imposing the tax.
    Sec. 3. (a) The local sales tax may be imposed at a rate specified by the adopting entity in an ordinance. The rate must be in increments of twenty-five hundredths of one percent (0.25%) up to a maximum of one percent (1%).
    (b) An ordinance adopted by the adopting entity of a county

must specify the basis upon which revenues from the local sales tax will be distributed. Except as provided in section 4(a) of this chapter, revenues may be distributed according to the following:
        (1) Population.
        (2) Location of collection.
        (3) Any combination of subdivision (1) or (2).
Except as provided in section 4(a) of this chapter, if the ordinance fails to specify a formula for distribution, revenues from the local sales tax shall be distributed according to population.
    (c) Except as provided in section 4(b) of this chapter, if the adopting entity of a municipality adopts an ordinance to impose a local sales tax under this chapter, the revenues from the local sales tax must be distributed to the municipality.
    Sec. 4. (a) The adopting entities of two (2) or more adjacent counties may adopt substantially identical ordinances:
        (1) to impose the local sales tax under this chapter in their respective counties; and
        (2) to provide for the distribution of revenues from the local sales tax in any manner the counties consider appropriate.
However, a distribution of revenues under this subsection must include a distribution of revenues from the local sales tax to all municipalities in each county in an amount not less than the amount that would be distributed to the municipalities based upon population.
    (b) The adopting entities of two (2) or more municipalities in a county or in adjacent counties may adopt substantially identical ordinances:
        (1) to impose the local sales tax under this chapter in their respective municipalities; and
        (2) to provide for the distribution of revenues from the local sales tax in any manner the municipalities consider appropriate.
    Sec. 5. (a) If a unit has outstanding bonds, leases, obligations, or other evidences of indebtedness, that are payable from a local sales tax imposed under this chapter, the tax may not be repealed or decreased below a rate that would produce one and twenty-five hundredths (1.25) times the total of the highest annual payment requirements due from the local sales tax on those bonds, leases, obligations, or other evidences of indebtedness, to their final maturity.
    (b) For purposes of subsection (a), the determination of a tax rate sufficient to produce one and twenty-five hundredths (1.25)

times the total of the highest annual payment requirements shall be based on an average of the immediately preceding three (3) years collections for the local sales tax, if the tax has been imposed for the last preceding three (3) years. If the local sales tax has not been imposed for the last preceding three (3) years, the tax may not be reduced below a rate that would produce one and twenty-five hundredths (1.25) times the total of the highest annual payment requirements due from local sale tax on those bonds, leases, obligations, or other evidences of indebtedness, based upon a study by a qualified accountant or financial adviser.
    (c) If no bonds, leases, obligations, or other evidences of indebtedness of a unit are outstanding that are payable from a local sales tax imposed under this chapter, the tax may be repealed or the rate reduced at the discretion of the adopting entity.
    Sec. 6. Revenue from the tax shall be collected, deposited, and used as provided by IC 6-10-11.
    Chapter 4. Local Food and Beverage Tax
    Sec. 1. (a) The adopting entity of a county may adopt an ordinance to impose an excise tax known as the unit's local food and beverage tax on transactions described in section 2 of this chapter in the county.
    (b) After March 31, 2007, the adopting entity of a municipality may adopt an ordinance to impose an excise tax known as the unit's local food and beverage tax on transactions described in section 2 of this chapter in the municipality, if the adopting entity of the county in which a majority of the territory of the municipality is located has not previously adopted a local food and beverage tax under this chapter.
    (c) An adopting entity that is a county income tax council must use the procedures set forth in IC.6-3.5-6 concerning the imposition of the county option income tax to adopt an ordinance to:
        (1) impose;
        (2) repeal; or
        (3) increase or decrease the rate of;
a local food and beverage tax under this chapter.
    (d) The adopting entity that adopts the ordinance shall provide a certified copy of the ordinance to the department.
    (e) The ordinance takes effect on the first day of the month specified in the ordinance. However, the effective date may not be any sooner than the first day of the month that follows, by at least forty-five (45) days, the month the ordinance is adopted.
    (f) A tax under this chapter is in addition to any food and

beverage tax under IC 6-9.
    Sec. 2. (a) Except as provided in subsection (c), a food and beverage tax imposed under this chapter applies to any transaction in which food or a beverage is furnished, prepared, or served:
        (1) for consumption at a location, or on equipment, provided by a retail merchant;
        (2) in the unit in which the tax is imposed; and
        (3) by the retail merchant for consideration.
    (b) Transactions described in subsection (a)(1) include transactions in which food or a beverage is:
        (1) served by a retail merchant off the merchant's premises;
        (2) sold by a retail merchant who ordinarily bags, wraps, or packages the food or beverage for immediate consumption on or near the retail merchant's premises, including food or beverages sold on a "take out" or "to go" basis; or
        (3) sold by a street vendor.
    (c) A food and beverage tax imposed under this chapter does not apply to the furnishing, preparing, or serving of any food or beverage in a transaction that is exempt, or to the extent the transaction is exempt, from the state gross retail tax imposed under IC.6-2.5.
    Sec. 3. The food and beverage tax imposed under this chapter is imposed on the gross retail income received by the retail merchant from the transaction at a rate specified by the adopting entity in an ordinance. The rate must be in increments of twenty-five hundredths of one percent (0.25%) up to a maximum of one percent (1%).
    Sec. 4. (a) For purposes of this chapter, the gross retail income received by the retail merchant from a transaction does not include:
        (1) the amount of tax imposed on the transaction under IC.6-2.5;
        (2) the amount of tax imposed under IC 6-9, if any; or
        (3) the amount of tax imposed under IC.6-10-4, if any.
    (b) An ordinance adopted by the adopting entity of a county must specify the basis upon which revenues from the local food and beverage tax will be distributed. Except as provided in section 4(a) of this chapter, revenues may be distributed according to the following:
        (1) Population.
        (2) Location of collection.
        (3) Any combination of subdivisions (1) and (2).


Except as provided in section 5(a) of this chapter, if the ordinance fails to specify a formula for distribution, revenues from the local food and beverage tax shall be distributed according to population.
    (c) Except as provided in section 5(b) of this chapter, if the adopting entity of a municipality adopts an ordinance to impose a local food and beverage tax under this chapter, the revenues from the local food and beverage tax must be distributed to the municipality.
    Sec. 5. (a) The adopting entities of two (2) or more adjacent counties may adopt substantially identical ordinances to impose the local food and beverage tax under this chapter in their respective counties and to provide for the distribution of revenues from the local food and beverage tax in any manner the counties consider appropriate. However, a distribution of revenues under this subsection must include a distribution of revenues from the local food and beverage tax to all municipalities in each county in an amount not less than the amount that would be distributed to the municipalities based upon population.
    (b) The adopting entities of two (2) or more municipalities in a county or in adjacent counties may adopt substantially identical ordinances to impose the local food and beverage tax under this chapter in their respective municipalities and to provide for the distribution of revenues from the local food and beverage tax in any manner the municipalities consider appropriate.
    Sec. 6. (a) If a unit has outstanding bonds, leases, obligations, or other evidences of indebtedness, that are payable from a food and beverage tax imposed under this chapter, the tax may not be decreased below a rate that would produce one and twenty-five hundredths (1.25) times the total of the highest annual payment requirements from food and beverage tax due on those bonds, leases, obligations, or other evidences of indebtedness, to their final maturity.
    (b) For purposes of subsection (a), the determination of a tax rate sufficient to produce one and twenty-five hundredths (1.25) times the total of the highest annual payment requirements shall be based on an average of the immediately preceding three (3) years collections for the food and beverage tax, if the food and beverage tax has been imposed for the last preceding three (3) years. If the food and beverage tax has not been imposed for the last preceding three (3) years, the tax may not be reduced below a rate that would produce one and twenty-five hundredths (1.25) times the total of the highest annual payment requirements due from food and

beverage tax on those bonds, leases, obligations, or other evidences of indebtedness, based upon a study by a qualified accountant or financial advisor.
    (c) If no bonds, leases, obligations, or other evidences of indebtedness of a unit are outstanding that are payable from a food and beverage tax imposed under this chapter, the adopting entity that imposed the local food and beverage tax may adopt an ordinance to repeal or decrease the rate of the food and beverage tax under this chapter.
    Sec. 7. Revenue from the tax shall be collected, deposited, and used as provided by IC 6-10-11.
    Chapter 5. Local Innkeeper's Taxes
    Sec. 1. (a) The adopting entity of a county may adopt an ordinance to impose an excise tax known as the unit's local innkeeper's tax on transactions described in section 2 of this chapter in the county.
    (b) After March 31, 2007, the adopting entity of a municipality may adopt an ordinance to impose an excise tax known as the unit's local innkeeper's tax on transactions described in section 2 of this chapter in the municipality, if the adopting entity of the county in which a majority of the territory of the municipality is located has not previously adopted a local innkeeper's tax under this chapter.
    (c) An adopting entity that is a county income tax council must use the procedures set forth in IC.6-3.5-6 concerning the imposition of the county option income tax to adopt an ordinance to impose, repeal, or increase or decrease the rate of, a local innkeeper's tax under this chapter.
    (d) The adopting entity that adopts the ordinance shall provide a certified copy of the ordinance to the department.
    (e) The ordinance takes effect on the first day of the month specified in the ordinance. However, the effective date may not be any sooner than the first day of the month that follows, by at least forty-five (45) days, the month the ordinance is adopted.
    (f) A tax under this chapter is in addition to any innkeeper's tax under IC 6-9.
    Sec. 2. (a) A local innkeeper's tax imposed under this chapter is levied on every person engaged in the business of renting or furnishing, for periods of less than thirty (30) days, any room or rooms, lodgings, or accommodations in any:
        (1) hotel;
        (2) motel;


        (3) boat motel;
        (4) inn;
        (5) college or university memorial union;
        (6) college or university residence hall or dormitory; or
        (7) tourist cabin;
located in the county.
    (b) The tax does not apply to gross income received in a transaction in which:
        (1) a student rents lodgings in a college or university residence while that student participates in a course of study for which the student receives college credit from a college or university located in the county; or
        (2) a person rents a room, lodgings, or accommodations for a period of thirty (30) days or more.
    Sec. 3. (a) The local innkeeper's tax may be imposed at the rate specified by the adopting entity in the ordinance imposing the tax. However, the rate may not exceed eight percent (8%) on the gross retail income derived from lodging income only and is in addition to:
        (1) the state gross retail tax imposed under IC 6-2.5;
        (2) a local sales tax imposed under IC 6-10-3, if any; or
        (3) an innkeeper's tax imposed under IC 6-9, if any.
    (b) An ordinance adopted by the adopting entity of a county must specify the basis upon which revenues from the innkeeper's tax will be distributed. Except as provided in section 4(a) of this chapter, revenues may be distributed according to the following:
        (1) Population.
        (2) Location of collection.
        (3) Any combination of subdivisions (1) and (2).
Except as provided in section 4(a) of this chapter, if the ordinance fails to specify a formula for distribution, revenues from the local innkeeper's tax shall be distributed according to population.
    (c) Except as provided in section 4(b) of this chapter, if the adopting entity of a municipality adopts an ordinance to impose a local innkeeper's tax under this chapter, the revenues from the innkeeper's tax must be distributed to the municipality.
    Sec. 4. (a) The adopting entities of two (2) or more adjacent counties may adopt substantially identical ordinances to impose the local innkeeper's tax under this chapter in their respective counties and to provide for the distribution of revenues from the local food and beverage tax in any manner the counties consider appropriate. However, a distribution of revenues under this subsection must

include a distribution of revenues from the local innkeeper's tax to all municipalities in each county in an amount not less than the amount that would be distributed to the municipalities based upon the location of collection.
    (b) The adopting entities of two (2) or more municipalities in a county or in adjacent counties may adopt substantially identical ordinances to impose the local innkeeper's tax under this chapter in their respective municipalities and to provide for the distribution of revenues from the local innkeeper's tax in any manner the municipalities consider appropriate.
    Sec. 5. (a) If a unit has outstanding bonds, leases, obligations, or other evidences of indebtedness that are payable from a local innkeeper's tax imposed under this chapter, the tax may not be decreased below a rate that would produce one and twenty-five hundredths (1.25) times the total of the highest annual payment requirements due from local innkeeper's tax on those bonds, leases, obligations, or other evidences of indebtedness to their final maturity.
    (b) For purposes of subsection (a), the determination of a tax rate sufficient to produce one and twenty-five hundredths (1.25) times the total of the highest annual payment requirements shall be based on an average of the immediately preceding three (3) years collections for the food and beverage tax, if the local innkeeper's tax has been imposed for the last preceding three (3) years. If the local innkeeper's tax has not been imposed for the last preceding three (3) years, the tax may not be reduced below a rate that would produce one and twenty-five hundredths (1.25) times the total of the highest annual payment requirements due from local innkeeper's tax on those bonds, leases, obligations, or other evidences of indebtedness, based upon a study by a qualified accountant or financial advisor.
    (c) If no bonds, leases, obligations, or other evidences of indebtedness of a unit are outstanding that are payable from a local innkeeper's tax imposed under this chapter, the adopting entity that imposed the local innkeeper's tax may adopt an ordinance to repeal or decrease the rate of the local innkeeper's tax under this chapter.
    Sec. 6. Revenue from the tax shall be collected, deposited, and used as provided by IC 6-10-11.
    Chapter 6. Supplemental Local Income Tax
    Sec. 1. (a) The adopting entity of a county may adopt an ordinance to impose a supplemental local income tax on the

adjusted gross income of taxpayers.
    (b) After March 1, 2007, the adopting entity of a municipality may adopt an ordinance to impose a supplemental local income tax on the adjusted gross income of taxpayers, if the adopting entity of the county in which a majority of the territory of the municipality is located has not previously adopted a supplemental local income tax under this chapter.
    (c) An adopting entity that is a county income tax council must use the procedures set forth in IC 6-3.5-6 concerning the adoption of the county option income tax to adopt an ordinance to impose, repeal, increase, or decrease the rate or rates of a supplemental local income tax under this chapter.
    (d) The adopting entity that adopts the ordinance shall provide a certified copy of the ordinance to the department.
    (e) If an ordinance imposing a supplemental local income tax under this chapter is adopted before May 1 of a year, the ordinance takes effect on July 1 of that year. If an ordinance imposing a supplemental local income tax under this chapter is adopted after April 30 of a year, the ordinance takes effect January 1 of the year following the year in which the ordinance is adopted.
    Sec. 2. (a) A supplement local income tax imposed under this chapter may be imposed on the adjusted gross income of taxpayers as follows:
        (1) The adjusted gross income earned by a resident within the jurisdiction of the adopting entity regardless of the location the income was earned.
        (2) Adjusted gross income earned by a nonresident of the jurisdiction of the adopting entity if:
            (A) the adjusted gross income is earned within the jurisdiction of the adopting entity; and
            (B) the adopting entity has imposed the nonresident tax.
    (b) If the adopting entity desires to impose a nonresident tax, the adopting entity must make findings, supported by facts, that the presence of nonresident employees imposes additional demands for public safety and other services within the jurisdiction of the adopting entity.
    Sec. 3. (a) An adopting entity may impose a supplemental local income tax at two (2) different rates, with one (1) rate for residents of the adopting entity and a different rate for nonresidents of the adopting entity who earn income within the jurisdiction of the adopting entity.
    (b) A rate must be specified in the ordinance. A rate must be in

increments of one-tenth of one percent (0.1%) or twenty-five hundredths of one percent (0.25%).
    (c) An ordinance adopted by the adopting entity of a county must specify the basis upon which revenues from the supplemental local income tax will be distributed. Except as provided in section 4(a) of this chapter, revenues may be distributed according to the following:
        (1) Population.
        (2) Location of collection.
        (3) Any combination of subdivisions (1) and (2).
Except as provided in section 4(a) of this chapter, if the ordinance fails to specify a formula for distribution, revenues from the supplemental local income tax shall be distributed according to population.
    (d) Except as provided in section 4(b) of this chapter, if the adopting entity of a municipality adopts an ordinance to impose a supplemental local income tax under this chapter, the revenues from the supplemental local income tax must be distributed to the municipality.
    Sec. 4. (a) The adopting entities of two (2) or more adjacent counties may adopt substantially identical ordinances to impose the supplemental local income tax under this chapter in their respective counties and to provide for the distribution of revenues from the supplemental local income tax in any manner the counties consider appropriate. However, a distribution of revenues under this subsection must include a distribution of revenues from the supplemental local income tax to all municipalities in each county in an amount not less than the amount that would be distributed to the municipalities based upon population.
    (b) The adopting entities of two (2) or more municipalities in a county or in adjacent counties may adopt substantially identical ordinances to impose the supplemental local income tax under this chapter in their respective municipalities and to provide for the distribution of revenues from the supplemental local income tax in any manner the municipalities consider appropriate.
    Sec. 5. (a) If for a taxable year a taxpayer is (or a taxpayer and a taxpayer's spouse who file a joint return are) allowed a credit for the elderly or the disabled under Section 22 of the Internal Revenue Code, the taxpayer is (or a taxpayer and a taxpayer's spouse who file a joint return are) entitled to a credit against the taxpayer's (or the taxpayer's and the taxpayer's spouse's) income tax liability under this chapter for that same taxable year. The

amount of the credit equals the lesser of:
        (1) the product of:
            (A) the taxpayer's (or the taxpayer's and the taxpayer's spouse's) credit for the elderly or the totally disabled for that same taxable year; multiplied by
            (B) a fraction for which the numerator is the income tax rate and the denominator is fifteen-hundredths (0.15); or
        (2) the amount of local income tax imposed on the local taxpayer (or the local taxpayer and the local taxpayer's spouse).
    (b) If a local taxpayer and the local taxpayer's spouse file a joint return and are subject to different income tax rates under this chapter for the same taxable year, they shall compute the credit under this section using the formula provided by subsection (a), except that they shall use the average of the two (2) income tax rates as the numerator referred to in subsection (a)(1)(B).
    Sec. 6. (a) If a unit has outstanding bonds, leases, obligations, or other evidences of indebtedness that are payable from an income tax imposed under this chapter, the local income tax may not be decreased below a rate that would produce one and twenty-five hundredths (1.25) times the total of the highest annual payment requirements due from local income tax on those bonds, leases, obligations, or other evidences of indebtedness to their final maturity.
    (b) For purposes of subsection (a), the determination of a tax rate sufficient to produce one and twenty-five hundredths (1.25) times the total of the highest annual payment requirements shall be based on an average of the immediately preceding three (3) years tax collections for the tax, if the tax has been imposed for the last preceding three (3) years. If the local income tax has not been imposed for the last preceding three (3) years, the income tax may not be reduced below a rate that would produce one and twenty-five hundredths (1.25) times the total of the highest annual payment requirements due from local income tax on those bonds, leases, obligations, or other evidences of indebtedness, based upon a study by a qualified accountant or financial advisor.
    (c) If no bonds, leases, obligations, or other evidences of indebtedness of the unit are outstanding that are payable from an income tax imposed under this chapter, the adopting entity that imposed the tax may adopt an ordinance to repeal a supplemental local income tax under this chapter.
    Sec. 7. Revenue from the tax shall be collected, deposited, and

used as provided IC 6-10-11.
    Chapter 7. Collection Procedures for Local Sales Taxes
    Sec. 1. A local sales tax imposed under IC.6-10-3 shall be imposed, paid, and collected in the same manner that the state gross retail tax is imposed, paid, and collected under IC.6-2.5. However, the return that is filed for the payment of the tax may be made on a separate return or may be combined with the return filed for the payment of the state gross retail tax as prescribed by the department.
    Sec. 2. A local sales tax imposed under IC.6-10-3 is a listed tax for purposes of IC.6-8.1.
    Sec. 3. (a) If a county has imposed a local sales tax under IC.6-10-3, the department shall notify the county fiscal officer of the amount of tax paid in the county.
    (b) If a municipality has imposed a local sales tax under IC 6-10-3, the department shall notify the municipal fiscal officer of the amount of tax paid in the municipality.
    (c) The amounts received from a local sales tax imposed under IC.6-10-3 shall be paid monthly by the treasurer of state on warrants issued by the auditor of state to the fiscal officer of the unit that imposed the tax.
    Sec. 4. The unit's fiscal officer shall establish a local sales tax revenue fund into which all amounts received monthly from the treasurer of state under this chapter shall be deposited.
    Chapter 8. Collection Procedures for Local Food and Beverage Taxes
    Sec. 1. A local food and beverage tax imposed under IC.6-10-4 shall be imposed, paid, and collected in the same manner that the state gross retail tax is imposed, paid, and collected under IC.6-2.5. However, the return that is filed for the payment of the tax may be made on a separate return or may be combined with the return filed for the payment of the state gross retail tax as prescribed by the department.
    Sec. 2. A local food and beverage tax imposed under IC.6-10-4 is a listed tax for the purposes of IC.6-8.1.
    Sec. 3. (a) If a county has imposed a local food and beverage tax under IC.6-10-4, the department shall notify the county fiscal officer of the amount of tax paid in the county.
    (b) If a municipality has imposed a local food and beverage tax under IC 6-10-4, the department shall notify the municipal fiscal officer of the amount of tax paid in the municipality.
    (c) The amounts received from a local food and beverage tax

imposed under IC.6-10-4 shall be paid monthly by the treasurer of state on warrants issued by the auditor of state to the fiscal officer of the unit that imposed the tax.
    Sec. 4. The unit's fiscal officer shall establish a local food and beverage tax revenue fund into which all amounts received monthly from the treasurer of state under this chapter shall be deposited.
    Chapter 9. Collection Procedures for Local Innkeeper's Taxes
    Sec. 1. A local innkeeper's tax imposed under IC.6-10-5 shall be imposed, paid, and collected in the same manner that the state gross retail tax is imposed, paid, and collected under IC.6-2.5. However, the return that is filed for the payment of the tax may be made on a separate return or may be combined with the return filed for the payment of the state gross retail tax as prescribed by the department.
    Sec. 2. A local innkeeper's tax imposed under IC.6-10-5 is a listed tax for the purposes of IC.6-8.1.
    Sec. 3. (a) If a county has imposed a local innkeeper's tax under IC.6-10-5, the department shall notify the county fiscal officer of the amount of tax paid in the county.
    (b) If a municipality has imposed a local innkeeper's tax under IC 6-10-5, the department shall notify the municipal fiscal officer of the amount of tax paid in the municipality.
    (c) The amounts received from a local innkeeper's tax imposed under IC.6-10-5 shall be paid monthly by the treasurer of state on warrants issued by the auditor of state to the fiscal officer of the unit that imposed the tax.
    Sec. 4. (a) The unit's fiscal officer shall establish a local innkeeper's tax revenue fund into which all amounts received monthly from the treasurer of state under this chapter shall be deposited.
    (b) Money in the local innkeeper's tax revenue fund shall be transferred at least monthly to the hometown revenues fund established under IC 6-10-11-1.
    Chapter 10. Collection Procedures for Local Income Taxes
    Sec. 1. (a) A special account within the state general fund shall be established for each unit that is a recipient of revenues from a supplemental local income tax imposed under IC.6-10-6.
    (b) Revenue derived from the imposition of a supplemental local income tax shall be deposited in that unit's account in the state general fund, if the local income tax is imposed by the unit's fiscal body.


    (c) Income earned on money in an account established under this section becomes part of that account.
    (d) Money remaining in an account at the end of a fiscal year does not revert to the state general fund but remains in that account.
    Sec. 2. (a) Revenue derived from the imposition of the supplemental income tax shall, in the manner prescribed by this chapter, be distributed to the unit that imposed the tax.
    (b) Subject to section 3 of this chapter, the amount to be distributed to a unit during an ensuing calendar year equals the amount of supplemental local income tax revenue that the department, after reviewing the recommendation of the budget agency, determines has been:
        (1) received from that unit for a taxable year ending before the calendar year in which the determination is made; and
        (2) reported on an annual return or amended return processed by the department in the state fiscal year ending before July 1 of the calendar year in which the determination is made;
as adjusted (as determined after review of the recommendation of the budget agency) for refunds of supplemental local income tax made in the state fiscal year.
    Sec. 3. (a) The amount determined under section 2 of this chapter shall be adjusted as provided under this section.
    (b) The department, after reviewing the recommendation of the budget agency, shall adjust the distribution of a unit to an amount less than the amount determined under section 2 of this chapter if the department, after reviewing the recommendation of the budget agency, determines that the reduced distribution is necessary to offset overpayments made in a calendar year before the calendar year of the distribution. The department, after reviewing the recommendation of the budget agency, may reduce the amount of a certified distribution over several calendar years so that any overpayments are offset over several years rather than in one (1) lump sum.
    (c) The department, after reviewing the recommendation of the budget agency, shall adjust the distribution of a unit to correct for any clerical or mathematical errors made in any previous certification under this chapter. The department, after reviewing the recommendation of the budget agency, may reduce the amount of the distribution over several calendar years so that any adjustment under this subsection is offset over several years rather

than in one (1) lump sum.
    (d) This subsection applies to a unit that:
        (1) initially imposes the supplemental local income tax; or
        (2) increases the supplemental income tax rate;
under this chapter in the same calendar year in which the department makes a certification under this section. The department, after reviewing the recommendation of the budget agency, shall adjust the distribution of a unit to provide for a distribution in the immediately following calendar year and in each calendar year thereafter. The department shall provide for a full transition to certification of distributions as provided in section 2 of this chapter over the number of years determined by the department, after review of the recommendation of the budget agency.
    Sec. 4. Before August 2 of each calendar year, the department, after reviewing the recommendation of the budget agency, shall certify to the fiscal officer of each adopting unit the amount determined under section 2 of this chapter (as adjusted under section 3 of this chapter) plus the amount of interest in the unit's account that has accrued and has not been included in a certification made in a preceding year. The amount certified is the unit's "certified distribution" for the ensuing year.
    Sec. 5. The department shall provide the adopting unit with:
        (1) the amount of the unit's certified distribution for the ensuing year; and
        (2) an informative summary of the calculations used to determine the certified distribution.
    Sec. 6. The department shall distribute to a unit the unit's certified distribution in twelve (12) equal monthly installments.
    Chapter 11. Use of Hometown Revenues
    Sec. 1. (a) After an adopting entity has imposed one (1) or more hometown revenue options under this article, the fiscal officer of the unit must establish a hometown revenue fund, consisting of a revenue stabilization account and a general account.
    (b) For the first three (3) years in which the unit receives a distribution of revenues from a hometown revenue option, the unit's fiscal officer must deposit an amount of hometown revenues in the revenue stabilization account sufficient to accumulate a balance in the account, at the end of the third year, that is at least equal to the total amount of hometown revenues received in the first year of distribution. If the unit's distribution of hometown revenues received in a year is less than the amount included in the

unit's budget for the year, money on deposit in the revenue stabilization account may be used to fund the shortfall. Any amounts withdrawn from the reserve stabilization account must be restored from the next distribution of any hometown revenues before applying hometown revenues under section 2 of this chapter. Money in the revenue stabilization account may not be taken into account when determining the unit's maximum permissible rate under IC 6-1.1-18 or levy under IC 6-1.1-18.5. The remaining hometown revenues shall be deposited in the general account and may be used as provided in section 2 of this chapter.
    (c) Except as provided in subsection (b), after meeting the requirement for funding the revenue stabilization account, beginning with the fourth year in which the unit receives a distribution of hometown revenues, the revenues must first be used to provide property tax relief to taxpayers or classes of taxpayers, to the extent permitted by the Constitution of the State of Indiana, in the following amount for the year:
        (1) For municipalities:
    Per capita     Percentage of
    municipal     revenues required for
    property tax     property tax reduction
    More than $450    75%
    More than $350
        but not more than $450    50%
    At least $250
        but not more than $350    25%
    Less than $250    0%
        (2) For counties:
    Per capita     Percentage of
    county     revenues required for     property tax     property tax reduction     More than $450    75%
    More than $350
        but not more than $450    50%
    At least $250
        but not more than $350    25%
    Less than $250    0%
The department of local government finance shall certify to each affected unit the total dollar amount of property tax relief that must be provided under this subsection for a particular year.
    (d) Hometown revenues remaining after satisfying the requirements of subsection (c) in any particular year shall be

deposited in the general account and may be treated by each unit as additional revenue for the purposes set forth in section 2 of this chapter.
    (e) A unit's maximum permissible rate under IC 6-1.1-18 or levy under IC 6-1.1-18.5 shall be computed without regard to the provisions of this article and shall not be adjusted to reflect the receipt, distribution, or use of any hometown revenue by a unit under this article.
    Sec. 2. (a) A unit may treat the revenue remaining after satisfying section 1 of this chapter as additional revenue for the purposes of fixing its budget for the budget year and the department of local government finance may not reduce a unit's:
        (1) property tax rate for a fund;
        (2) property tax levy; or
        (3) maximum permissible levy for a particular year;
by the amount of revenue described in this section received from a tax imposed under this article.
    (b) A unit may use the additional revenue for any one (1) or more of the following purposes:
        (1) To provide property tax relief to taxpayers or classes of taxpayers, to the extent permitted by the Constitution of the State of Indiana.
        (2) To provide additional operating revenue for the unit.
        (3) To pay debt service or lease rentals on:
            (A) bonds;
            (B) leases;
            (C) obligations; or
            (D) any other evidence of indebtedness of the unit.
        (4) For any other purpose that the fiscal body determines is necessary, wise, and in the best interest of the residents of the unit.
    (c) Notwithstanding section 1 of this chapter, if a governing body (as defined in IC 6-1.1-21.2-6) has bonds, leases, obligations, or other evidences of indebtedness payable in whole or in part from tax increment revenues (as defined in IC 6-1.1-21.2-10), the unit's fiscal officer must first apply any hometown revenues received under this article to the payment of those bonds, leases, obligations, or other evidences of indebtedness if the governing body certifies that, without the application of hometown revenues, the rights of holders or owners of the bonds, leases, or other obligations will be impaired or adversely affected by the property tax reduction provided for under this chapter.


    Chapter 12. Covenants
    Sec. 1. The general assembly covenants with the respective units and the purchasers and owners of bonds, leases, obligations, or any other evidences of indebtedness of a unit payable from a tax imposed under this article that this article will not be repealed or amended in any manner that will adversely affect the imposition or collection of a tax imposed under this article so long as the principal, interest, or lease rentals due under those bonds, leases, obligations, or other evidences of indebtedness of a unit that are payable from a tax imposed under this article remain unpaid.

SOURCE: IC 8-14-1-5; (06)IN1399.1.47. -->     SECTION 47. IC 8-14-1-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5. (a) All funds allocated to cities and towns from the motor vehicle highway account shall be used by the cities and towns for the:
        (1) engineering, land acquisition,
construction, reconstruction, repair, maintenance, oiling, sprinkling, snow removal, weed and tree cutting and cleaning of their highways, as herein defined, and including also any curbs; and the
         (2) city's or town's share of the cost of the separation of the grades of crossing of public highways and railroads; the
         (3) purchase or lease of highway construction and maintenance equipment; the
         (4) purchase, erection, operation and maintenance of traffic signs and signals, and safety zones and devices; and the
         (5) painting of structures, objects, and surfaces in highways for purposes of safety and traffic regulation.
All of such the funds shall be budgeted as provided by law.
    (b) In addition to purposes for which funds may be expended under subsections (a) and (c) of this section, monies allocated to cities and towns under this chapter may be expended for law enforcement purposes, subject to the following limitations:
        (1) For cities and towns with a population of less than five thousand (5,000), no more than fifteen percent (15%) may be spent for law enforcement purposes.
        (2) For cities and towns other than those specified in subdivision (1) of this subsection, no more than ten percent (10%) may be spent for law enforcement purposes.
    (c) In addition to purposes for which funds may be expended under subsections (a) and (b) of this section, monies allocated to cities and towns under this chapter may be expended for the payment of principal and interest on bonds sold primarily to finance road, street, or thoroughfare projects and for the payment of the indirect costs

associated with municipal street departments.
    (d) A city or town may combine funds allocated under this chapter with funds allocated under IC 8-14-2.

SOURCE: IC 8-14-2-5; (06)IN1399.1.48. -->     SECTION 48. IC 8-14-2-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5. (a) Money from the local road and street account shall be used exclusively by the cities, towns, and counties for:
        (1) engineering, land acquisition, construction, resurfacing, maintenance, restoration, or rehabilitation of both local and arterial road and street systems;
        (2) the payment of principal and interest on bonds sold primarily to finance road, street, or thoroughfare projects;
        (3) any local costs required to undertake a recreational or reservoir road project under IC 8-23-5; or
        (4) the purchase, rental, or repair of highway equipment.
    (b) In addition to the purposes specified in subsection (a), cities, towns, and counties may use money from the local road and street account for:
        (1) oiling, sprinkling, snow removal, weed and tree cutting, and cleaning of their highways, including any curbs;
        (2) the city's or town's share of the cost of the separation of the grades of crossing of public highways and railroads;
        (3) the purchase, erection, operation and maintenance of traffic signs and signals, and safety zones and devices; and
        (4) the painting of structures, objects, and surfaces in highways for purposes of safety and traffic regulation.
    (c) A city or town may combine funds allocated under this chapter with funds allocated under IC 8-14-1.

SOURCE: IC 22-2-2-4; (06)IN1399.1.49. -->     SECTION 49. IC 22-2-2-4 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 4. (a) Every employer employing four (4) or more employees during a work week shall:
        (1) in any work week beginning on or after July 1, 1968, in which he the employer is subject to the provisions of this chapter, pay each of his the employer's employees wages of not less than one dollar and twenty-five cents ($1.25) per hour;
        (2) in any work week beginning on or after July 1, 1977, in which he the employer is subject to this chapter, pay each of his the employer's employees wages of not less than one dollar and fifty cents ($1.50) per hour;
        (3) in any work week beginning on or after January 1, 1978, in which he the employer is subject to this chapter, pay each of his the employer's employees wages of not less than one dollar and

seventy-five cents ($1.75) per hour; and
        (4) in any work week beginning on or after January 1, 1979, in which he the employer is subject to this chapter, pay each of his the employer's employees wages of not less than two dollars ($2) per hour.
    (b) Except as provided in subsection (c), every employer employing at least two (2) employees during a work week shall, in any work week in which the employer is subject to this chapter, pay each of the employees in any work week beginning on and after July 1, 1990, and before October 1, 1998, wages of not less than three dollars and thirty-five cents ($3.35) per hour.
    (c) An employer subject to subsection (b) is permitted to apply a "tip credit" in determining the amount of cash wage paid to tipped employees. In determining the wage an employer is required to pay a tipped employee, the amount paid the employee by the employee's employer shall be an amount equal to:
        (1) the cash wage paid the employee, which for purposes of the determination shall be not less than the cash wage required to be paid to employees covered under the federal Fair Labor Standards Act of 1938, as amended (29 U.S.C. 203(m)(1)) on August 20, 1996, which amount is two dollars and thirteen cents ($2.13) an hour; and
        (2) an additional amount on account of the tips received by the employee, which amount is equal to the difference between the wage specified in subdivision (1) and the wage in effect under subsections (b), (f), and (g), (h), (i), (j), and (l).
An employer is responsible for supporting the amount of tip credit taken through reported tips by the employees.
    (d) No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which employees are employed, between employees on the basis of sex by paying to employees in such establishment a rate less than the rate at which he the employer pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to:
        (1) a seniority system;
        (2) a merit system;
        (3) a system which measures earnings by quantity or quality of production; or
        (4) a differential based on any other factor other than sex.


    (e) An employer who is paying a wage rate differential in violation of subsection (d) shall not, in order to comply with subsection (d), reduce the wage rate of any employee, and no labor organization, or its agents, representing employees of an employer having employees subject to subsection (d) shall cause or attempt to cause such an employer to discriminate against an employee in violation of subsection (d).
    (f) Except as provided in subsection (c), every employer employing at least two (2) employees during a work week shall, in any work week in which the employer is subject to this chapter, pay each of the employees in any work week beginning on or after October 1, 1998, and before March 1, 1999, wages of not less than four dollars and twenty-five cents ($4.25) per hour.
    (g) Except as provided in subsections (c) and (i), (l), every employer employing at least two (2) employees during a work week shall, in any work week in which the employer is subject to this chapter, pay each of the employees in any work week beginning on or after March 1, 1999, and before September 1, 2006, wages of not less than five dollars and fifteen cents ($5.15) an hour.
     (h) Except as provided in subsections (c) and (l), every employer employing at least two (2) employees during a work week shall, in any work week in which the employer is subject to this chapter, pay each of the employees in any work week beginning on or after September 1, 2006, and before March 1, 2007, wages of not less than five dollars and sixty-five cents ($5.65) an hour.
     (i) Except as provided in subsections (c) and (l), every employer employing at least two (2) employees during a work week shall, in any work week in which the employer is subject to this chapter, pay each of the employees in any work week beginning on or after March 1, 2007, and before September 1, 2007, wages of not less than six dollars and fifteen cents ($6.15) an hour.
     (j) Except as provided in subsections (c) and (l), every employer employing at least two (2) employees during a work week shall, in any work week in which the employer is subject to this chapter, pay each of the employees in any work week beginning on or after September 1, 2007, wages of not less than seven dollars ($7) an hour.
    (h) (k) This section does not apply if an employee:
        (1) provides companionship services to the aged and infirm (as defined in 29 CFR 552.6); and
        (2) is employed by an employer or agency other than the family or household using the companionship services, as provided in 29

CFR 552.109 (a).
    (i) (l) This subsection applies only to an employee who has not attained the age of twenty (20) years. Instead of the rates prescribed by subsections (c), (f), and (g), (h), (i), and (j), an employer may pay an employee of the employer, during the first ninety (90) consecutive calendar days after the employee is initially employed by the employer, a wage which is not less than:
         (1) four dollars and twenty-five cents ($4.25) per hour, effective March 1, 1999;
         (2) four dollars and seventy-five cents ($4.75) per hour, effective September 1, 2006;
        (3) five dollars and twenty-five cents ($5.25) per hour, effective March 1, 2007; and
        (4) six dollars and ten cents ($6.10) per hour, effective September 1, 2007.

However, no employer may take any action to displace employees (including partial displacements such as reduction in hours, wages, or employment benefits) for purposes of hiring individuals at the wage authorized in this subsection.
    (j) (m) Except as otherwise provided in this section, no employer shall employ any employee for a work week longer than forty (40) hours unless the employee receives compensation for employment in excess of the hours above specified at a rate not less than one and one-half (1.5) times the regular rate at which he the employee is employed.
    (k) (n) For purposes of this section the following apply:
        (1) "Overtime compensation" means the compensation required by subsection (j). (m).
        (2) "Compensatory time" and "compensatory time off" mean hours during which an employee is not working, which are not counted as hours worked during the applicable work week or other work period for purposes of overtime compensation, and for which the employee is compensated at the employee's regular rate.
        (3) "Regular rate" means the rate at which an employee is employed is considered to include all remuneration for employment paid to, or on behalf of, the employee, but is not considered to include the following:
            (A) Sums paid as gifts, payments in the nature of gifts made at Christmas time or on other special occasions, as a reward for service, the amounts of which are not measured by or dependent on hours worked, production, or efficiency.


            (B) Payments made for occasional periods when no work is performed due to vacation, holiday, illness, failure of the employer to provide sufficient work, or other similar cause, reasonable payments for traveling expenses, or other expenses, incurred by an employee in the furtherance of his the employer's interests and properly reimbursable by the employer, and other similar payments to an employee which are not made as compensation for his the employee's hours of employment.
            (C) Sums paid in recognition of services performed during a given period if:
                (i) both the fact that payment is to be made and the amount of the payment are determined at the sole discretion of the employer at or near the end of the period and not pursuant to any prior contract, agreement, or promise causing the employee to expect the payments regularly;
                (ii) the payments are made pursuant to a bona fide profit sharing plan or trust or bona fide thrift or savings plan, meeting the requirements of the administrator set forth in appropriately issued regulations, having due regard among other relevant factors, to the extent to which the amounts paid to the employee are determined without regard to hours of work, production, or efficiency; or
                (iii) the payments are talent fees paid to performers, including announcers, on radio and television programs.
            (D) Contributions irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for providing old age, retirement, life, accident, or health insurance or similar benefits for employees.
            (E) Extra compensation provided by a premium rate paid for certain hours worked by the employee in any day or work week because those hours are hours worked in excess of eight (8) in a day or in excess of the maximum work week applicable to the employee under subsection (j) (m) or in excess of the employee's normal working hours or regular working hours, as the case may be.
            (F) Extra compensation provided by a premium rate paid for work by the employee on Saturdays, Sundays, holidays, or regular days of rest, or on the sixth or seventh day of the work week, where the premium rate is not less than one and one-half (1.5) times the rate established in good faith for like work performed in nonovertime hours on other days.
            (G) Extra compensation provided by a premium rate paid to the employee, in pursuance of an applicable employment contract or collective bargaining agreement, for work outside of the hours established in good faith by the contract or agreement as the basic, normal, or regular workday (not exceeding eight (8) hours) or work week (not exceeding the maximum work week applicable to the employee under subsection (j)) (m)) where the premium rate is not less than one and one-half (1.5) times the rate established in good faith by the contract or agreement for like work performed during the workday or work week.
    (l) (o) No employer shall be considered to have violated subsection (j) (m) by employing any employee for a work week in excess of that specified in subsection (j) (m) without paying the compensation for overtime employment prescribed therein if the employee is so employed:
        (1) in pursuance of an agreement, made as a result of collective bargaining by representatives of employees certified as bona fide by the National Labor Relations Board, which provides that no employee shall be employed more than one thousand forty (1,040) hours during any period of twenty-six (26) consecutive weeks; or
        (2) in pursuance of an agreement, made as a result of collective bargaining by representatives of employees certified as bona fide by the National Labor Relations Board, which provides that during a specified period of fifty-two (52) consecutive weeks the employee shall be employed not more than two thousand two hundred forty (2,240) hours and shall be guaranteed not less than one thousand eight hundred forty (1,840) hours (or not less than forty-six (46) weeks at the normal number of hours worked per week, but not less than thirty (30) hours per week) and not more than two thousand eighty (2,080) hours of employment for which the employee shall receive compensation for all hours guaranteed or worked at rates not less than those applicable under the agreement to the work performed and for all hours in excess of the guaranty which are also in excess of the maximum work week applicable to the employee under subsection (j) (m) or two thousand eighty (2,080) in that period at rates not less than one and one-half (1.5) times the regular rate at which the employee is employed.
    (m) (p) No employer shall be considered to have violated subsection (j) (m) by employing any employee for a work week in excess of the maximum work week applicable to the employee under subsection (j)

(m) if the employee is employed pursuant to a bona fide individual contract, or pursuant to an agreement made as a result of collective bargaining by representatives of employees, if the duties of the employee necessitate irregular hours of work, and the contract or agreement includes the following:
        (1) Specifies a regular rate of pay of not less than the minimum hourly rate provided in subsections (c), (f), (g), and (h), (i), (j), and (l) (whichever is applicable) and compensation at not less than one and one-half (1.5) times that rate for all hours worked in excess of the maximum work week.
        (2) Provides a weekly guaranty of pay for not more than sixty (60) hours based on the rates so specified.
    (n) (q) No employer shall be considered to have violated subsection (j) (m) by employing any employee for a work week in excess of the maximum work week applicable to the employee under that subsection if, pursuant to an agreement or understanding arrived at between the employer and the employee before performance of the work, the amount paid to the employee for the number of hours worked by him the employee in the work week in excess of the maximum work week applicable to the employee under that subsection:
        (1) in the case of an employee employed at piece rates, is computed at piece rates not less than one and one-half (1.5) times the bona fide piece rates applicable to the same work when performed during nonovertime hours;
        (2) in the case of an employee performing two (2) or more kinds of work for which different hourly or piece rates have been established, is computed at rates not less than one and one-half (1.5) times those bona fide rates applicable to the same work when performed during nonovertime hours; or
        (3) is computed at a rate not less than one and one-half (1.5) times the rate established by the agreement or understanding as the basic rate to be used in computing overtime compensation thereunder, provided that the rate so established shall be substantially equivalent to the average hourly earnings of the employee, exclusive of overtime premiums, in the particular work over a representative period of time;
and if the employee's average hourly earnings for the work week exclusive of payments described in this section are not less than the minimum hourly rate required by applicable law, and extra overtime compensation is properly computed and paid on other forms of additional pay required to be included in computing the regular rate.
    (o) (r) Extra compensation paid as described in this section shall be

creditable toward overtime compensation payable pursuant to this section.
    (p) (s) No employer shall be considered to have violated subsection (j) (m) by employing any employee of a retail or service establishment for a work week in excess of the applicable work week specified therein, if:
        (1) the regular rate of pay of the employee is in excess of one and one-half (1.5) times the minimum hourly rate applicable to the employee under section 2 of this chapter; and
        (2) more than half of the employee's compensation for a representative period (not less than one (1) month) represents commissions on goods or services.
In determining the proportion of compensation representing commissions, all earnings resulting from the application of a bona fide commission rate shall be considered commissions on goods or services without regard to whether the computed commissions exceed the draw or guarantee.
    (q) (t) No employer engaged in the operation of a hospital or an establishment which is an institution primarily engaged in the care of the sick, the aged, or the mentally ill or defective who reside on the premises shall be considered to have violated subsection (j) (m) if, pursuant to an agreement or understanding arrived at between the employer and the employee before performance of the work, a work period of fourteen (14) consecutive days is accepted in lieu of the work week of seven (7) consecutive days for purposes of overtime computation and if, for his the employee's employment in excess of eight (8) hours in any workday and in excess of eighty (80) hours in that fourteen (14) day period, the employee receives compensation at a rate not less than one and one-half (1.5) times the regular rate at which the employee is employed.
    (r) (u) No employer shall employ any employee in domestic service in one (1) or more households for a work week longer than forty (40) hours unless the employee receives compensation for that employment in accordance with subsection (j). (m).
    (s) (v) In the case of an employee of an employer engaged in the business of operating a street, a suburban or an interurban electric railway, or a local trolley or motorbus carrier (regardless of whether or not the railway or carrier is public or private or operated for profit or not for profit), in determining the hours of employment of such an employee to which the rate prescribed by subsection (j) (m) applies, there shall be excluded the hours the employee was employed in charter activities by the employer if both of the following apply:


        (1) The employee's employment in the charter activities was pursuant to an agreement or understanding with the employer arrived at before engaging in that employment.
        (2) If employment in the charter activities is not part of the employee's regular employment.
    (t) (w) Any employer may employ any employee for a period or periods of not more than ten (10) hours in the aggregate in any work week in excess of the maximum work week specified in subsection (j) (m) without paying the compensation for overtime employment prescribed in subsection (j), (m), if during that period or periods the employee is receiving remedial education that:
        (1) is provided to employees who lack a high school diploma or educational attainment at the eighth grade level;
        (2) is designed to provide reading and other basic skills at an eighth grade level or below; and
        (3) does not include job specific training.
    (u) (x) Subsection (j) (m) does not apply to an employee of a motion picture theater.
    (v) (y) Subsection (j) (m) does not apply to an employee of a seasonal amusement or recreational establishment, an organized camp, or a religious or nonprofit educational conference center that is exempt under the federal Fair Labor Standards Act of 1938, as amended (29 U.S.C. 213).
SOURCE: IC 36-1-3.1; (06)IN1399.1.50. -->     SECTION 50. IC 36-1-3.1 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]:
     Chapter 3.1. Cooperative Agreements
    Sec. 1. (a) This chapter applies to cities, towns, and counties.
    (b) This chapter does not apply to townships.
    Sec. 2. (a) The policy of the state is to grant units broad powers to enable units to operate more efficiently by eliminating restrictions under existing law that:
        (1) impede the efficient operation of; and
        (2) inhibit cooperation among;
units.
    (b) Encouraging efficiency by and cooperation between units serves the public purposes of:
        (1) reducing reliance on property taxes;
        (2) enhancing the ability of units to provide critical and necessary services; and
        (3) strengthening the financial condition of state government.
    Sec. 3. (a) This chapter contains full and complete authority for

cooperative agreements between units. Except as provided in this chapter, no law, procedure, proceedings, publications, notices, consents, approvals, orders, or acts by a unit or any other officer, department, agency, or instrumentality of the state or any political subdivision is required for a unit to enter into a cooperative agreement with one (1) or more other units under this article.
    (b) A unit may exercise the powers granted under this chapter without complying with the provisions of any other law, statute, or regulation.
    Sec. 4. (a) This chapter shall be liberally construed to effect the purposes of this chapter.
    (b) To the extent the provisions of this chapter are inconsistent with the provisions of any other general, special, or local law, the provisions of this chapter are controlling and supersede all other laws.
    (c) This chapter is supplemental to all other laws governing or regulating units.
    Sec. 5. (a) Two (2) or more units may enter into a written agreement to cooperate in:
        (1) the delivery of any local governmental service to residents of the participating units, including:
            (A) public safety;
            (B) emergency medical services;
            (C) traffic management;
            (D) land use regulation;
            (E) public health;
            (F) recreation;
            (G) sanitation, including solid waste collection and disposal;
            (H) business activity regulation;
            (I) maintenance of streets, roads, sidewalks, bridges, and other rights-of-way;
            (J) public transportation; and
            (K) any other activity that the units determine is necessary or desirable to provide more efficient local government to their residents;
        (2) the acquisition, financing, construction, renovating, repair, and equipping of any capital project, local public improvement, structure, system, or other project for which a unit is authorized to issue bonds, enter into leases, or to establish a fund under any statute listed in IC 6-1.1-18.5-9.8; and


        (3) the management, operation, and maintenance of any capital project, local public improvement, structure, system, or other project for which a unit is authorized to issue bonds, enter into leases, or to establish a fund under any statute listed in IC 6-1.1-18.5-9.8.
    (b) The cooperative agreement must contain the following:
        (1) A description of the activity to be conducted, the service to be provided, or the project to be undertaken, managed, operated, or maintained under the agreement.
        (2) The duration of the agreement.
        (3) The division of responsibilities for performance of the agreement by the participating units.
        (4) Provisions for altering, amending, and terminating the agreement.
        (5) The funding for all capital and noncapital services to be provided under the agreement, including any provisions for:
            (A) financing projects through bonds, leases, or other obligations to be issued by one (1) or more of the participating units; and
            (B) the contribution of revenues by participating units.
    (c) The cooperative agreement may provide that a unit:
        (1) may appropriate and pledge any legally available revenues to the payment of the bonds, leases, or other obligations of another unit that is a party to the cooperative agreement; and
        (2) will appropriate legally available revenues for any other payment under the cooperative agreement;
if the unit's fiscal body finds that it is necessary, desirable, and in the best interests of the residents of that unit.
    Sec. 6. (a) Before a unit may enter into a cooperative agreement under this chapter, the executive of each unit must make a written recommendation to the unit's fiscal body concerning the proposed cooperative agreement. The proposed form of cooperative agreement must be submitted with the recommendation.
    (b) The fiscal body of each unit must conduct a public hearing on the recommendation and proposed cooperative agreement within thirty (30) days of the receipt of the recommendation from the executive. Notice of the public hearing, stating the time, date, and place of the public hearing, must be published one (1) time, in accordance with IC 5-3-1, at least ten (10) days before the hearing.
    (c) At the conclusion of the public hearing, which may be adjourned from time to time, the fiscal body may adopt a resolution:
        (1) accepting the recommendation of the executive and approving the execution of the proposed cooperative agreement;
        (2) accepting the recommendation of the executive, recommending certain modifications to the proposed agreement and approving the execution of the cooperative agreement as modified; or
        (3) rejecting the recommendation of the executive.
    (d) If the fiscal body of one (1) unit recommends modifications to the proposed agreement, the fiscal body of all other units participating in the proposed agreement must also approve the recommendations.
    Sec. 7. If the fiscal body adopts a resolution under section 6(c)(1) or 6(c)(2) of this chapter, the executive shall execute the cooperative agreement.
    Sec. 8. An action to challenge the validity of an agreement under this chapter must be brought within fifteen (15) days after the effective date of the resolution of the last unit approving the agreement.
    Sec. 9. If a cooperative agreement under this chapter provides for the appropriation and pledge of legally available revenues, the fiscal body shall annually appropriate sufficient legally available revenues to satisfy the unit's obligation under the agreement.

SOURCE: IC 36-1-7-16; (06)IN1399.1.51. -->     SECTION 51. IC 36-1-7-16 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 16. This chapter is not applicable to a cooperative agreement entered into under IC 36-1-3.1. However, the parties to a cooperative agreement under IC 36-1-3.1 may incorporate any provision of this chapter the parties determine to be necessary or desirable to accomplish the cooperative agreement.
SOURCE: IC 36-1-8-4; (06)IN1399.1.52. -->     SECTION 52. IC 36-1-8-4 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 4. (a) The fiscal body of a political subdivision may, by ordinance or resolution, permit the transfer of a prescribed amount for a prescribed period, to a fund in need of money for cash flow purposes from another fund of the political subdivision if all these conditions are met:
        (1) It must be necessary to borrow transfer money to enhance the fund that is in need of money for cash flow purposes.
        (2) There must be sufficient money on deposit to the credit of the other fund that can be temporarily transferred.
        (3) Except as provided in subsection subsections (b) and (c), the prescribed period must end during the budget year of the year in

which the transfer occurs.
        (4) The amount transferred must be returned to the other fund at the end of the prescribed period.
        (5) Only revenues derived from the levying and collection of property taxes or special taxes or from operation of the political subdivision may be included in the amount transferred.
    (b) If the fiscal body of a political subdivision determines that an emergency exists that requires an extension of the a prescribed period of a transfer under this section, the prescribed period may be extended for not more than six (6) months beyond the budget year of the year in which the transfer occurs if the fiscal body does all the following:
        (1) Passes an ordinance or a resolution that contains: the following:
            (A) a statement that the fiscal body has determined that an emergency exists;
            (B) a brief description of the grounds for the emergency; and
            (C) the date the loan transferred funds will be repaid that is not more than six (6) months beyond the budget year in which the transfer occurs.
        (2) Immediately forwards the ordinance or resolution to the state board of accounts and the department of local government finance.
    (c) If the fiscal body of a political subdivision determines that the interests of the political subdivision will be best served if the transferred funds are not repaid, the transferred funds need not be repaid if the fiscal body does all the following:
        (1) Adopts an ordinance or resolution that contains:
            (A) a statement that the fiscal body has determined the interest of the political subdivision will be best served if the transferred funds are not repaid;
            (B) a statement that the fiscal officer has certified that the transferred funds are:
                (i) not in fact needed for the budget from which the funds were transferred; and
                (ii) unobligated and available for transfer; and
            (C) a brief description of the basis for the determination.
        (2) Immediately forwards the ordinance or resolution to the department of local government finance.
    (d) The political subdivision shall publish a notice one (1) time, in accordance with IC 5-3-1, of a transfer made under this section.

SOURCE: IC 36-1-8-5; (06)IN1399.1.53. -->     SECTION 53. IC 36-1-8-5, AS AMENDED BY P.L.73-2005, SECTION 171, IS AMENDED TO READ AS FOLLOWS

[EFFECTIVE UPON PASSAGE]: Sec. 5. (a) This section applies to all funds raised by a general or special tax levy on all the taxable property of a political subdivision.
    (b) Whenever the purposes of a tax levy have been fulfilled and an unused and unencumbered balance remains in the fund, the fiscal body of the political subdivision shall order the balance of that fund to be transferred as follows, unless a statute provides that it be transferred otherwise:
        (1) Funds of a county, to the general fund or rainy day fund of the county, as provided in section 5.1 of this chapter.
        (2) Funds of a municipality, to the general fund or rainy day fund of the municipality, as provided in section 5.1 of this chapter.
        (3) Funds of a township for redemption of township assistance obligations, to the township assistance fund of the township or rainy day fund of the township, as provided in section 5.1 of this chapter.
        (4) Funds of any other political subdivision, to the general fund or rainy day fund of the political subdivision, as provided in section 5.1 of this chapter. However, if the political subdivision is dissolved or does not have a general fund or rainy day fund, then to the general fund of each of the units located in the political subdivision in the same proportion that the assessed valuation of the unit bears to the total assessed valuation of the political subdivision.
    (c) Whenever an unused and unencumbered balance remains in the civil township fund of a township and a current tax levy for the fund is not needed, the township fiscal body may order any part of the balance of that fund transferred to the debt service fund of the school corporation located in or partly in the township; but if more than one (1) school corporation is located in or partly in the township, then any sum transferred shall be transferred to the debt service fund of each of those school corporations in the same proportion that the part of the assessed valuation of the school corporation in the township bears to the total assessed valuation of the township.
    (d) Transfers to a political subdivision's rainy day fund must may be made after the last day of at any time during the political subdivision's fiscal year. and before March 1 of the subsequent calendar year.

SOURCE: IC 36-1-8-5.1; (06)IN1399.1.54. -->     SECTION 54. IC 36-1-8-5.1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5.1. (a) A political subdivision may establish a rainy day fund by the adoption of:
        (1) an ordinance, in the case of a county, city, or town; or
        (2) a resolution, in the case of any other political subdivision.
    (b) An ordinance or a resolution adopted under this section must specify the following:
        (1) The purposes of the rainy day fund.
        (2) The sources of funding for the rainy day fund, which may include the following:
            (A) Unused and unencumbered funds under:
                (i) section 5 of this chapter;
                (ii) IC 6-3.5-1.1-21.1;
                (iii) IC 6-3.5-6-17.3; or
                (iv) IC 6-3.5-7-17.3.
            (B) Any other funding source:
                (i) specified in the ordinance or resolution adopted under this section; and
                (ii) not otherwise prohibited by law.
    (c) The rainy day fund is subject to the same appropriation process as other funds that receive tax money.
    (d) In any fiscal year, a political subdivision may transfer under section 5 of this chapter not more than ten percent (10%) of the political subdivision's total annual budget for that fiscal year, adopted under IC 6-1.1-17, to the rainy day fund.
    (e) (d) A political subdivision may use only the funding sources specified in subsection (b)(2)(A) or in the ordinance or resolution establishing the rainy day fund. The political subdivision may adopt a subsequent ordinance or resolution authorizing the use of another funding source.
    (f) (e) The department of local government finance may not reduce the actual or maximum permissible levy of a political subdivision as a result of a balance in the rainy day fund of the political subdivision.
SOURCE: IC 36-1-18; (06)IN1399.1.55. -->     SECTION 55. IC 36-1-18 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]:
     Chapter 18. Interlocal Governmental Service Territories
    Sec. 1. This chapter applies to cities, towns, and counties and to any geographic area that is established as a governmental service territory.
    Sec. 2. As used in this chapter, "participating unit" refers to a unit that adopts an ordinance under section 6 of this chapter.
    Sec. 3. As used in this chapter, "provider unit" refers to the participating unit that is responsible for providing the services within the territory.
    Sec. 4. As used in this chapter, "territory" refers to a governmental service territory established under this chapter.
    Sec. 5. (a) Subject to subsections (b) and (c), the legislative bodies of at least two (2) contiguous units may establish a service territory to provide any government service that these units determine is necessary, wise, and in the best interest of the residents of the units.
    (b) Not more than one (1) unit within the proposed territory may be designated as the provider unit for the territory.
    (c) The boundaries of a territory need not coincide with those of other political subdivisions.
    Sec. 6. (a) To establish a governmental service territory, the legislative bodies of each unit desiring to become a part of the proposed territory must adopt identical ordinances after January 1 but before March 2 authorizing the unit to become a party to an agreement for the establishment of a governmental service territory. Before adopting an ordinance under this section, a legislative body must hold a public hearing to receive public comment on the proposed ordinance. The legislative body must give notice of the hearing under IC 5-3-1.
    (b) The notice required under this section shall include all the following:
        (1) A list naming the provider unit and all participating units in the proposed territory.
        (2) A description of the service to be provided.
        (3) The date, time, and location of the hearing.
        (4) The location where the public can inspect the proposed ordinance.
        (5) A statement as to whether the proposed ordinance requires uniform tax rates or different tax rates within the territory.
        (6) The name and telephone number of a representative of the unit who may be contacted for further information.
    (c) The ordinance adopted under this section must include at least the following:
        (1) The boundaries of the proposed territory.
        (2) The identity of the provider unit and all other participating units desiring to be included within the territory.
        (3) Provisions requiring the parties to:
            (A) use local option revenue under IC 6-10;
            (B) impose a uniform tax rate upon all the taxable property within the territory for the governmental services; or
            (C) impose different tax rates for the governmental services for the units desiring to be included within the territory, so long as a tax rate applies uniformly to all a unit's taxable property within the territory.
        (4) The agreement, or an executive summary of the agreement, to establish the territory.
    (d) An ordinance adopted under this section takes effect July 1 of the year the ordinance is adopted.
    Sec. 7. A property tax levied under this chapter must be levied at:
        (1) a uniform rate upon all taxable property within the territory; or
        (2) different rates for the units included within the territory, so long as a tax rate applies uniformly to all a unit's taxable property within the territory.
    Sec. 8. (a) Upon the adoption of identical ordinances under section 6 of this chapter, the provider unit must establish a governmental service fund from which all expenses of operating and maintaining the governmental services within the territory, including repairs, fees, salaries, depreciation on all depreciable assets, rents, supplies, contingencies, and all other expenses lawfully incurred within the territory shall be paid. The purposes described in this subsection are the sole purposes of the fund and money in the fund may not be used for any other expenses. Except as allowed in subsections (d) and (e), the provider unit is not authorized to transfer money out of the fund at any time.
    (b) The fund consists of the following:
        (1) All receipts from the tax imposed under this section.
        (2) Any money transferred to the fund by the provider unit as authorized under subsection (d).
    (c) The provider unit, with the assistance of each of the other participating units, shall annually budget the necessary money to meet the expenses of providing the governmental services within the territory, plus a reasonable operating balance, not to exceed twenty percent (20%) of the budgeted expenses. After estimating expenses and receipts of money, the provider unit shall establish the property tax levy then required to fund the estimated budget. The amount budgeted under this subsection shall be considered a part of each of the participating unit's budget.
    (d) If the amount levied in a particular year is insufficient to cover the costs incurred in providing the governmental services within the territory, the provider unit may transfer from available

sources to the governmental services fund the money needed to cover those costs. In this case:
        (1) the transfers from the local option revenue or the property tax levy in the following year shall be increased by the amount needed to cover the shortfall; and
        (2) the provider unit is entitled to transfer the amount described in subdivision (1) from the fund as reimbursement to the provider unit.
    (e) If the amount of local option revenue plus property taxes levied in a particular year exceed the amount necessary to cover the costs incurred in providing the governmental services within the territory, the local option revenue transferred or the property tax levy in the following year shall be reduced by the amount of surplus money. All participating units must agree to the amount to be transferred by adoption of identical ordinances specifying the amount.
    (f) The tax under this section is not subject to the tax levy limitations imposed on civil taxing units under IC 6-1.1-18.5 for any unit that is a participating unit in a governmental services territory.
    (g) For purposes of calculating a participating unit's maximum permissible ad valorem property tax levy for the three (3) calendar years in which the participating unit levies a tax to support the territory, the unit's maximum permissible ad valorem property tax levy for the preceding calendar year under IC 6-1.1-18.5-3(a) STEP ONE or IC 6-1.1-18.5-3(b) STEP ONE is increased each year by an amount equal to the difference between the:
        (1) amount the unit will have to levy for the ensuing calendar year in order to fund the unit's share of the governmental services territory budget as provided in the ordinance making the unit a participating unit in the territory; and
        (2) unit's levy for those governmental services being provided for the calendar year that immediately precedes the ensuing calendar year in which the participating unit levies a tax to support the territory.
    Sec. 9. (a) The department of local government finance, when approving a rate and levy fixed by the provider unit, shall verify that a duplication of tax levies does not exist within participating units, so that taxpayers do not bear two (2) levies for the same service, except as provided by subsection (b) or (c).
    (b) A unit that incurred indebtedness before becoming a participating unit under this chapter for any governmental services

now being provided by the provider unit shall continue to repay that indebtedness by levies within the boundaries of the unit until the indebtedness is paid in full.
    (c) A unit that agreed to the borrowing of money while a participating unit under this chapter shall continue to repay the unit's share of that indebtedness by transferring local option revenue or imposing a property tax within the boundaries of the unit until the indebtedness is paid in full.
    Sec. 10. Any area that is part of a territory and that is annexed by a municipality that is not a part of the territory ceases to be a part of the territory when the municipality begins to provide the governmental services to the area.
    Sec. 11. In the same year that a tax levy is imposed under this chapter, each respective participating unit's tax levies attributable to providing the governmental services within the unit shall be reduced by an amount equal to the amount levied for the governmental services in the year immediately preceding the year in which each respective unit became a participating unit.
    Sec. 12. (a) If a unit elects to withdraw from a governmental services territory established under this chapter, the unit must after January 1 but before March 2 adopt an ordinance providing for the withdrawal. An ordinance adopted under this section takes effect July 1 of the year that the ordinance is adopted.
    (b) If an ordinance is adopted under subsection (a):
        (1) the unit's maximum permissible ad valorem property tax levy with respect to the governmental services shall be initially increased by the amount of the particular unit's previous year levy under this chapter; and
        (2) additional increases with respect to the governmental services levy amounts are subject to the tax levy limitations under IC 6-1.1-18.5, except for the part of the unit's levy that is necessary to retire the unit's share of any debt incurred while the unit was a participating unit.
    Sec. 13. (a) This chapter contains full and complete authority for the establishment of service territories by units. Except as provided in this chapter, no law, procedure, proceedings, publications, notices, consents, approvals, orders, or acts by a unit or any other officer, department, agency, or instrumentality of the state or any political subdivision is required for a unit to enter into an agreement with one (1) or more other units under this article.
    (b) A unit may exercise the powers granted under this chapter without complying with the provisions of any other law, statute, or

regulation.
    Sec. 14. (a) This chapter shall be liberally construed to effect the purposes of this chapter.
    (b) To the extent the provisions of this chapter are inconsistent with the provisions of any other general, special, or local law, the provisions of this chapter are controlling and supersede all other laws.
    (c) This chapter is supplemental to all other laws governing or regulating units.
    Sec. 15. An action to challenge the validity of an agreement under this chapter must be brought within fifteen (15) days after the effective date of the ordinance of the last unit approving the agreement.

SOURCE: IC 6-1.1-21-2.5; (06)IN1399.1.56. -->     SECTION 56. IC 6-1.1-21-2.5 IS REPEALED [EFFECTIVE JANUARY 1, 2006 (RETROACTIVE)].
SOURCE: ; (06)IN1399.1.57. -->     SECTION 57. P.L.246-2005, SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2006 (RETROACTIVE)]: SECTION 10.
    DISTRIBUTIONS FOR THE PROPERTY TAX REPLACEMENT FUND BOARD
        Property Tax Replacement Fund (IC 6-1.1-21)
            Total Operating Expense 2,028,509, 197
2,028,509, 197

Notwithstanding IC 6-1.1-21, the foregoing appropriations are the maximum amount that may be distributed. If the amount determined under IC 6-1.1-21 exceeds the amount appropriated, the board shall reduce the credit percentages proportionately so that the distributions equal the appropriation.
SOURCE: ; (06)IN1399.1.58. -->     SECTION 58. [EFFECTIVE JANUARY 1, 2006 (RETROACTIVE)] (a) IC 6-1.1-21-5.7, as added by this act, applies only to a general reassessment of real property under IC 6-1.1-4-4 that occurs after July 30, 2006.
    (b) P.L.246-2005, SECTION 10, as amended by this act, applies only to distributions to replace revenue lost as the result of granting credits for property taxes first due and payable after December 31, 2005.

SOURCE: ; (06)IN1399.1.59. -->     SECTION 59. [EFFECTIVE JANUARY 1, 2006 (RETROACTIVE)] (a) As used in this SECTION, "department" refers to the department of state revenue established by IC 6-8.1-2-1.
    (b) IC 6-2.5-5-16.5 and IC 6-2.5-5-16.7, both as added by this act, and IC 6-2.5-7-3, as amended by this act, apply to retail transactions that occur after March 28, 2006.
    (c) IC 6-3.1-31, as added by this act, applies to taxable years beginning after December 31, 2005.
    (d) The department may adopt temporary rules in the manner provided for the adoption of emergency rules under IC 4-22-2-37.1 to implement any combination of IC 6-2.5-5-16.5, as added by this act,
IC 6-2.5-5-16.7, as added by this act, IC 6-2.5-7-3, as amended by this act, or IC 6-3.1-31, as added by this act.
    (e) A rule adopted under this SECTION expires on the earliest of the following:
        (1) The date a rule is adopted by the department under IC 4-22-2 that repeals, amends, or supercedes the temporary rule.
        (2) The date another temporary rule is adopted under this SECTION.
        (3) The date specified in the temporary rule.
        (4) July 1, 2007.
    (f) This SECTION expires July 1, 2007.

SOURCE: ; (06)IN1399.1.60. -->     SECTION 60. An emergency is declared for this act.