Editorial By Therese Brown in
the Fort Wayne News-Sentinel:
…
The distribution of local option income taxes has been a historic
problem. Sudden changes in economic conditions have usually resulted in
dramatic changes to local option income tax distributions. Evidence for these
changes was not accompanied with a detailed report on exactly why a county’s
distribution increased or decreased dramatically. Reasons from the state varied
from less income being earned to less returns being processed in a state fiscal
year. However, no matter the cause, little data was produced to verify the
distributions.
How can we add transparency to the process? The answer is more
detailed reporting and a better accounting process.
Counties are already receiving quarterly reports on local income
tax collections, and this should be expanded to include more information. The
state should include in the reports the number of processed income tax returns,
attributable to the correct filing year.
The most critical change needs to be an end to the co-mingling of
income tax revenue and a clearer distinction between each county’s local
collections and those collected for the state’s revenue needs. When
withholdings and estimated payments are reported to the Department of Revenue,
the withholdings for the counties should be deposited into the proper county
account. Statute already requires the Department of Revenue to segregate the
money and there is no longer any reason for the state to ignore its statutory
duty; this should occur immediately. We encourage the state to make each
county’s account available to the local units of government and to the public
on a real time basis via a posting on the state’s website. County income tax
withholdings should never be co-mingled with the state general fund.
The only way to have a transparent and accountable system is if
the local units of government can track the amount of withholdings and
processed returns. This is not to suggest that local units receive estimated
amounts because locals should still only receive that which is actually
collected and reconciled after taxpayers file their tax returns. Fundamentally,
more eyes need to be on this data. If the state would introduce more
transparency into the process, local officials would be in a better position to
compare their community’s histories and anticipate problems when collections
don’t match distributions. This would be a benefit to all: the state, local
governments and taxpayers.
We urge the audit of the Department of Revenue to include other revenues
and accounting processes. The state collects other revenue for local units of
government such as food and beverage taxes, lodging taxes, gas taxes and 911
fees. We would prefer the collection and distribution of these revenues to be
reviewed as well to reassure taxpayers that due diligence on their behalf has
been served. We also ask that county officials be included among the members of
the audit review committee when a vendor is selected to conduct the audit.
…