Hampered by the recession and tax caps, some cities and counties across the state are spending very little of their annual economic development income tax revenues on economic development.
Instead, they are paying for police cars, roads, health insurance, replacing curbs, parks buildings and laptop computers.
Some economic development officials worry that communities that use economic development income tax revenues to plug holes in their budgets may put themselves at a competitive disadvantage. The officials said the communities would benefit more if they invested the funds on projects that increase the tax base and create jobs, including building roads and laying sewer lines in industrial parks.
But a spokesman for Indiana cities and towns said economic development is becoming a luxury that many cities and counties cannot afford.
Seventy-one Indiana counties have an economic development income tax, and this year they are receiving about $175 million combined, according to the Indiana Department of Local Government Finance. The tax, created by the Indiana legislature in 1987, is adopted by the county council and distributed to county, city and town governments, typically based on population.
Bartholomew County residents have paid the tax since October 2009. The rate is 0.25 percent of people’s gross income, or about $125 for a household with $50,000 in earnings.
The city of Columbus uses the bulk of its $2.5 million this year for road and building maintenance, police cars and maintenance for The Commons. Bartholomew County uses most of its $1.7 million for road repairs and sheriff’s vehicles.
