Indiana’s New Tax Option to address County Jail Issues

As many counties in Indiana face overcrowding issues in their jails, and limited resources to deal with the issue, the adoption of House Bill 1263 creates an option to deal with these issues by allowing counties to increase Local Income Tax to fund or maintain a county jail.

House Bill 1263 Provided that a county fiscal body may adopt an ordinance to impose (within the local income tax expenditure rate) a tax rate for correctional facilities and rehabilitation facilities in the county. It specifies that the tax rate must be in increments of 0.01% and may not exceed 0.2%. House Bill 1427 enacted this year, provided that the tax rate may not be in effect for more than 22 years, 2 years longer than previously enacted. House bill 1263 also specifies that the revenue generated by such a tax rate: (1) must be distributed directly to the county before the remainder of the expenditure rate revenue is distributed; and (2) shall be maintained in a separate dedicated county fund and used by the county only for paying for correctional facilities and rehabilitation facilities in the county.

Although most LIT rates are addressed by a local LIT Council made up of both county and city/town officials, HEA 1263 gives the county fiscal body sole authority to implement the new rate. Lastly the bill also requires that the county complete a feasibility study and hold a public hearing on the study prior to jail construction or expansion.

Contact FSG Corp. we can cover possible financing options and pitfalls that Counties can run into, the Rating agency perspective on Financing under a new income tax, and go over the State-wide survey of county jails and where jails stand on one of the most critical issues – the correct number of personnel to staff a jail.