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Local Governments Receive Millions In Lost Tax Dollars

The state announced recently that it had not distributed more than $205 million in Local Option Income Tax funds.

Monroe County

Photo: Dan Goldblatt/WFIU News

Monroe County has been cutting down on vehicle usage after budget cuts in 2011. It has put off purchasing new vehicles and is reducing fuel consumption.

Local governments across the state were glad to be receiving more money Thursday, but most would have liked to see the money in their 2011 budgets. The state announced recently that it had not distributed more than $205 million in Local Option Income Tax (LOIT) funds.

Democratic State Representative Peggy Welch, sits on the budget committee and says her party’s call for an external audit months ago went unanswered.

“We said, ‘We need to restore the public’s trust in what we are doing at the state with their tax dollars’” she says. “We need to make sure this problem does not happen again.”

Since the error was discovered, State Budget Director Adam Horst has called for an independent audit.

Monroe County received an additional $4.1 million, which will be distributed to the county, city, townships, schools, and library through the County Option Income Tax formula.

Vigo County received more than $3 million, Bartholomew almost $4 million, Howard $2.5 million, Lawrence more than a million, and Orange County around $350,000.

Because of another distribution error in 2010, many local governments were forced to give back millions in Local Option Income Tax money last year.

“The state was, not intentionally, harming the revenue stream of local units of government,” Welch says.

Welch says individual local governing bodies will decide where the redistributed money will go.

Distribution By County

The Indiana government has also released a chart noting how much each county received in interest.

Dan Goldblatt

Dan Goldblatt is the Multi-media Producer for WFIU/WTIU News. A graduate of Indiana University, he studied journalism and anthropology. He currently lives in Bloomington with his cat, June Carter.

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