PENDLETON -- Pendleton Town Council President Robert Jones said he understands why Gov. Mike Pence is pushing for an elimination of the business personal property tax. An elimination of the tax would be another positive check mark for businesses looking to locate in Indiana.
But Jones thinks eliminating the tax, which local units of government like Pendleton rely on, could have unintended consequences. He said so during the town’s monthly council meeting, when the council approved a resolution spelling out its position on the tax elimination.
Since the resolution passed, it will now be sent to Pence’s office and Pendleton’s local legislators.
The business property tax charges a tax on any sort of equipment a business purchases. Across the state, the tax generates about $1 billion which is doled out to local governments, schools, libraries and other entities like fire departments.
Pence wants the tax eliminated so more businesses would be encouraged to come to Indiana.
Jones said he is worried a decrease in funds might have an opposite effect. With a decrease in revenue, cities and schools would have to cut back on things like parks or public safety. Those are some of the things businesses look at when deciding what city to come to. Having a down-sized police force or parks in disrepair could make a company take its business elsewhere Jones said.
“Employers are attracted to certain communities,” Jones said. “And that in part is based off of amenities such as parks, public safety and other things. Pendleton is a desirable place to live and we’d like to keep it that way.”
There is fear if the tax is done away with, quality of life could suffer in Pendleton. Jones said the town is looking at a 10 percent cut in property tax revenue if the governor’s plan is put into action.
“That’s significant for us,” Jones said.
A version of what Pence wants to do passed out of the Indiana House earlier this year and will soon start making its way through the Senate. The bill the House approved would allow individual cities to eliminate the tax if they choose. The new law, if passed, would only affect new property bought by businesses.
Jones said he isn’t sure if that strategy is a good idea either because it pits cities and towns against each other. Some of them might eliminate the tax because a neighboring town did.
“I don’t think the state should put this on the backs of local government,” Jones said. “If they’re going to take away the revenue they need to come up with a way to make up the deficit.”
Pence told reporters in the Indiana Statehouse last week he wants to continue the push to eliminate the tax. Despite his insistence on cutting the tax, he has not publicly offered any suggestions on where the state might make up the lost revenue.
“We as a council are not necessarily opposed to the idea,” Jones said. “We just want that lost revenue to be made up somewhere.”
Pendleton will wait to see what happens with the House bill before making any sort of decision on the future. Jones said if the tax goes away, the town might be forced to make cuts or raise taxes, neither of which anyone on the council wants to do.
Follow Zach Osowski on Twitter @Osowski_THB, or call 640-4847.
By the numbers Projected losses in Madison County with total business tax cut City of Anderson: $10,751,754 City of Elwood: $1,761,651 City of Alexandria: $625,792 Town of Pendleton: $353,118 Town of Chesterfield: $104,462 Town of Ingalls: $95,072 Town of Lapel: $90,301 Source: Legislative Services Agency