KOKOMO — Taxing units in Howard County will not receive $6.1 million in personal property taxes owed by the former Chrysler LLC for the spring and will be down $12.3 million for the year unless an agreement is reached.

Howard County officials received the news Friday that most of the taxes owed by the now-defunct company won’t be paid, setting off a wave of local contingency planning meetings.

Chrysler Group LLC, the new company formed with Fiat, has agreed to pay $2.2 million in real estate taxes owed by Chrysler LLC, the now-defunct firm formerly owned by the Cerberus private equity firm, according to Larry Murrell, county attorney.

Murrell said Chrysler Group LLC has indicated it may also pay the fall real estate taxes owed by Chrysler LLC early, pending the outcome of an appeal it has filed on the assessed value of Indiana Transmission Plants 1 and 2.

“The personal property taxes are not going to be paid,” Murrell said. “We are still in negotiations about personal property. The real estate taxes have been resolved; the personal property tax discussions are ongoing.”

The four taxing units expected to be impacted the most by the non-payment of the personal property taxes are Howard County, city of Kokomo, Northwestern School Corp. and Kokomo-Center Consolidated Schools.

All four of those units may be forced to apply for loans from the state’s Rainy Day Fund.

Earlier this week, the Indiana House passed an amendment to free up Rainy Day money in case the bankrupt Chrysler LLC defaulted on tax payments.

State Sen. Brandt Hershman, R-Monticello, said early Friday that he expected the Senate budget bill, which could pass the Senate Tuesday, would contain a similar provision.

“It will happen,” Hershman said of the emergency loan money. “I talked 1/8with Howard County officials 3/8 and I told them ’I can’t expect you to do anything about a problem of that magnitude.”

Hershman said he expected the loan provision will be approved in the final budget bill.

“We’ve got lots of other things to fight over 1/8at the Statehouse 3/8,” he said. “That’s not going to be one of them.”

The only alternative to Rainy Day Fund loans would be a $65 million escrow fund, administered by the U.S. Bankruptcy Court in New York overseeing the Chrysler LLC bankruptcy.

Murrell said the county will file a claim with the court, seeking payment from the escrow fund.

Originally the Chrysler Group LLC was not going to pay any of taxes owed by the former company, Murrell said.