Monroe County Council nears decision on new jail tax rate, which could be as high as 0.2% – The B Square

County Councilman Marty Hawk (August 16, 2024)

County Council Chairman Trent Deckard (August 16, 2024)

Monroe County Council Work Session (August 16, 2024)

Depending on the decisions of the Monroe County Council over the next six weeks, all county residents could see an increase of up to 0.19 percentage points in the local income tax (LIT) they currently pay.

The higher tax would take effect from January 1, 2025.

The increase would fall into the category of correctional facilities tax (LIT). It is commonly known as the prison tax.

It can be enacted by the County Council for all residents of the county, including residents of Bloomington and Ellettsville.

The county's current jail tax rate is 0.01 percent, so a 0.19 point increase would bring the jail tax rate to the statutory maximum of 0.2 percent.

A tax rate of 0.2 on taxable income of $20,000 per year works out to $40 per year. Currently, someone with taxable income of $20,000 per year pays $2 in prison tax.

The current local income tax rate for residents of all categories in Monroe County is 2.035 percent.

Based on a work session Friday morning, city councilors plan to set the amount of the jail tax increase, which will be announced to the public at their next meeting on Aug. 27. If an announced rate is adopted, a public hearing may be scheduled for Sept. 16.

Unless there are changes to the rate in the meantime, the Council could vote on its adoption at any time after 16 September. If the Council acts before 1 November, the new rate would take effect from 1 January 2025.

The reason county councils are considering a 0.2 percent jail tax is to fund a new jail. The Monroe County Jail is currently operating under a 2009 settlement agreement with the ACLU, which filed a lawsuit alleging overcrowding at the jail. The settlement agreement has been extended several times.

Funding streams: ED LIT versus prison tax

Factors that county councils will consider when setting the prison tax rate include the size of the new prison and the scale of any associated justice centres that will be built on the same site as the prison. The council has not yet decided how many beds the new prison should have or how big the associated justice centre should be.

According to an analysis by the council's longtime financial advisers, if the council added to the prison tax revenue the approximately $11.2 million per year it currently receives from the relatively new local economic development income tax (ED LIT), which the Bloomington City Council will implement in May 2022, the potential construction budget would be about $211 million.

The county's fiscal consultant estimates that at its maximum level, the prison LIT could contribute $86 million toward the $211 million construction cost of a fully co-located facility, while the local economic development income tax (ED LIT) could contribute $125 million.

The total cost of a 400-bed prison with a directly attached new justice center that is 50 percent larger than the current one was estimated at about $200 million by DLZ, the county's consultant for the overall planning and design of a new prison facility.

One of the questions that county councils will have to consider is what proportion of each of the funding sources under consideration – ED LIT and the new prison tax – should be used to finance the new prison.

At Friday's work session, City Councilor Marty Hawk recalled that there was a lot of “gnashing of teeth” a few years ago when the Bloomington City Council added an additional 0.69 points to the income tax in the “economic development” (ED LIT) category.

Hawk asked Councilwoman Kate Wiltz if she remembered saying that if the county funded the jail from the ED LIT, there would be no need to impose a jail tax. Wiltz agreed that she had originally thought it would be possible to fund the new jail entirely from the ED LIT.

Hawk spoke about the people who would have to pay the new prison tax, describing some of them as people who are “really struggling, trying to put food on the table or gas for their car.”

Wiltz said it was wise to keep in mind the idea of ​​not maxing out the statutory 0.2 percent rate for the prison tax. She encouraged her colleagues not to raise the tax at its maximum level, pointing out that it is possible to increase it later.

Council President Trent Deckard warned that “every individual’s first wish, hope and dream may not be fully achievable in our system.”

Councilwoman Cheryl Munson pointed out that the jail's operating costs have increased significantly this year. Munson stated that the jail tax may be needed in the future to fund jail operations and to finance a new facility since the county's general fund cannot absorb the increase.

Councilman Geoff McKim does not believe the ED LIT alone will raise enough money to fund a jail and justice center on the same site. McKim called the $200 million construction budget a “bogeyman” that could be funded if the maximum jail LIT and all of the ED LIT's revenue went to the project. McKim believes all county councils have the information they need to develop alternative scenarios.

Alternate location on Vernal Pike

Among the factors that county councillors are likely to consider in determining the level of prison tax to be announced on August 27 are the cost of the land on which the new prison will be built.

The location of the new jail has not yet been decided and it seems almost certain that Monroe County will have to purchase land to build a jail, meaning the cost of the land is unknown. However, the most promising candidate at this time is North Park, which is located on SR 46 at Hunter Valley Road.

The property is currently valued by county commissioners at $11,375,000, according to a chart presented by Commissioner Penny Githens at a meeting in mid-July.

In addition to the county commissioners, state law also requires the county council to approve the purchase of any new significant property, regardless of the financing method.

Some uncertainty was caused by an offer from two property owners along Vernal Pike, which was announced at the county council meeting on Tuesday and repeated at the county commissioners meeting on Wednesday morning.

Their proposal is supported by the Greater Bloomington Chamber of Commerce and the Greater Ellettsville Area Chamber of Commerce. The two chambers sent the county governments a joint letter of support with logos of both organizations on the letterhead.

A follow-up letter from the two landowners – Craig Cowden and Dee Burris – made it clear that they are willing to cap the price of their properties at $3 million each, for a total of $6 million, regardless of the two required appraisals that would have to be completed by the Monroe County government in order to purchase the land.

So the offer that Monroe County officials could consider would make a difference of about $5 million, all other things being equal.

At the County Council work session on Friday, County Attorney Molly Turner-King asked the council for input on whether to proceed with the assessment of the Vernal Pike site. Council members agreed that the assessments should be conducted immediately and that a Phase 1 environmental study should be conducted – especially given that the landowners had said they would cover the costs.

When county commissioners heard the proposal Wednesday morning, they seemed unwilling to pursue the Vernal Pike property and the North Park property simultaneously. Commissioner Lee Jones called the Vernal Pike property a good option to keep an eye on as a “backup.”

On Friday, District Attorney Jeff Cockerill told councilors that the Vernal Pike proposal is not just sitting idle on a desk in the commissioners' office. He has reached out to DLZ, the county's design and construction consultant for the prison project, and asked that the property be examined for any obvious “red flags” that could be a deal breaker.