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3/6/2018 10:28:00 AM
Noble County Council approves county income tax hike, bond sale for Corrections Center

Mark Murdock, Star

AUBURN — DeKalb County is moving ahead with financing for its new Community Corrections center at the county farm.

The County Council Monday passed on second and third readings ordinances to raise local income taxes, sell general obligation bonds and appropriate the bond proceeds.

All three ordinances passed by 5-1 votes, with Councilman Bill VanWye casting the vote against each time. Councilman Dave Yarde was absent.

The bonds will provide $6.7 million toward the $8 million project. Commissioners are using their Local Income Tax Economic Development funds to make up the remainder.

The ordinance for the tax increase covers the highest cost possible for the bonds, and assumes the county’s nine cities and towns will keep all of their shares of the additional income tax revenue.

Financial consultant Jeff Peters explained the income tax increase with the county paying for the project on its own will be 0.188 percent, or $86.87 per year for a person with the county’s median income of $46,208.

“Because of our timeline, (the ordinance) is establishing no assistance from the cities and towns as a rate,” council President Alan Middleton said.

The timeline would allow the sale of the bonds to be completed in May and the project to be bid shortly after. That would allow construction to begin later in the summer, in hopes of getting the building under cover so work can be done during the winter.

Community Corrections must occupy the building by June of next year.

Should the cities allow their revenue from the increase to help pay for the Community Corrections project, the tax increase would be 0.104 percent, which would cost someone earning the median income $48.06 per year.

Middleton said Butler had discussed pledging two-thirds of its new revenue to the project and keeping one-third. That would mean a tax increase of 0.122 percent, or people with the median income paying an additional $56.37 per year.

The cities and towns would have to pass resolutions to designate their additional money for the project, however, and could not do that before their first meeting in April. They would need to have a resolution ready for consideration by the third week of the month.

Butler Mayor Ron Walter said his council was to meet Monday night, and it would not be able to act on a resolution so soon.

“April 2 is the absolute earliest we could do this, and that puts Auburn and Garrett at April 3. I don’t think any of the cities want to suspend the rules and ram an ordinance through,” Walter said.

Peters said exact figures would be needed to present to a bond rating agency. He said the lower the tax rate, the better the bond rating.

“At this point, we’re waiting to hear from the cities and towns before you set the initial rate,” Peters said. “We’re going to go get a bond rating from Standard & Poor’s. What we want to present to them is what we believe is going to be the real deal. We want to present that number prior to the issuance of this debt.”

County bond counsel Randy Rampola said the tax rate ordinance could be amended if the cities and towns elect to contribute some of their new revenue toward the project.

“If you need to stay on the timeline, you go with the high rate on the second and third (readings) today, and we will proceed, and then if you have changes, those can be made,” Peters said.

Several objections were raised during a public hearing on the tax increase prior to the council’s vote.

Bill Hartman of Corunna asked what would happen if expenses made the cost of the project higher.

“It can’t become anything greater than this council allows it to become,” Middleton said. “If we establish this rate, with an adjustment coming we hope from the cities and towns, once it’s turned over to the commissioners they have the amount they have to work with in their budget. They can’t go greater than that unless they’re going to come up with funds of their own, which they have.”

Hartman said citizens’ input should have been sought earlier.

“I don’t think our opinion means so much. It’s troubling because the time to ask for our opinion would have been when this project first started two years ago,” he said. “It should have been put to a vote of the taxpayers. Now we’re going to end up paying more taxes, and I don’t see where that’s fair to the taxpayers.”

Auburn City Councilman Mike Walter objected to the tax increase hitting ordinary citizens the hardest.

“Not that you don’t have to do this project in some form, not that you don’t have to pay for it, but why did you take the income tax?” Walter asked. “The income tax is a tax on wages and salary. It’s a tax on individuals.

Metal Technologies isn’t going be paying this, Steel Dynamics isn’t going to be paying this, none of the big-box retailers is going to be paying it. It’s a 15-year-old kid with a part-time job. What you have here is a pre-approved tax abatement for the big property owners.”

Walter was unhappy with the time crunch the cities face to decide whether they will share their new revenue with the county.

“You should have been talking with cities and towns in a formal meeting, in a public meeting back in January to see where they stand on this,” Walter said. “One of my colleagues said if we don’t give you the assistance you’d like to have, you’re going to make us out to be the bad guy.

“I don’t think we have to do anything. I think we just do nothing. I’m not sure we could do that and meet your timeline. My feeling is Auburn should not give up its share of that revenue.”

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