GREENSBURG – The Greensburg City Council has officially opposed a state legislative proposal that has the potential to significantly reduce local tax revenues.
Gov. Mike Pence proposed late last year to completely eliminate the tax that businesses pay annually on their personal property, such as metal stamping machines, plastic injection molding machines and other equipment. Bills in the Indiana Senate and Indiana House tackle the tax in different ways, but both would eliminate just some of the tax.
Proponents of the elimination of the tax say it hinders economic growth because it essentially punishes businesses when they invest in new machinery — and in each subsequent year so long as they own the equipment. Most other states either have eliminated the tax or assess it at a lower rate than Indiana.
However, the tax brings in about $1 billion annually into the coffers of the state’s local governmental units — including counties, cities, towns, townships, sanitation districts and libraries — and city and school officials have said that if the state legislature does not find a way to replace the $1 billion, popular local services, on which residents rely daily, will suffer.
The size of the potential tax revenue losses varies greatly among Indiana cities, counties, towns and libraries and depends on how heavily the counties rely on equipment-heavy jobs such as manufacturing. Potential losses for the city of Greensburg could reach about $425,000. Losses for Greensburg Community Schools could exceed $300,000, and for Decatur County government, the loss could be close to $170,000, according to a report from the Legislative Services Agency, which helps legislators and residents understand the impact of proposed legislation. But depending on the language in the bill, the potential losses could be significantly reduced.
Greensburg City Council on Monday unanimously adopted a resolution to oppose the elimination of the tax at this time. The Council said that the issue needs to be studied more over the summer and that the tax should be eliminated only if the state finds replacement revenues for local governmental units so that they do not have to cut local services.