Guest commentary
An explanation of Carroll County taxes

Editor's Note: was written by the Carroll County Economic Development Corporation to help explain the county's tax structure. This is the first of a two-part series. The following article

Carroll County citizens have heard a lot about the county's serious financial situation. That situation is causing drastic reductions in all areas of county government, particularly police, jail, and emergency services. Added to that is the news that 150 people will be out of work due to the loss of manufacturing at Peters-Revington furniture plant.

There are a number of reasons why the county is struggling financially. A review of the existing tax structure helps to explain why Carroll County is in worse shape than its neighbors.

Property tax

The largest source of revenue for the county, townships, towns, schools, and libraries in Carroll County is property tax. That tax is collected on homes, land, business real estate, and other personal property. In 2007, Carroll County's property tax total was over $23 million. However, that revenue is very low compared to surrounding counties. White County is the next lowest to Carroll County with $34.4 million while Tippecanoe County is the highest with $184.4 million.

Assessed value forms the basis for property tax. Carroll County's assessed value is 56% residential, 30% agricultural, and less than 8% commercial or industrial. (6% is tax exempt). The percent of assessed value for commercial/industrial is higher in all other counties than Carroll (13-28%) and their agricultural percentages are lower (5-26%).

Carroll County's relative lack of business and industry puts the county at a distinct disadvantage for generating property tax revenue. Of property tax collected for Carroll County, 65% goes to schools; 18% to the county government for county-wide services; 10% to the municipalities of Delphi, Flora, Camden, Burlington and Yeoman; 3% to townships; and 3% to libraries.

County Adjusted Gross Income Tax (CAGIT)

The second largest source of general funding is the County Adjusted Gross Income Tax (CAGIT). This tax is collected at the rate of 1% from people who live in Carroll County, regardless of where they work. Carroll County's 2007 revenue was $3.3 million.

The CAGIT revenue goes to the same entities as listed above but at very different proportions: 45% to county government; 25% to municipalities; 16% to schools; and 7% each to libraries and townships in 2007.

Population effect on income taxes

Population in all surrounding counties is larger than in Carroll County. During the hundred years from 1900 and 2000, Carroll County's population grew just 1% (19,953 to 20,165). In the same time, Cass County grew 18% (to 40,930), Clinton County 20% (to 33,866), White County 32% (to 25,267), Howard County 197% (to 84,964), and Tippecanoe County 285% (to 148,955).

Resident population has a huge effect on a county's finances, particularly on income tax revenue, so the impact of essentially no growth compared to our neighbors is very significant.

Since surrounding counties have larger populations, they collect more in income taxes. Most others have rates of 1% like Carroll, but Howard County's rate is .9% and Tippecanoe's is .6%. White County's $3.8 million in revenue for 2007 was next lowest to Carroll County at $3.3 million. Tippecanoe County had the highest income, $16.3 million, despite its lower rate.

Carroll County's residents rank in the middle or high side in per capita personal income and median household income, and the county's unemployment and poverty rates are relatively low. The education levels in Carroll County are about in the middle compared to its neighbors, so its residents are qualified to work at middle-income jobs.

The lack of industry in the county results in a shortage of jobs, however, and many more of the county's residents commute to other counties to work. 54% of Carroll County workers travel out of county to work. In White County the figure is only 35%. Tippecanoe County's rate is only 6%. When people commute away from home to work, they are more likely to do their shopping in the work location, especially when the choices are much greater. That work migration then also has a negative impact on the ability of Carroll County's retail businesses to survive. Such commuters also have less disposable income because of the increased fuel costs of getting to and from their places of work.

(Next week: Local Option Income Tax (LOIT) and Economic Development Income Tax (EDIT).