TIPPECANOE COUNTY, Ind. (WLFI) - Elected officials are preparing for rainy days ahead as they anticipate unemployment from COVID-19 to cut into the county's income tax revenue over the next several years.
Tippecanoe County Commissioners voted Monday to create a new local income tax rainy day fund, and members of the Tippecanoe County County council voted Tuesday to add $3 million of CARES Act money to the fund.
As News 18 previously reported, the county has received $6.2 million in CARES Act money and has spent about $1.4 million to reimburse COVID-19-related expenses.
Auditor Bob Plantenga says the county is setting a portion aside to compensate for less income tax revenue in the future.
"We don't want the services the county government delivers, we don't want those to go down and I think we should be in good shape to be able to do that," he says.
Plantenga says income tax collected any given year is budgeted for the next year. As a result, income tax revenue is expected to drop in 2022 and 2023 as widespread unemployment from the pandemic continues into next year.
"Now, we're trying to take some of this money that they sent us that we put in the general fund, and we want to hold that back and then we can incrementally put that back into the general fund as the next couple years unfold and we see reductions in the income tax," he says.
Indiana alleviated shortfalls in 2021 budgets by extending the income tax collection period this year from 12 to 14 months, allowing local governments to collect two extra months of revenue for next year's budget.
But next year's collection period will be shortened to 10 months as a result, creating even more concerns about revenue shortfalls, Plantenga says.
"We want to hold some money back and put it into a rainy day fund because there's about 25% of the general fund comes from income taxes, and obviously we're going to have some reductions in income taxes in the future," he says.