Evansville City Council to Consider Income Tax Rate Increase

The Evansville City Council will take up on first reading an ordinance that would raise the local option income tax for people living and working in Evansville and Vanderburgh County. The 0.2% increase in the income tax could generate nearly $8 million a year and would be exclusively earmarked for public safety, according to the ordinance's sponsor, City Council President Missy Mosby (D-2nd Ward).

In 2017, public safety will account for more than 20% of the $337 million overall city budget, totaling nearly $80 million. With a tight budget forecasted for 2018, Council President Mosby said more money is needed to fund public safety.

"It's not that we like to raise taxes or want to raise taxes but we really have to look at another source of revenue so we can get the public safety budget where it needs to be," Mosby said.

Vanderburgh County currently has the second lowest effective tax rate of counties with more than 100,000 residents, Mosby said. The current income tax rate is 0.9035% of a resident's gross annual income. State law caps the income tax at 1% but allows for an additional 0.25% to be levied so long as it is earmarked for public safety-related expenses.

If the tax hike is approved, nearly $8 million in additional revenue would be generated. The city would receive an estimated $4.5 million of that new annual revenue. The county would collect the remainder. The additional tax revenue would supplement the budgets for the Evansville Police Department, Vanderburgh County Sheriff's Office, Evansville Fire Department, Central Dispatch and the Vanderburgh County Detention Center. The Evansville-Vanderburgh County Emergency Management Agency would also see a funding increase, Mosby said.

"The 2018 budget that came in front of [council] doesn't include money for another fire truck. With this amount of money coming in, we'll be able to get more equipment and get the things public safety needs," Mosby said.

The city has allocated money for a new fire truck every year since 2012. The tax increase could be a tough sell for some residents, especially with significant but separate rate increases expected for water, sewer and electric services in the coming years.

This could be especially true for some of the economically-challenged neighborhoods in the city including some in Mosby's second ward.

"I hate to raise taxes but when its going to be only for public safety... I think it's an option people can look at and they can appreciate that." Mosby said.

For a resident making $40,000 in gross income a year, their current county income tax is $361.40 per year. Under the proposed tax hike, the income tax total would be $441.40.

"For less than eight dollars a month, you can help get our public safety officials what they need," Mosby said. "We don't like raising taxes. No one likes to do that but when you know it's going to public safety only -- people that are out there on the streets protecting us -- I think people want them to have the equipment and the things they need so they can stay safe to keep us safe."

Mosby also said the income tax increase would also lessen the burden on the city's riverboat fund. The revenues from the riverboat fund, which typically hovers in the $13-14 million range, is typically used to fund capital expenses, including police cars and fire trucks.

The ordinance will go before the City Council on first reading Monday night. 


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