Jackson Kelly PLLC

Public Law Monitor

Indiana Adds New Tax Option to Address County Jail Issues

March 21, 2018

By: Joshua A. Claybourn

Many counties across Indiana face inmate overcrowding issues and limited resources to pay for expanded or new jails. With the passage and adoption of Indiana House Enrolled Act 1263, signed by the governor on March 21, 2018, counties across the state will be allowed to increase local income tax (“LIT”) rates to fund or maintain a county jail. Most counties will now be able to raise LIT rates by 0.2%. Although most LIT rates are addressed by a local LIT Council made up of both county and city/town officials, HEA 1263 gives the county fiscal body sole authority to implement the new rate.

The new county jail LIT rate must be in increments of 0.01%, may not exceed 0.2%, and may not be in effect for more than 20 years. Revenue from the new rate must be maintained in a separate dedicated county fund and used by the county only for paying for correctional facilities and rehabilitation facilities in the county.

HEA 1263 also requires that the county complete a feasibility study and hold a public hearing on the study prior to jail construction or expansion.

Joshua A. Claybourn is Counsel in the Public Finance and Utilities industry groups, focusing primarily on municipal finance, utility regulation, and commercial transactions. He practices out of the Firm’s office in Evansville, Indiana.


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