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Mayor warns state law will shift revenue from property to local income tax, projecting millions lost by 2028
Summary
The mayor told the council the recently passed state legislation (referred to in the meeting as Senate Enrolled Act 1) will phase out some property-tax-related local income tax (LIT) revenues and require the city to adopt a municipal local income tax; Michigan City could lose roughly $14 million under the new structure, the mayor said.
At a Sept. 11 budget workshop the mayor said changes in state law will shift revenue from property-tax-related sources toward a reliance on local income tax (LIT), and that the change could substantially reduce the city’s current revenue stream beginning in 2028.
The mayor described Senate Enrolled Act 1 as moving revenue emphasis from property taxes to local income tax and said many of the existing LIT streams that the city now receives will end in 2028. “We’re basically getting rid of property taxes to an extent, and our money’s gonna be based on local income tax,” the mayor said during the presentation.
Projected revenue change and local composition The mayor said Michigan City’s current combined LIT-like rate is about 3.7 percent across funds and that under the new framework the maximum…
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