Clayton advised to seek county income-tax allocation as state law cuts assessed values and business taxes

At a recent Town of Clayton budget meeting, Greg, the county financial adviser, told town officials that Indiana's Senate Bill 1 will reduce net assessed values, shift tax burdens and shrink certain business and personal-property tax revenue, and he recommended the town ask the Hendricks County Council to adopt a local income tax (LIT) rate that would allocate funds to small towns like Clayton.

Greg said Clayton's share of income taxes is currently small under the county's system: the town's LIT receipts are estimated at about $147,000 annually while Hendricks County collects roughly $46,000,000 in total income tax. He told officials the county can set a maximum LIT rate of 1.2 percent and that, as currently described, the county may retain 75 percent of any county-enacted portion.

The town's financial picture is changing under the new law, Greg said. He described projected declines in net assessed values (AV) of about 4 to 7 percent per year across several years, which would cause tax rates to rise even as taxable bases shrink. He also warned that business personal-property…