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Consultants warn LIT distribution timing will complicate Pulaski County budgeting
Summary
Consultants said adoption of local income tax (LIT) choices is shown in 2028 but distributions under the new structure are likely to phase in around 2030, creating a budget timing mismatch and uncertainty for 2029 planning.
Consultants told the council that while the new local income tax structure will be adopted in 2028, the consultants’ reading of DLGF guidance is that distributions under the new LIT formula likely will not be fully implemented until about 2030 — creating a one‑ to two‑year window of uncertainty for budgets.
“That will actually not be distributed based on that list structure until 2030,” the presenter said, noting the county is likely to receive funding under the current distribution rules in 2029. Consultants said they are discussing timing with the Association of Indiana Counties and expect more statutory clarity in 2027. The report models several LIT allocation scenarios so the council can see near‑term and long‑term outcomes.
The presentation showed how a municipal share at 0.55% or a county general service split at 1.2% would affect different taxing units and said some units could gain while others — notably schools under the new structure — would lose direct LIT receipts. Consultants recommended the MUST task force analyze opt‑in/opt‑out effects and urged the council to prepare interlocal agreements where appropriate.
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