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Blog > > Legislature Overrides Pence Veto of Jackson-Pulaski Tax Fix

Legislature Overrides Pence Veto of Jackson-Pulaski Tax Fix

Vote retroactively authorizes rates as high as 1.3% for '98 jail projects

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(WIBC.com file photo: Eric Berman)

Jackson and Pulaski Counties can continue collecting the full amount of their local income taxes, following the legislature's override of Governor Pence's veto.

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The two counties imposed income taxes 15 years ago to build new jails, but overlooked a requirement that they lower the rate to 1% after the first several years. The bill repassed Wednesday by the legislature retroactively authorizes and extends the higher rate.

Senate Tax and Fiscal Policy Chairman Brandt Hershman (R-Buck Creek) says he respects Pence's principles in arguing taxpayers shouldn't have to pay the cost of an illegally imposed tax. But he says the state's partly to blame for the oversight, and says ordering a refund would end up costing taxpayers more in borrowing and administrative costs than the six-million dollars they'd get back.

Hershman and Senate Minority Leader Tim Lanane (D-Anderson) traded analogies on the Senate floor, with Lanane defending the veto by comparing it to a worker having his wages garnished long after he'd satisfied a debt. Hershman argues a more accurate comparison would be a worker who is denied health insurance coverage despite having paid the premiums because the paycheck deduction wasn't properly authorized. He says the tax has been spent on the jail as intended, and the money is needed to keep the jail operating.

Jackson County officials were first to discover the error and notified Representative Jim Lucas (R-Seymour), who authored a bill to legitimize the higher rate. The Indiana Department of Revenue advised legislators with weeks left in the session that Pulaski County had the same problem. Both counties were included in a 64-page package of noncontroversial tax changes, which passed the House unanimously and the Senate 48-1.

A simple majority is enough to override vetoes in Indiana, but the House and Senate both voted by two-thirds margins to repass the bill, with the House voting 68-23 and the Senate 34-12.

A spokeswoman for Governor Pence issued a brief statement saying Pence "regrets (the veto) was not upheld."