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Starke County Uses Creative Financing for Jail Expansion

Starke County, like many counties in Indiana, struggled to fund a jail expansion at a time when it was already struggling to provide essential services with less money.

Indiana changed its A-D felony sentencing to a six-level grid in July of 2014, reserving state prisons for high-level offenders and keeping lower-level offenders at county jails for treatment-oriented rehabilitation or serving them locally with community-based correction programs and probation. Experience tells us that when county jails become overcrowded, the potential for lawsuits increases.

Persuading taxpayers to vote in favor of raising property taxes for jail expansion to meet the new sentencing grid requirements is understandably difficult. As an alternative, Indiana counties can fund additional jail space with existing income tax revenue streams, additional income tax rates or other existing local revenue sources.

With assistance from Umbaugh, Starke County adopted an additional County Economic Development Income Tax (CEDIT) rate of sixty-five hundredths of one percent (0.65%) imposed on the adjusted gross income of county taxpayers. The additional CEDIT required enabling legislation from the Indiana General Assembly. In Starke County’s case, the legislation allowed the county to implement the rate to provide specific funding for its correctional facility and still maintain the low property tax rates that were important to their constituents and essential to economic development.

Starke County issued bonds to renovate its existing facility and build new jail space to address the needs for the foreseeable future, giving them additional flexibility to address the impact of the new sentencing grid. The additional CEDIT tax is designed to provide funding to repay the bonds and meet ongoing operating expenses as needed.