Both counties continued to collect local income taxes from residents after the legal authority for those tax rates had expired. House Enrolled Act 1546 would legalize those collections and reinstated the tax rates.

Pence said when he vetoed the bill that was inappropriate.

“If Hoosiers owe taxes, they should pay them. But when Hoosiers pay taxes that are not owed, they deserve relief, and this legislation does not meet that standard,” Pence said.

“HEA 1546 would approve, after the fact, the collection of taxes that were not owed,” he said. “While there are valuable elements of this legislation, retroactive approval of the taxes collected is not the proper remedy and for that reason I am vetoing this legislation.”

The House and Senate can override the veto with a simple majority vote.

Lawmakers could also use that day to approve any technical corrections to new laws.

Staff report from TheStatehouseFile.com

Rep. Gutwein working with county officials to solve tax issue

From WKVI Radio

State Rep. Douglas Gutwein visited Pulaski County to speak to the county commissioners and council during a joint session held Monday night regarding a revenue bill vetoed by Gov. Mike Pence that could affect the county’s CAGIT monies.

Gutwein explained that a clerical error at the state level could force the county to pay back taxpayers millions of dollars that had been collected by the County Adjusted Gross Income Tax – money that had originally been collected to cover the cost of the Justice Center and jail – because the state claims that the county overcharged its taxpayers. The county still owes roughly $5 million on the jail facility.

County attorney Kevin Tankersley explained that the county did everything by the books.

“I just want to be clear that when the initial letter came from the Department of Revenue, they were like, ‘You overtaxed your taxpayers $5 million.’ They were quite aggressive about it. The reality is that it was checked by an independent county agency to make sure that no money went anywhere it wasn’t supposed to go. This is money that we agreed to pay back when we built an over-$8 million jail. And we’ve been collecting that money and paying that as we’re supposed to,” said Tankersley.

Gutwein said that the refunding of those monies is a worst-case scenario, however; and said legislators are working hard to fix the issue. A revenue bill that would have fixed the problem was vetoed by the governor because, according to Gutwein, Pence does not approve of “retroactive” conditions, which Gutwein said are necessary in this case due to the state mix-up regarding the CAGIT tax.

“We’re not dealing with rocket science here,” Gutwein said. “Somebody messed up down there and they’re not wanting to fess up. It was one paragraph, ‘Pulaski County, retroactive for 2007 or whatever it was, extended through 2021.’ Simple fix to a very simple problem.”

Fortunately, there are solutions to the problem. Gutwein explained that legislators may meet again on what he described as “technical day” at the statehouse – June 12 – to override the veto. Alternatively, he said the county can use its own funds to cover the cost of the jail until the legislative session resumes in January and the problem can be addressed. Auditor Shelia Garling explained that there should be enough money in the CEDIT fund to pay for the jail’s bond and use the CAGIT funds the county currently has to cover the operating expenses until January.

There is currently nothing that can be done about the situation, according to Gutwein. He said the county will have to wait and see what the state revenue officials come up with as a solution and work from there, but he will keep county officials up to date on the progress.