The state budget approved by Indiana lawmakers includes a provision that will allow Howard County taxing units to borrow money to cover the lost personal property taxes that were unpaid by Chrysler LLC.
Earlier this month, county officials were informed Chrysler LLC would not pay $6.1 million in personal property taxes that were due this month.
“Allows a taxing unit that experiences a property tax shortfall with respect to taxes payable in 2009 or 2010 resulting from the bankruptcy of a motor vehicle transmission manufacturer to obtain a loan from the rainy day fund,” the approved state budget reads.
Sen. Jim Buck, R-Kokomo, said the loan for the non-payment of the Chrysler taxes is structured differently than when the county received a similar loan when Delphi failed to pay property taxes.
“There is no dollar amount,” Buck said. “The local taxing units can draw down from the Rainy Day fund for the amount in unpaid taxes.”
Buck said the county will have to negotiate with the state the terms of the loan, but expects it to be interest-free.
He said the loan has to be repaid when the taxes are paid or within 10 years.
“That’s good news,” Howard County Treasurer Martha Lake said of the approved loan. “We would rather not have to borrow the money.”
Sen. Brandt Hershman, R-Monticello, said the loan was approved in order for the Howard County taxing units to continue to provide services to residents.
Chrysler Group LLC, the new company formed with Fiat, has agreed to pay $2.2 million in real estate taxes owed by Chrysler LLC, the now-defunct firm formerly owned by the Cerberus private equity firm, according to Larry Murrell, county attorney.
When the Delphi Corp. filed for bankruptcy protection in 2005 the legislature approved as much as $3.2 million in loans to local taxing entities.
Those loans have to be repaid in 10 years or whenever the outstanding tax bill is paid.
Local News
County gets Chrysler tax relief
State budget has loan provision
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