Porter County Treasurer Jim Murphy has proposed using the interest earnings from last year’s sale of Porter Memorial Hospital for additional homestead credits for county homeowners, while also distributing $3.3 million to schools, towns and other taxing units.

Murphy, who is the Republican candidate for Porter County Commissioner this year against Democrat incumbent Carole Knoblock, outlined his plan called “The Murphy Plan: A Plan for Reduction and Stability for Porter County Taxpayers.”

Murphy is proposing to tap the interest earnings from last year’s hospital sale to fund additional homestead credits for homeowners that would reflect the additional savings if the state’s 1 percent “circuit breaker” tax cap were already in place. Statewide, the tax cap will be phased in so that by 2010, homeowner tax bills will be capped at 1 percent of the homes’ assessed value.

Murphy’s proposal comes on the heels of last week’s Porter County Council meeting, when council members appeared to support a proposal by Council President Robert Poparad, D-1st, to tap the hospital interest earnings to reimburse taxing units for the borrowing they face this year.

Murphy is proposing to take that idea a step further, in two ways.

First, he is proposing to distribute a total of $3.3 million to taxing units to compensate them for not receiving their tax draws in 2007. Murphy said that because half of the tax funds should have been disbursed by mid-2007, he is proposing to multiply that half-year of revenue by 3.5 percent, which comes to $3.3 million.

Second, he is proposing to effectively begin the statewide 1 percent tax caps for homeowners this year, instead of waiting until 2010, by providing additional homestead credits. According to his statistics, if the 1 percent cap on homeowners were in place this year, the loss to local government units would $1.8 million. The cost would be $3.2 million in 2009.

Murphy said he is proposing to enact the tax cap by providing additional homestead credits. He said it would be his intention that all homeowners would get the additional credit, even those who are already paying less than 1 percent of their AV and won’t be affected by the tax cap.

Murphy said the hospital sale is generating about $500,000 a month and that by January, 2009, the county will have about $11 million in interest earnings.

His plan would tap $8.3 million of that, by providing a total of $5 million this year and next in additional homestead credits and by compensating local government units by $3.3 million.

Posted 6/2/2008