Former Gov. Mitch Daniels' Newsroom

Contact: Jane Jankowski
Phone: 317/232-1622

For Immediate Release: Sep 18, 2006
State will reimburse city of Indianapolis for excise tax error

INDIANAPOLIS (September 18, 2006) - The state will assist Hoosier cities and towns by repaying $13 million owed to the City of Indianapolis by hundreds of Indiana cities and towns, an amount that has accumulated over the last 30 years because of a historical excise tax distribution error.

Governor Mitch Daniels and Indianapolis Mayor Bart Peterson announced today that an agreement has been reached to deduct $13.1 million from the estimated $58 million Marion County owes to the state for housing juvenile offenders. The state will suspend billing for the next four payment periods and credit the county for the amount.

Since 1977, the Indianapolis share of the allocation of excise revenue that is made to Indiana cities and towns by the state auditor has been calculated using incorrect population numbers. The calculation was based on the city's old boundaries before implementation of 'Unigov,' when many services and most geographic areas of the city and county were consolidated into one government unit. Since the statute was changed in 1977, state excise tax distribution was made based on the smaller city boundary, and several hundred other cities and towns in Indiana received overpayments.

While cities and towns throughout Indiana accidentally received these additional funds, Daniels said approaching them to repay the money after all of this time was not fair and believes this repayment is the only alternative to the City pursuing sister towns and cities in a lengthy legal proceeding.

Each year, a portion of all alcoholic beverage excise tax revenues are collected by the Department of Revenue and deposited with the state treasurer. The treasurer sets aside half of the gross revenues for the state general fund; the other half is set aside for all cities and towns. Cities and towns receive a portion upon the basis their population bears to the total population of all cities and towns of Indiana.


Additional media contact: Office of the Indianapolis Mayor, Justin Ohlemiller, 317/327-3690,