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BMV excise tax refund to cost counties $19 million

November 20, 2014

Indiana's counties will lose $19.2 million in state excise tax money due to refunds being issued to motorists who were overcharged on their auto registrations, but it's a fraction of what local officials see added each year to their coffers.

Data released by the state Bureau of Motor Vehicles show the reductions that all 92 of Indiana's counties will see under the impact of the BMV's refunds. The agency is refunding nearly $29 million to some 185,000 motorists overcharged on excise taxes they paid on vehicles registered between 2004 and 2014.

BMV spokesman Josh Gillespie said the $19.2 million the counties won't see is only about 2 percent of the total excise tax revenue the counties normally receive over a two-year period; counties see about $410 million a year, he said.

The reductions will restore the counties' funding levels to what they should have been had the overcharges not occurred, Gillespie said.

"The money they won't be receiving is actually money they shouldn't have received in the first place," he said Thursday.

The BMV announced the motorists' refunds in September.

Last year, the BMV settled a class-action lawsuit that accused the agency of overcharging customers by $30 million. More than 4.5 million Indiana drivers were refunded $3.50 to $15 as part of that settlement, but Gillespie said the state's counties were not impacted by those refunds.

Andrew Berger, the government affairs director of the Association of Indiana Counties, said counties distribute excise tax revenue to local government units, with the main beneficiaries being cities, towns, schools and county road-maintenance budgets. He said the funding reductions may not have a significant impact on many counties.

"Once you get down to the individual taxing units hopefully it's not something that anyone will have trouble dealing with. But that's an individual question because budgets are tight," Berger said.

The BMV has been working with the state Auditor's office on how to phase in the excise tax funding reductions, but has yet to settle on a start date or determine whether it'll be spread out over 24 or 36 months, said Fred Van Dorp, an assistant settlement director with the state Auditor's office.

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